Document:

Exhibit 10. 12

 

SCHEDULE 1

 

ABBREVIATED NEW DRUG APPLICATIONS

 

 

	Number	 	Description	 	Status	 
	{***}	 	{***}	 	Approved ANDA	 
	{***}	 	{***}	 	Approved ANDA	 
	40-762	 	Phendimetrazine Tartrate Tablets USP, 35 mg	 	Approved ANDA	 
	{***}	 	{***}	 	Approved ANDA	 
	{***}	 	{***}	 	Approved ANDA	 
	{***}	 	{***}	 	Approved ANDA	 
	{***}	 	{***}	 	Approved ANDA	 
	{***}	 	{***}	 	Approved ANDA	 
	{***}	 	{***}	 	Approved ANDA	 
	{***}	 	{***}	 	Approved ANDA	 
	{***}	 	{***}	 	Approved ANDA	 
	{***}	 	{***}	 	Approved ANDA	 
	Pending:	 	 	 	 	 
	{***}	 	{***}	 	Pending ANDAExhibit 10.15

 

 

 

August 9, 2013

Mikah Pharma LLC

20 Kilmer Drive

Hillsborough, New Jersey, 08844

Attention: Nasrat Hakim, President

 

Dear Nasrat:

As our wholly-owned subsidiary, Elite Laboratories, Inc. acquired all rights to the only remaining relevant ANDA which is the
subject of the June 1, 2011 Manufacturing and Supply Agreement (the “Agreement”) by and between Mikah Pharma LLC (“Mikah”)
and Elite Pharmaceuticals, Inc. (the “Company”), Mikah and the Company have determined to terminate the Agreement.

Accordingly, the Agreement is hereby terminated. Notwithstanding the foregoing, the indemnification provisions set forth in
Article 12 of the Agreement (the “Surviving Obligation”) survive such termination.

In addition, except for manufacturing lots in progress, amounts accrued and owing to Mikah as of the date of this letter in
relation to the Agreement, and except as may arise under or in connection with this termination and the Surviving Obligation,
the Company and Mikah (each, a “Party”) hereby release and forever discharge each Party and its predecessors, successors
and assigns, employees, shareholders, partners, managing members, officers, directors, agents, subsidiaries, divisions and affiliates
from any and all claims, causes of actions, suits, demands, debts, dues, accounts, bonds, covenants, contracts, agreements, judgments
whatsoever in law or in equity, whether known or unknown, including, but not limited to, any claim arising out of or relating
to the transactions described in the Agreement (other than the Surviving Obligation) which any Party had, now has or which its
heirs, executors, administrators, successors or assigns, or any of them, hereafter can, shall or may have, against the other Party
or such Party's predecessors, successors and assigns, employees, shareholders, partners, managing members, officers, directors,
agents, subsidiaries, divisions and affiliates, for or by reason of any cause, matter or thing whatsoever, whether arising prior
to, on or after the date hereof, provided, however, that the Surviving Obligation shall continue in full force and effect as the
legal, valid and binding obligation of each Party enforceable against each such Party in accordance with its terms.

If the foregoing comports with your understanding, please acknowledge your agreement and approval of the foregoing in the space
provided below and send me an executed copy.

Sincerely,

s/ Carter Ward

Carter Ward, CFO

 

The foregoing is hereby acknowledged and approved as of August
9, 2013.

 

Mikah Pharma LLC

 

By: s/ Nasrat Hakim

Nasrat Hakim, PresidentExhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase
Agreement (this “Agreement”) is dated as of May 3, 2013, between CombiMatrix Corporation, 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

 

1.1           Definitions.
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 Certificate of Designation (as defined herein), and (b) the following terms have the meanings
set forth in this Section 1.1:

 

“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.

 

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

 

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

 

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

 

“Business
Day” means any day except any Saturday, any 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.

 

“Certificate
of Designation” means the Certificate of Designation to be filed prior to the First Closing by the Company with the Secretary
of State of Delaware, in the form of Exhibit A attached hereto.

 

    	1

    	 

    

 

“Closing Date”
means, respectively, the date of the First Closing or the date of the Second Closing, and means the Trading Day on which all of
the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i)
the Purchasers’ obligations to pay the Subscription Amount as to the applicable Closing and (ii) the Company’s obligations
to deliver the Securities as to the applicable Closing, in each case, have been satisfied or waived.

 

“Closing
Dates” means, collectively, the dates of the First Closing and the Second Closing.

 

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

 

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

 

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

 

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

 

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

 

“Company
Counsel” means Dorsey & Whitney LLP, with offices located at 600 Anton Boulevard, Suite 2000, Costa Mesa, California
92626.

 

“Conversion
Price” shall have the meaning ascribed to such term in the Certificate of Designation.

 

“Conversion
Shares” means, collectively, the shares of Common Stock issued and issuable upon conversion of the shares of Series C
Preferred Stock in accordance with the terms of the Certificate of Designation.

 

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

 

“EGS”
means Ellenoff Grossman & Schole LLP, with offices located at 150 East 42nd Street, New York, New York 10017.

 

    	2

    	 

    

 

“Effective
Date” means the earliest of the date that (a) the Registration Statement covering the resale of the Conversion Shares
in question has been declared effective by the Commission, (b) all of the Registrable Securities (as defined in the Registration
Rights Agreement) have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company
to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions
or (c) following the one year anniversary of the Closing Date provided that a holder of Registrable Securities is not an Affiliate
of the Company under Rule 144, all of the Registrable Securities may be sold pursuant to an exemption from registration under Section
4(1) of the Securities Act without volume or manner-of-sale restrictions and Company counsel has delivered to such holders a standing
written opinion that resales may then be made by such holders of the Registrable Securities pursuant to such exemption which opinion
shall be in form and substance reasonably acceptable to such holders.

 

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

 

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

 

“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options or other awards to employees, independent contractors
providing service to the Company, officers or directors of the Company pursuant to any stock or option plan or agreement duly adopted
for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee
of non-employee directors established for such purpose, (b) Securities issued and issuable pursuant to this Agreement and securities
upon the exercise or exchange of or conversion of any Securities issued and issuable hereunder and/or other securities exercisable
or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease
the exercise price, exchange price or conversion price of such securities, (c) securities issued pursuant to Section 3 of the Certificate
of Designation, (d) securities issued to the Company by its Subsidiaries, and (e) securities issued pursuant to acquisitions, mergers,
consolidations or strategic transactions (including licensing and partnering agreements) or purchase of all or substantially all
of the securities or assets of another entity approved by a majority of the disinterested directors of the Company, provided that
any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries,
an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

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

 

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

 

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

 

    	3

    	 

    

 

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

 

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

 

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

 

“Investor
Rights Agreement” shall have the meaning ascribed to such term in Section 4.12(a).

 

“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

 

“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(b).

 

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

 

“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.

 

“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.12(a).

 

“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.

 

“Pharmaceutical
Product” shall have the meaning ascribed to such term in Section 3.1(kk).

 

“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.12(b).

 

“Pro
Rata Portion” shall have the meaning ascribed to such term in Section 4.12(e).

 

“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.

 

“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).

 

    	4

    	 

    

 

“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.

 

“Registration
Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers,
in the form of Exhibit B attached hereto.

 

“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of the Underlying Shares by each Purchaser as provided for in the Registration Rights Agreement.

 

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

 

“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all outstanding
Warrants or conversion in full of all outstanding shares of Series C Preferred Stock, ignoring any conversion or exercise limits
set forth therein, and assuming that any previously unconverted shares of Series C Preferred Stock are held until the third anniversary
of the Closing Date and all dividends are paid in shares of Common Stock until such third anniversary.

 

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

 

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

 

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

 

“Securities”
means the Series C Preferred Stock, the Warrants and the Underlying Shares.

 

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

 

    	5

    	 

    

 

“Series
C Preferred Stock” means the up to 2,400 shares of the Company’s 6% Series C Convertible Preferred Stock issued
hereunder having the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit
A hereto.

 

“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or
any successor entity) from the shareholders of the Company with respect to the transactions contemplated by the Transaction Documents,
including the issuance of all of the Underlying Shares in excess of 19.99% of the issued and outstanding Common Stock on the First
Closing Date.

 

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

 

“Stated
Value” means $1,000 per share of Series C Preferred Stock.

 

“Subscription
Amount” shall mean, as to each Purchaser, the aggregate amount to be paid for the Series C Preferred Stock 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.

 

“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.12(a).

 

“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.12(b).

 

“Subsidiary”
means any subsidiary of the Company as set forth on Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2012, as amended, and shall, where applicable, also include any direct or indirect subsidiary of the Company
formed or acquired after the date hereof.

 

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

 

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

 

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

 

    	6

    	 

    

 

“Transfer
Agent” means Computershare, the current transfer agent of the Company, with a mailing address of 520 Pike Street, Suite
1220, Seattle, Washington 98101 and a facsimile number of (206) 674-3059, and any successor transfer agent of the Company.

 

“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion of the Series C Preferred Stock, upon exercise
of the Warrants, and issued and issuable in lieu of the cash payment of dividends on the Series C Preferred Stock in accordance
with the terms of the Certificate of Designation.

 

“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(b).

 

“Voting
Agreement” means the written agreement, in the form of Exhibit E attached hereto, of all of the officers, directors
and stockholders holding more than 10% of the issued and outstanding shares of Common Stock on the date hereof to vote all Common
Stock over which such Persons have voting control as of the record date for the meeting of stockholders of the Company in favor
of Shareholder Approval, amounting to, in the aggregate, at least 4.95% of the issued and outstanding Common Stock.

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common
Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.

 

“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, which Warrants shall be exercisable 6 months following their issuance and have a term of exercise expiring 5 1⁄2 years
from the applicable Closing, in the form of Exhibit C attached hereto.

 

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

 

    	7

    	 

    

 

ARTICLE II.

 

PURCHASE AND SALE

 

2.1           Closing.
On the Closing Dates, 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 2,400 shares of Series C Preferred Stock with an aggregate Stated Value for each Purchaser
equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and
Warrants as determined pursuant to Section 2.2(a), it being understood that, and as more fully described below, each Purchaser
shall indicate on its signature page the aggregate Subscription Amount to be purchased hereunder by such Purchaser, and such Purchaser
shall purchase Series C Preferred Stock and Warrants for a Subscription Amount equal to 50% of its aggregate Subscription Amount
on the First Closing Date and purchase Series C Preferred Stock and Warrants for a Subscription Amount equal to 50% of its aggregate
Subscription Amount on the Second Closing Date, subject to the conditions set forth herein. Each Purchaser shall deliver to the
Company, via wire transfer, immediately available funds equal to its Subscription Amount as to the applicable Closing and the
Company shall deliver to each Purchaser its respective shares of Series C Preferred Stock and Warrants as determined pursuant
to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the
applicable Closing. The Closings shall take place in two stages as set forth below (respectively, the “First Closing”
and the “Second Closing” and the respective dates thereof, the “First Closing Date” and
the “Second Closing Date”). Upon satisfaction of the covenants and conditions
set forth in Sections 2.2 and 2.3, each Closing shall occur at the offices of EGS or such other location as the parties shall
mutually agree.

 

(a)          First
Closing. The First Closing shall be for up to 50% of the aggregate Subscription Amount subscribed for by all Purchasers hereunder
and shall occur on, or as soon as reasonably practicable following, the date hereof.

 

(b)          Second
Closing. The Second Closing shall be for up to 50% of the aggregate Subscription Amount subscribed for by all Purchasers hereunder
and shall occur within 5 Business Days following the date Shareholder Approval is received and effective.

 

2.2                   Deliveries.

 

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

 

(i)          as
to the First Closing, this Agreement duly executed by the Company;

 

(ii)         a
legal opinion of Company Counsel;

 

(iii)        a
certificate evidencing a number of shares of Series C Preferred Stock equal to such Purchaser’s Subscription Amount as to
the applicable Closing divided by the Stated Value, registered in the name of such Purchaser and evidence of the filing and acceptance
of the Certificate of Designation from the Secretary of State of Delaware;

 

    	8

    	 

    

 

(iv)        as
to the First Closing, a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock
equal to 125% of such Purchaser’s aggregate Subscription Amount as to the First Closing divided by the initial Conversion
Price, with an exercise price equal to $3.77;

 

(v)         as
to the Second Closing, a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock
equal to 125% of such Purchaser’s aggregate Subscription Amount as to the Second Closing divided by the initial Conversion
Price, with an exercise price equal 110% of the market value (as defined by Nasdaq rules) of one share of Common Stock on the
Second Closing Date, subject to adjustment therein;

 

(vi)        as
to the First Closing, the Voting Agreements; and

 

(vii)       as
to the First Closing, the Registration Rights Agreement duly executed by the Company.

 

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

 

(i)          as
to the First Closing, this Agreement duly executed by such Purchaser;

 

(ii)         such
Purchaser’s Subscription Amount as to the applicable Closing, by wire transfer to the account specified in writing by the
Company; and

 

(iii)        as
to the First Closing, the Registration Rights Agreement duly executed by such Purchaser.

 

2.3                   Closing
Conditions.

 

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

 

(i)          the
accuracy in all material respects on the applicable Closing Date of the representations and warranties of the Purchasers contained
herein (unless as of a specific date therein in which case they shall be accurate in all material respects as of such date);

 

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

 

    	9

    	 

    

 

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

 

(iv)        as
to the Second Closing, Shareholder Approval shall have been received and effective.

 

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

 

(i)          the
accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties of the Company
contained herein (unless as of a specific date therein in which case they shall be accurate in all material respects as of such
date);

 

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

 

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

 

(iv)        as
to the Second Closing only, Shareholder Approval shall have been received and effective and such receipt shall have occurred on
or before the 60th day following the First Closing Date;

 

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

 

(vi)        from
the date hereof until the Second Closing Date, the Common Stock shall have been listed or quoted for trading on the Nasdaq Capital
Market; and

 

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

 

    	10

    	 

    

 

ARTICLE
III. 

REPRESENTATIONS AND WARRANTIES

 

3.1         Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be delivered
separately to the Purchasers and shall qualify any representation or warranty made herein to the extent of the disclosure contained
in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties
to each Purchaser:

 

(a)          Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Exhibit 21.1 to the Company’s Annual Report
on Form 10-K for the year ended December 31, 2012, as amended. The Company owns, directly or indirectly, all of the capital stock
or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe
for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the
Transaction Documents shall be disregarded.

 

(b)          Organization
and Qualification.   The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, 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 or
financial condition 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.

 

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

 

(d)          No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (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.

 

(e)          Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.6 of this Agreement, (ii) the filings with the Commission pursuant to the Registration
Rights Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities
and the listing of the Underlying Shares for trading thereon in the time and manner required thereby, (iv) the filing of Form
D with the Commission and such filings as are required to be made under applicable state securities laws, (v) the filing of the
Certificate of Designation with the Delaware Secretary of State and (vi) Shareholder Approval (collectively, the “Required
Approvals”).

 

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(f)          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 at least equal to the Required
Minimum on the date hereof.

 

(g)          Capitalization.
The capitalization of the Company is as set forth in the SEC Reports. The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under
the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee
stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of
the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents which has
not been waived in connection with the transactions contemplated hereby. Except as a result of the purchase and sale of the Securities,
and except as set forth in Schedule 3.1(g) and for stock options and other equity grants to employees made under the Company’s
existing stock plans, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements
by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.
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 duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities
laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Securities other than Required Approvals. There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s stockholders except as contemplated by the Transaction Documents.

 

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

 

(i)          Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there
has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company
stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no material
event, liability, fact, circumstance, occurrence or development has occurred or exists with respect to the Company or its Subsidiaries
or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed
by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly
disclosed at least 1 Trading Day prior to the date that this representation is made.

 

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(j)          Litigation.
Except as set forth in the SEC Reports, 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, to the knowledge
of the Company, 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. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current
or former director or officer of the Company. To the knowledge of the Company, the Commission has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.

 

(k)          Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse Effect. To the knowledge of the Company, none
of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship
with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge
of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement,
or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each
such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing
matters. 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.

 

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

 

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

 

(n)          Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens that 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, (ii)
Liens reflected in the Company’s financial statements and (iii) Liens for the payment of federal, state or other taxes,
for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent
nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in material compliance.

 

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

 

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

 

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

 

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

 

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(s)          Certain
Fees. Except as set forth on Schedule 3.1(s), no brokerage or finder’s fees or commissions are or will be payable
by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank
or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(t)          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. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

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

 

(v)         Registration
Rights. Other than each of the Purchasers and except as set forth on Schedule 3.1(v), no Person has any right to cause
the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

 

(w)        Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating
terminating such registration. Except as set forth in the SEC Reports, the Company has not, in the 12 months preceding the date
hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of such Trading Market. Except as set forth in the SEC
Reports, the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in material compliance
with all such listing and maintenance requirements.

 

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(x)          Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and
the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

 

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

 

(z)          No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated. 

 

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(aa)         Solvency.
Based on the consolidated financial condition of the Company as of each Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to
carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the applicable Closing Date. The SEC Reports
set forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which
the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x)
any liabilities for borrowed money or amounts owed in excess of $500,000 (other than trade accounts payable incurred in the ordinary
course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether
or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties
by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;
and (z) the present value of any lease payments in excess of $500,000 due under leases required to be capitalized in accordance
with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

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

 

(cc)         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. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, the Company has offered the Securities for sale only to the Purchasers and certain other
“accredited investors” within the meaning of Rule 501 under the Securities Act.

 

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

 

(ee)         Accountants.
The Company’s accounting firm is set forth in the SEC Reports. To the knowledge and belief of the Company, such accounting
firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect
to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2013.

 

(ff)         Seniority.
As of each Closing Date, no Indebtedness or other claim against the Company is senior to the Series C Preferred Stock in right
of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured
by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations
(which is senior only as to the property covered thereby).

 

(gg)         No
Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and
the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents.

 

(hh)         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.

 

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(ii)         Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) and 4.15 hereof), it is understood and
acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed,
to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based
on securities issued by the Company or to hold the Securities for any specified term, (ii) past or future open market or other
transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions,
before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities and (iii) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s
length counter-party in any “derivative” transaction. The Company further understands and acknowledges that
(y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding,
including, without limitation, during the periods that the value of the Underlying Shares deliverable with respect to Securities
are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders’ equity
interests in the Company at and after the time that the hedging activities are being conducted.  The Company acknowledges
that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

 

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

 

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(kk)        FDA.
As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal
Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged,
labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical
Product”), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed
by the Company in compliance with all applicable requirements under FDCA and similar laws, rules and regulations relating to registration,
investigational use, premarket clearance, licensure, or application approval, good manufacturing practices, good laboratory practices,
good clinical practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse Effect. There is no pending, completed or, to the Company's knowledge,
threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint,
or investigation) against the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received
any notice, warning letter or other communication from the FDA or any other governmental entity, which (i) contests the premarket
clearance, licensure, registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the testing
of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the recall,
suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any
Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries,
(iv) enjoins production at any facility of the Company or any of its Subsidiaries, (v) enters or proposes to enter into a consent
decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have
a Material Adverse Effect. The properties, business and operations of the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of the FDA.  The Company has not been informed by
the FDA that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed,
produced or marketed by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product
being developed or proposed to be developed by the Company.

 

(ll)         Form
S-3 Eligibility.        The Company is eligible to register the resale of that
number of Underlying Shares permitted by Commission rules and guidance for resale by the Purchaser on Form S-3 promulgated under
the Securities Act.

 

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

 

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

 

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

 

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

 

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

 

3.2           Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the applicable Closing Date to the Company as follows (unless as of a specific date therein):

 

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

 

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(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 in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.

 

(c)          Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants or converts any shares of Series C Preferred Stock or is paid any dividends on the Series C Preferred
Stock in shares of stock, it will be an “accredited investor” as defined in Rule 501(a) under the Securities Act.
Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

 

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

 

(e)          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.

 

(f)          Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not
directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed
any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time
that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.
Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation
set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser
has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute
a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing
of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

 

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(g)          Non-US
Persons. If such Purchaser is not a United States Person, it has satisfied itself as to the full observance of the laws of
its jurisdiction in connection with any invitation to purchase the Securities or any use of this Agreement or any Transaction
Document, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any necessary permits or consents of any governmental authority or similar regulating
body and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale
or transfer of the Securities. Such Purchaser’s payment for, and continued beneficial ownership of the Securities, will
not violate any applicable securities or other Laws of the Purchaser’s jurisdiction.

 

The Company
acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s
right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this
Agreement or the consummation of the transaction contemplated hereby.

 

ARTICLE
IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1         Transfer
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, to the Company or to an Affiliate of a Purchaser that is
an “accredited investor” 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 the other Transaction Documents and shall have the rights
and obligations of a Purchaser under this Agreement and the other Transaction Documents.

 

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(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 [EXERCISABLE] [CONVERTIBLE]] 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 [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT 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 to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged
or secured Securities to the pledgees or secured parties. 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, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement,
the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights
Agreement) thereunder.

 

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(c)          Certificates
evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while
a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities
Act, (ii) following any sale of such Underlying Shares pursuant to Rule 144 and delivery by Purchaser of customary representation
letters regarding Rule 144 compliance and a copy of Form 144 filed by Purchaser, (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 requirements
of Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions thereunder, and Purchaser delivers a
customary representation letter or (iv) if such legend is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue
a legal opinion to the Transfer Agent promptly if required by the Transfer Agent to effect the removal of the legend hereunder.
If all or any shares of Series C Preferred Stock are converted or any portion of a Warrant is exercised at a time when there is
an effective registration statement to cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under
Rule 144 without the requirement for the Company to be in compliance with the current public information requirements of Rule 144
as to such Underlying Shares and without volume or manner-of-sale restrictions thereunder or 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) then such Underlying Shares shall be issued free of all legends after the Company has received a customary representation
letter from Purchaser. The Company agrees that following the Effective Date or at such time as such legend is no longer required
under this Section 4.1(c), it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the
Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend together with a
customary representation letter and, if applicable, a copy of the filed Form 144 (such third Trading Day, the “Legend
Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free
from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer
Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates for Underlying Shares subject to legend
removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s
prime broker with the Depository Trust Company System as directed by such Purchaser.

 

(d)          In
addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $2,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities
are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading
Day for each Trading Day after the second Trading Day following the Legend Removal Date until such certificate is delivered without
a legend. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue
all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive
relief.

 

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(e)          Each
Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities
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.

 

4.2         Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its
obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant
to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive
effect that such issuance may have on the ownership of the other stockholders of the Company.

 

4.3         Furnishing
of Information; Public Information. 

 

(a)           If the Common Stock is not registered under Section 12(b) or 12(g) of the Exchange Act on the date hereof, the Company agrees
to cause the Common Stock to be registered under Section 12(g) of the Exchange Act on or before the 60th calendar day
following the date hereof. Until the time that no Purchaser owns Securities, the Company covenants to maintain the registration
of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act. 

 

(b)           At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that
all of the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise
without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public
information requirement under Rule 144(c) and a Registration Statement covering the resale of the Underlying Shares relating to
such Securities is not at such time effective (a “Public Information Failure”) then, in addition to such Purchaser’s
other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by
reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2.0%)
of the aggregate Subscription Amount of such Purchaser’s Securities on the day of a Public Information Failure and on every
thirtieth (30th) day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (a) the
date such Public Information Failure is cured and (b) such time that such public information is no longer required  for the
Purchasers to transfer the Underlying Shares pursuant to Rule 144.  The payments to which a Purchaser shall be entitled pursuant
to this Section 4.3(b) are referred to herein as “Public Information Failure Payments.”  Public Information
Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information
Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to
the Public Information Failure Payments is cured.  In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month
(prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages
for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific performance and/or injunctive relief. Notwithstanding anything herein
to the contrary, in no event shall the aggregate amount of liquidated damages payable hereunder exceed 8% of a Purchaser’s
aggregate Subscription Amount.

 

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

 

4.5           Conversion
and Exercise Procedures. Each of the form of Notice of Exercise included in the Warrants and the form of Notice of Conversion
included in the Certificate of Designation set forth the totality of the procedures required of the Purchasers in order to exercise
the Warrants or convert the Series C Preferred Stock. Except as required in Section 4.1(c), no additional legal opinion, other
information or instructions shall be required of the Purchasers to exercise their Warrants or convert their Series C Preferred
Stock. The Company shall honor exercises of the Warrants and conversions of the Series C Preferred Stock and shall deliver Underlying
Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

 

4.6           Securities
Laws Disclosure; Publicity. The Company shall (a) by 9:00 a.m. (New York City time) on the Trading Day immediately following
the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby and (b) within 4
Trading Days of the date hereof, file a Current Report on Form 8-K disclosing such terms, including the Transaction Documents
as exhibits thereto. From and after the issuance of such press release, the Company represents to the Purchaser that it shall
have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries,
or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make
any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without
the prior consent of the Purchaser holding a majority of the Securities, with respect to any press release of the Company, which
consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing
party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing
with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a)
as required by federal securities law in connection with (i) the Form 8-K described above, any proxy statement or any registration
statement contemplated by the Registration Rights Agreement and (ii) the filing of final Transaction Documents with the Commission
and (b) to the extent such disclosure is required by law or Trading Market regulations or request, in which case the Company shall
provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

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

 

4.8           Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by
the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide
any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information,
unless prior thereto such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality
and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant
in effecting transactions in securities of the Company.

 

4.9           Use
of Proceeds. Except as set forth on Schedule 4.9 attached hereto, the Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and shall not use such proceeds: (a) for the satisfaction of any portion
of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior
practices), (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding
litigation or (d) in violation of FCPA or OFAC regulations. 

 

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4.10        Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such
Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants
or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against
the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is
not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such
Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence,
willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may
be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will
not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s
prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that
a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents or attributable to
Purchaser Party’s fraud, gross negligence, willful misconduct or malfeasance. The indemnification
required by this Section 4.10 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to
any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may
be subject to pursuant to law.

 

4.11        Reservation
and Listing of Securities.

 

(a)          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.

 

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(b)          If,
on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than 130% of (i) the
Required Minimum on such date, minus (ii) the number of shares of Common Stock previously issued pursuant to the Transaction Documents,
then the Board of Directors shall use commercially reasonable efforts to amend the Company’s certificate or articles of incorporation
to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time (minus the
number of shares of Common Stock previously issued pursuant to the Transaction Documents), as soon as possible and in any event
not later than the 75th day after such date; provided that the Company will not be required at any time to authorize
a number of shares of Common Stock greater than the maximum remaining number of shares of Common Stock that could possibly be issued
after such time pursuant to the Transaction Documents.

 

(c)          The
Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum
on the date of such application, (ii) take all commercially reasonable steps to cause such shares of Common Stock to be approved
for listing or quotation on such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such
listing application and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required
Minimum on such date on such Trading Market or another Trading Market. In addition, for the purpose of obtaining Shareholder Approval,
the Company shall prepare and file a proxy statement with the Commission within 20 days following the First Closing Date and shall
hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) at the earliest practical date
after the date hereof, but in any event on or before the 60th day after the First Closing Date, with the recommendation of the
Company’s Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders
in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed
proxyholders shall vote their proxies in favor of such proposal. If the Company does not obtain Shareholder Approval at the first
meeting, the Company shall call a meeting every four months thereafter to seek Shareholder Approval until the earlier of the date
Shareholder Approval is obtained or the Series C Preferred Stock is no longer outstanding. Each Purchaser agrees not to vote any
Underlying Shares held by it in favor of the Shareholder Approval.

 

4.12        Participation
in Future Financing.

 

(a)          Subject
to the prior rights of first refusal set forth in (i) that certain Investors Rights Agreement dated as of April 1, 2011 (the “Investors
Rights Agreement”), (ii) that certain Securities Purchase Agreement, dated as of September 28, 2012, and (iii) that certain
Securities Purchase Agreement, dated as of March 19, 2013, from the date hereof until the date that is the 6 month anniversary
of the Second Closing Date, upon any issuance by the Company or any of its Subsidiaries of Common Stock, Common Stock Equivalents
for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent Financing”), each Purchaser
shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the
maximum aggregate amount of 100% of such Subsequent Financing among all Purchasers, “Participation Maximum”)
on the same terms, conditions and price provided for in the Subsequent Financing.

 

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(b)          At
least five (5) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The
Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of
proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed
to be effected and shall include a term sheet or similar document relating thereto as an attachment.

 

(c)          Any
Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice that
such Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and representing
and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no such notice from a Purchaser as of such fifth (5th) Trading Day, such Purchaser
shall be deemed to have notified the Company that it does not elect to participate.

 

(d)          If
by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received
the Pre-Notice, notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their
“accredited investor” designees to participate) is, in the aggregate, less than the total amount of the Subsequent
Financing, then the Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set
forth in the Subsequent Financing Notice.

 

(e)          If
by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice,
the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of that
amount of the Participation Maximum being purchased by the Purchasers. “Pro Rata Portion” means the ratio of
(x) the Subscription Amount of Securities purchased on the Closing Dates by a Purchaser participating under this Section 4.12 and
(y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Dates by all Purchasers participating
under this Section 4.12.

 

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(f)         The
Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of
participation set forth above in this Section 4.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice.

 

(g)         The
Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree to
any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination
of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of
such Purchaser.

 

(h)         Notwithstanding
anything to the contrary in this Section 4.12 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the Subsequent
Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to the Subsequent
Financing has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser, such
transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession of any material,
non-public information with respect to the Company or any of its Subsidiaries. 

 

(i)          Notwithstanding
the foregoing, this Section 4.12 shall not apply in respect of (i) an Exempt Issuance, or (ii) an underwritten public offering
of Common Stock.         

 

4.13        Subsequent
Equity Sales.

 

(a)          From
the date hereof until the later of (i) September 20, 2013 and (ii) the date that is 30 days following the date on which no Series
C Preferred Stock remains outstanding, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or
announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents.

 

(b)          From
the date hereof until such time as no Purchaser holds any of the Series C Preferred Stock or Warrants, the Company shall be prohibited
from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or
Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable
or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares
of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market
for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company
may issue securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company
to preclude any such issuance, which remedy shall be in addition to any right to collect damages.

 

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(c)          Unless
Shareholder Approval has been obtained and deemed effective, neither the Company nor any Subsidiary shall make any issuance whatsoever
of Common Stock or Common Stock Equivalents until no Preferred Stock or Warrants remain outstanding. In addition, until the date
on which less than 7.5% of the aggregate Warrants issued at the Closings remain outstanding, the Company shall not issue any Common
Stock or Common Stock Equivalents at an effective price per share that is less than the then effective Exercise Price (as defined
in the Warrants). Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.

 

(d)          Notwithstanding
the foregoing, this Section 4.13 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall
be an Exempt Issuance.

 

4.14         Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration
is also offered to all of the parties to this Agreement. 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.

 

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4.15         Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will (i) execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending
at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release
as described in Section 4.6 or (ii) execute any sales, including any Short Sales (but excluding the maintenance of any existing
Short Sales), during the 3 Trading Days prior the Second Closing Date, other than (a) any sales of shares of Common Stock held
long by the Purchaser prior to the 3rd Trading Day preceding the Second Closing Date and (b) any sales, including any Short Sales,
made where a corresponding Notice of Conversion or Notice of Exercise is tendered to the Company within 3 Trading Days of such
sale and the shares received upon such conversion or exercise are used to close out such sale (a “Prohibited Short Sale”). 
Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated
by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.6, such
Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the
Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding anything contained in this
Agreement to the contrary, other than a Prohibited Short Sale or other than pursuant to Section 4.8, the Company expressly acknowledges
and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions
in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.6, (ii) no Purchaser shall be restricted or prohibited from effecting
any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in
Section 4.6 and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance
of the initial press release as described in Section 4.6. Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

 

4.16         Form
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 Closings 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.

 

4.17         Capital
Changes. Until the one year anniversary of the Effective Date, the Company shall not undertake a reverse or forward stock
split or reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority in interest
of the shares of Series C Preferred Stock, unless required to maintain the listing of the Common Stock on the Nasdaq Stock Market.

 

4.18         Most
Favored Nation Provision. From the date hereof until such time as no Purchaser holds any of the Series C Preferred Stock or
Warrants, in the event that the Company issues or sells any Common Stock or Common Stock Equivalents, if a Purchaser then holding
Securities reasonably believes that any of the material terms and conditions appurtenant to such issuance or sale are more favorable
to such investors than are the terms and conditions granted to the Purchasers hereunder, upon notice to the Company by such Purchaser
within five Trading Days after disclosure of such issuance or sale, the Company shall amend the terms of this transaction as to
such Purchaser only so as to give such Purchaser the benefit of such more favorable terms or conditions. This Section 4.18 shall
not apply with respect to an Exempt Issuance. The Company shall provide each Purchaser with notice of any such issuance or sale
in the manner for disclosure of Subsequent Financings set forth in Section 4.12.

 

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4.19         Amendments
to Investor Rights Agreement. From the date hereof until the date that is the 12-month anniversary of the Effective Date, without
prior written consent of the Purchasers holding at least 67% in interest of the Securities then outstanding, the Company shall
not (i) amend or alter the Investors Rights Agreement or (ii) except with respect to an Exempt Issuance or in accordance with the
terms of the Investors Rights Agreement as in effect as of the date hereof, issue additional shares of Common Stock or Common Stock
Equivalents to the investors who are a party to the Investors Rights Agreement.

 

ARTICLE
V.

MISCELLANEOUS

 

5.1           Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the First
Closing has not been consummated on or before May 10, 2013; provided, however, that such termination will not affect
the right of any party to sue for any breach by any other party (or parties).

 

5.2           Fees
and Expenses. At the First Closing, the Company has agreed to reimburse Alpha Capital (“Alpha”) the non-accountable
sum of $30,000 for its legal fees and expenses and $20,000 for administrative and due diligence fees and expenses. The Company
shall deliver to each Purchaser, prior to the Closing, a completed and executed copy of the Closing Statement, attached hereto
as Annex A. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent
fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company
and any conversion or exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with
the delivery of any Securities to the Purchasers.

 

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

 

5.4           Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the 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 Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the third (3rd) Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

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5.5           Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed
by the Company and the Purchasers holding at least 67% in interest of the Securities then outstanding. 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.

 

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

 

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

 

5.8           No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.10.

 

5.9           Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including
with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any 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, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to
the obligations of the Company under Section 4.10, the prevailing party in such action, suit 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.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.17         Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim,
and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at
any time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order
to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents
for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum
Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of
them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction
Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to
the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof,
the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from
the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever,
interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction
Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded
to the Company, the manner of handling such excess to be at such Purchaser’s election.

 

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5.18         Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each
Purchaser and its respective counsel have chosen to communicate with the Company through EGS. EGS does not represent any of the
Purchasers other than Alpha. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for
the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.

 

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

 

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

 

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

 

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

 

(Signature Pages Follow)

 

    	43

    	 

    

 

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.

 

	combimatrix corporation	 	Address for Notice:
	 	 	 	 
	By:	 	 	Fax:
	 	Name:	 	 
	 	Title:	 	 
	With a copy to (which shall not constitute notice):	 	 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

    	44

    	 

    

 

[PURCHASER SIGNATURE PAGES TO CBMX 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 to Purchaser:

 

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

 

First Closing Subscription Amount: $____________

 

First Closing Shares of Series C Preferred Stock:____________

 

First Closing Warrant Shares:________________

 

Second Closing Subscription Amount: $____________

 

Second Closing Shares of Series C Preferred Stock:____________

 

Second Closing Warrant Shares:________________

 

EIN Number: _______________________

 

[SIGNATURE PAGES CONTINUE]

 

    	45

    	 

    

 

Annex A 

 

CLOSING STATEMENT

 

Pursuant to the attached Securities Purchase
Agreement, dated as of the date hereto, the purchasers shall purchase up to $2,400,000 of Series C Preferred Stock and Warrants
from Combimatrix Corporation, 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:    May ___, 2013

 

 

 

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

 

	combimatrix corporation	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 

 

	WIRE INSTRUCTIONS:	 
	 	 	 
	To: 	 	 
	 	 	 
	To: 	 	 

 

    	46

    	 

    

 

EXHIBIT A

 

combimatrix
corporation

 

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES C
6% CONVERTIBLE PREFERRED STOCK

 

PURSUANT
TO SECTION 151 OF THE 

Delaware
GENERAL CORPORATION LAW

 

The undersigned, Mark
McDonough and Scott R. Burell, do hereby certify that:

 

1. They are the President
and Secretary, respectively, of CombiMatrix Corporation, a Delaware corporation (the “Corporation”).

 

2. The Corporation
is authorized to issue 5,000,000 shares of preferred stock, ____ of which are issued as Series B 6% Convertible Preferred Stock.

 

3. The following resolutions
were duly adopted by the board of directors of the Corporation (the “Board of Directors”):

 

WHEREAS, the certificate
of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting of 5,000,000
shares, $0.001 par value per share, issuable from time to time in one or more series;

 

WHEREAS, the Board
of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption
and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and
the designation thereof, of any of them; and

 

WHEREAS, it is the
desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other
matters relating to a series of the preferred stock, which shall consist of up to 2,500 shares of the preferred stock which the
Corporation has the authority to issue, as follows:

 

NOW, THEREFORE, BE
IT RESOLVED, that the Board of Directors does hereby designate and provide for the creation and issuance of a series of preferred
stock and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series of preferred
stock as follows:

 

    	47

    	 

    

 

TERMS OF SERIES C PREFERRED STOCK

 

Section 1.          Definitions.
For the purposes hereof, the following terms shall have the following meanings:

 

“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 of the Securities Act.

 

“Alternate
Consideration” shall have the meaning set forth in Section 7(e).

 

“Base
Conversion Price” shall have the meaning set forth in Section 7(b).

 

“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 6(d).

 

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

 

“Business
Day” means any day except any Saturday, any 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.

 

“Buy-In”
shall have the meaning set forth in Section 6(c)(iv).

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise)
of in excess of 40% of the voting securities of the Corporation (other than by means of conversion or exercise of Series C Preferred
Stock and the Securities issued together with the Series C Preferred Stock), (b) the Corporation merges into or consolidates with
any other Person, or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction,
the stockholders of the Corporation immediately prior to such transaction own less than 60% of the aggregate voting power of the
Corporation or the successor entity of such transaction, (c) the Corporation sells or transfers all or substantially all of its
assets to another Person and the stockholders of the Corporation immediately prior to such transaction own less than 60% of the
aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a one
year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals
who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the
Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board
of Directors who are members on the Original Issue Date), or (e) the execution by the Corporation of an agreement to which the
Corporation is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

 

    	48

    	 

    

 

“Closing
Date” means, respectively, the date of the First Closing or the date of the Second Closing, and means the Trading Day
on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions
precedent to (i) the Purchasers’ obligations to pay the Subscription Amount as to the applicable Closing and (ii) the Corporation’s
obligations to deliver the Securities as to the applicable Closing, in each case, have been satisfied or waived.

 

“Closing Dates” means,
collectively, the dates of the First Closing and the Second Closing.

 

“Closing(s)”
means the closing(s) of the purchase and sale of the Securities pursuant to Section 2.1 of the Purchase Agreement.

Commission”
means the United States Securities and Exchange Commission.

 

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

 

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

 

“Conversion
Amount” means the sum of the Stated Value at issue.

 

“Conversion
Date” shall have the meaning set forth in Section 6(a).

 

“Conversion
Price” shall have the meaning set forth in Section 6(b).

 

“Conversion
Shares” means, collectively, the shares of Common Stock issued and issuable upon conversion of the shares of Series C
Preferred Stock in accordance with the terms hereof.

 

“Conversion
Shares Registration Statement” means one or more registration statements that registers the resale of some or all of
the Conversion Shares of the Holders, who shall be named as “selling stockholders” therein and meets the requirements
of the Registration Rights Agreement.

 

“Dilutive
Issuance” shall have the meaning set forth in Section 7(b).

 

“Dilutive
Issuance Notice” shall have the meaning set forth in Section 7(b).

 

    	49

    	 

    

 

“Dividend
Conversion Rate” means 80% of the average of the VWAPs for the 5 consecutive Trading
Days ending on the Trading Day that is immediately prior to the applicable Dividend Payment Date.

 

“Dividend
Conversion Shares” shall have the meaning set forth in Section 3(a).

 

“Dividend
Notice Period” shall have the meaning set forth in Section 3(a).

 

“Dividend
Payment Date” shall have the meaning set forth in Section 3(a).

 

“Dividend
Share Amount” shall have the meaning set forth in Section 3(a).

 

“Effective
Date” means each date that a Conversion Shares Registration Statement filed by the Corporation pursuant to the Registration
Rights Agreement is declared effective by the Commission.

 

“Equity
Conditions” means, during the period in question, (a) the
Corporation shall have duly honored all conversions scheduled to occur or occurring by virtue of one or more Notices of Conversion
of the applicable Holder on or prior to the dates so requested or required, if any, (b) the Corporation shall have paid all liquidated
damages and other amounts owing and then lawfully payable under this Certificate of Designation to the applicable Holder in respect
of the Series C Preferred Stock, (c)(i) there is an effective Conversion Shares Registration Statement pursuant to which
the Holders are permitted to utilize the prospectus thereunder to resell all of the shares of Common Stock issued and issuable
pursuant to the then outstanding Series C Preferred Stock (including, all Conversion Shares, Warrant Shares and shares issuable
in lieu of cash payments of dividends, and the Corporation believes, in good faith, that such effectiveness will continue uninterrupted
for the foreseeable future) permitted by the Commission to be resold thereunder or (ii) all of the Underlying Shares may be resold
pursuant to Rule 144 without volume or manner-of-sale restrictions or current public information requirements as determined by
the counsel to the Corporation, (d) the Common Stock is trading on a Trading Market (other than the OTC Bulletin Board) and all
of the Underlying Shares are listed or quoted for trading on such Trading Market (and the Corporation believes, in good faith,
that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient
number of authorized, but unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the Underlying Shares,
(f) Shareholder Approval has been obtained, (g) the issuance of the shares in question to the applicable Holder would not violate
the limitations set forth in Section 6(d) herein, (h) there has been
no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated,
(i) the applicable Holder is not in possession of any information provided by the Corporation that constitutes, or may constitute,
material non-public information, and (j) for each Trading Day in a period of 20 consecutive Trading Days prior to the applicable
date in question, the daily dollar trading volume for the Common Stock on the principal Trading Market exceeds $75,000 per Trading
Day.

 

    	50

    	 

    

 

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

 

“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options or other awards to employees, independent contractors
providing service to the Corporation, officers or directors of the Corporation pursuant to any stock or option plan or agreement
duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members
of a committee of non-employee directors established for such purpose, (b) Securities issued and issuable pursuant to the Purchase
Agreement and securities upon the exercise or exchange of or conversion of any Securities issued and issuable pursuant to the Purchase
Agreement and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding
on the date of the Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement
to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities,
(c) securities issued pursuant to Section 3 of the Certificate of Designation, (d) securities issued to the Corporation by its
Subsidiaries, and (e) securities issued pursuant to acquisitions, mergers, consolidations or strategic transactions (including
licensing and partnering agreements) or purchase of all or substantially all of the securities or assets of another entity approved
by a majority of the disinterested directors of the Corporation, provided that any such issuance shall only be to a Person (or
to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in
a business synergistic with the business of the Corporation and shall provide to the Corporation additional benefits in addition
to the investment of funds, but shall not include a transaction in which the Corporation is issuing securities primarily for the
purpose of raising capital or to an entity whose primary business is investing in securities.

 

“Fundamental
Transaction” shall have the meaning set forth in Section 7(e).

 

“GAAP”
means United States generally accepted accounting principles.

 

“Holder”
means the Persons who hold the Series C Preferred Stock at any given time.

 

“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities
which are explicitly senior or pari passu to the Series C Preferred Stock in dividend rights or liquidation preference.

 

“Liquidation”
shall have the meaning set forth in Section 5.

 

“New
York Courts” shall have the meaning set forth in Section 11(d).

 

“Notice
of Conversion” shall have the meaning set forth in Section 6(a).

 

    	51

    	 

    

 

“Original
Issue Date” means the date of the first issuance of any shares of the Series C Preferred Stock regardless of the number
of transfers of any particular shares of Series C Preferred Stock and regardless of the number of certificates which may be issued
to evidence such Series C Preferred Stock.

 

“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.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of May ___, 2013, among the Corporation and the original
Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the
Corporation and the original Holders, in the form of Exhibit B attached to the Purchase Agreement.

 

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

 

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

 

“Securities”
means the Series C Preferred Stock, the Warrants and the Underlying Shares.

 

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

 

“Series
A Preferred Stock” means the Series A 6% Convertible Preferred Stock of the Corporation.

 

“Series
B Preferred Stock” means the Series B 6% Convertible Preferred Stock of the Corporation

 

“Series
C Preferred Stock” shall have the meaning set forth in Section 2.

 

“Share
Delivery Date” shall have the meaning set forth in Section 6(c).

 

“Stated
Value” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.

 

    	52

    	 

    

 

“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or
any successor entity) from the shareholders of the Corporation with respect to the transactions contemplated by the Transaction
Documents, including the issuance of all of the Underlying Shares in excess of 19.99% of the issued and outstanding Common Stock
on the First Closing Date.

 

“Subscription
Amount” shall mean, as to each Holder, the aggregate amount to be paid for the Series C Preferred Stock purchased pursuant
to the Purchase Agreement as specified below such Holder’s name on the signature page of the Purchase Agreement and next
to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

 

“Subsidiary”
means any subsidiary of the Corporation as set forth on Exhibit 21.1 to the Corporation’s Annual Report on Form 10-K for
the year ended December 31, 2012, as amended, and shall, where applicable, also include any direct or indirect subsidiary of the
Corporation formed or acquired after the date of the Purchase Agreement.

“Successor
Entity” shall have the meaning set forth in Section 7(e).

 

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

 

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

 

“Transaction
Documents” means this Certificate of Designation, the Purchase Agreement, the Warrants, the Registration Rights Agreement,
the Voting Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection
with the transactions contemplated pursuant to the Purchase Agreement.

 

“Transfer
Agent” means Computershare, the current transfer agent of the Corporation with a mailing address of 520 Pike Street,
Suite 1220, Seattle, Washington 98101 and a facsimile number of (206) 674-3059, and any successor transfer agent of the Corporation.

 

“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion of the Series C Preferred Stock, upon exercise
of the Warrants and issued and issuable in lieu of the cash payment of dividends on the Series C Preferred Stock in accordance
with the terms of this Certificate of Designation.

 

“Voting
Agreement” means the written agreement, in the form of Exhibit E attached to the Purchase Agreement, of all of
the officers, directors and stockholders holding more than 10% of the issued and outstanding shares of Common Stock on the date
hereof to vote all Common Stock over which such Persons have voting control as of the record date for the meeting of stockholders
of the Corporation, amounting to, in the aggregate, at least 4.95% of the issued and outstanding Common Stock.

 

    	53

    	 

    

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board,
(c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are
then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the
Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Corporation, the fees and
expenses of which shall be paid by the Corporation.

 

“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
of the Purchase Agreement, which Warrants shall be exercisable 6 months following their issuance and have a term of exercise expiring
5 1⁄2 years from the applicable Closing, in the form of Exhibit C attached of the Purchase Agreement.

 

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

 

Section
2.         Designation, Amount and Par Value. The series of preferred stock created hereunder shall be designated as its
Series C 6% Convertible Preferred Stock (the “Series C Preferred Stock”) and the number of shares so designated
shall be 2,500 (which shall not be subject to increase without the written consent of the Holders of 67% of the Series C Preferred
Stock). Each share of Series C Preferred Stock shall have a par value of $0.001 per share and a stated value equal to $1,000, subject
to increase set forth in Section 3 below (the “Stated Value”).

 

    	54

    	 

    

 

Section
3.          Dividends.

 

a)         Dividends
in Cash or in Kind. Holders shall be entitled to receive, and the Corporation shall pay, cumulative dividends at the rate per
share (as a percentage of the Stated Value per share) of 6% per annum, which rate shall increase by 1% on the date of each anniversary
of the First Closing Date up to a maximum rate of 10% per annum. Such dividends shall be payable semi-annually on June 30
and December 31, beginning on the first such date after the Original Issue Date and on each Conversion Date (with respect only
to Series C Preferred Stock being converted) (each such date, a “Dividend Payment Date”) (if any Dividend Payment
Date is not a Trading Day, the applicable payment shall be due on the next succeeding Trading Day) in cash out of legally available
funds, or at the Corporation’s option and only after Shareholder Approval has been obtained, in duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock as set forth in this Section 3(a), or a combination thereof (the dollar
amount to be paid in shares of Common Stock, the “Dividend Share Amount”). The form of dividend payments to
each Holder shall be determined in the following order of priority: (i) if funds are legally available for the payment of dividends
and the Equity Conditions have not been met during the 5 consecutive Trading Days immediately prior to the applicable Dividend
Payment Date or Conversion Date (the “Dividend Notice Period”), in cash only, (ii) if funds are legally available
for the payment of dividends and the Equity Conditions have been met during the Dividend Notice Period, at the sole election of
the Corporation, in any combination of cash or shares of Common Stock which shall be valued solely for such purpose at 80% of the
average of the VWAPs for the 5 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable Dividend
Payment Date or Conversion Date, (iii) if funds are not legally available for the payment of dividends and the Equity Conditions
have been met during the Dividend Notice Period, in shares of Common Stock which shall be valued solely for such purpose at 80%
of the average of the VWAPs for the 5 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable
Dividend Payment Date or Conversion Date, (iv) if funds are not legally available for the payment of dividends and the Equity Condition
relating to an effective Conversion Shares Registration Statement has been waived by such Holder, as to such Holder only, in unregistered
shares of Common Stock (but only if Shareholder Approval has been obtained) which shall be valued solely for such purpose at 80%
of the average of the VWAPs for the 5 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable
Dividend Payment Date or Conversion Date, and (v) if funds are not legally available for the payment of dividends and the Equity
Conditions have not been met during the Dividend Notice Period, then, at the election of such Holder, such dividends shall accrue
to the next applicable Dividend Payment or Conversion Date or shall be accreted to, and increase, the outstanding Stated Value.
In the event the Corporation notifies the Holders that it will pay dividends in whole or in part in shares of Common Stock based
on its good faith and reasonable belief that the Corporation it will be in compliance with the Equity Conditions during the Dividend
Notice Period, and the Corporation determines on or before the first day of the dividend notice period that it will not be in compliance
with the Equity Conditions, it shall so notify the Holders and each holder may elect to receive Common Stock or cash. The Holders
shall have the same rights and remedies with respect to the delivery of any such shares as if such shares were being issued pursuant
to Section 6.

 

b)         Corporation’s
Ability to Pay Dividends in Cash or Kind. On each Closing Date, the Corporation shall have notified the Holders whether or
not it may legally pay cash dividends as of each Closing Date. The Corporation shall promptly notify the Holders at any time the
Corporation shall become able or unable, as the case may be, to legally pay cash dividends. If at any time the Corporation has
the right to pay dividends in cash or shares of Common Stock, the Corporation must provide the Holders with at least 20 Trading
Days’ notice of its election to pay a regularly scheduled dividend in shares of Common Stock (the Corporation may indicate
in such notice that the election contained in such notice shall continue for later periods until revised by a subsequent notice).
The aggregate number of shares of Common Stock otherwise issuable to a Holder on a Dividend Payment Date shall be reduced by the
number of shares of Common Stock previously issued to such Holder in connection with such Dividend Payment Date.

 

    	55

    	 

    

 

c)         Dividend
Calculations. Dividends on the Series C Preferred Stock shall be calculated on the basis of a 360-day year, consisting of twelve
30 calendar day periods, and shall accrue daily commencing on the Original Issue Date, and shall be deemed to accrue from such
date whether or not earned or declared and whether or not there are profits, surplus or other funds of the Corporation legally
available for the payment of dividends. Payment of dividends in shares of Common Stock shall otherwise occur pursuant to Section
6(c)(i) herein and, solely for purposes of the payment of dividends in shares, the Dividend Payment Date shall be deemed the Conversion
Date. Dividends shall cease to accrue with respect to any Series C Preferred Stock converted, provided that the Corporation actually
delivers the Conversion Shares within the time period required by Section 6(c)(i) herein, in which case dividends shall cease to
accrue with respect to such converted Series C Preferred Stock on the date the Corporation actually delivers the Conversion Shares.
Except as otherwise provided herein, if at any time the Corporation pays dividends partially in cash and partially in shares, then
such payment shall be distributed ratably among the Holders based upon the number of shares of Series C Preferred Stock held by
each Holder on such Dividend Payment Date.

 

d)         Late
Fees. If funds are legally available for the payment of cash dividends and the Corporation is required to or elects to pay
dividends in cash, then such cash dividends that are not paid within three Trading Days following a Dividend Payment Date shall
continue to accrue and shall entail a late fee, which must be paid in cash, at the rate of 18% per annum or the lesser rate permitted
by applicable law which shall accrue daily from the Dividend Payment Date through and including the date of actual payment in full.

 

e)         Other
Securities. So long as any Series C Preferred Stock shall remain outstanding, neither the Corporation nor any Subsidiary thereof
shall redeem, purchase or otherwise acquire directly or indirectly any Junior Securities. So long as any Series C Preferred Stock
shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall directly or indirectly pay or declare any dividend
or make any distribution upon (other than a dividend or distribution described in Section 6 or dividends due and paid in the ordinary
course on preferred stock of the Corporation at such times when the Corporation is in compliance with its payment and other obligations
hereunder), nor shall any distribution be made in respect of, any Junior Securities as long as any dividends due on the Series
C Preferred Stock remain unpaid, nor shall any monies be set aside for or applied to the purchase or redemption (through a sinking
fund or otherwise) of any Junior Securities or shares pari passu with the Series C Preferred Stock.

 

    	56

    	 

    

 

f)         Special
Reserves. The Corporation acknowledges and agrees that the capital of the Corporation (as such term is used in Section 154
of the Delaware General Corporation Law) in respect of the Series C Preferred Stock and any future issuances of the Corporation’s
capital stock shall be equal to the aggregate par value of such Series C Preferred Stock or capital stock, as the case may be,
and that, on or after the date of the Purchase Agreement, it shall not increase the stated capital of the Corporation with respect
to any shares of the Corporation’s capital stock issued and outstanding on such date. The Corporation also acknowledges and
agrees that it shall not create any special reserves under Section 171 of the Delaware General Corporation Law without the prior
written consent of each Holder.

 

Section 4.          Voting
Rights. Except as otherwise provided herein or as otherwise required by law, the Series C Preferred Stock shall have no voting
rights. However, as long as any shares of Series C Preferred Stock are outstanding, the Corporation shall not, without the affirmative
vote of the Holders of a majority of the then outstanding shares of the Series C Preferred Stock, (a) alter or change adversely
the powers, preferences or rights given to the Series C Preferred Stock or alter or amend this Certificate of Designation, (b)
authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined
in Section 5) senior to, or otherwise pari passu with, the Series C Preferred Stock, (c) amend its certificate of
incorporation or other charter documents in any manner that adversely affects any rights of the Series C Preferred Stock, (d) increase
the number of authorized shares of Series C Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.

 

Section 5.          Liquidation.
Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”),
the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the
Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon
under this Certificate of Designation, for each share of Series C Preferred Stock after any distribution or payment to the holders
of the Series A Preferred Stock and the Series B Preferred Stock and before any distribution or payment shall be made to the holders
of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire
assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts
that would be payable on such shares if all amounts payable thereon were paid in full. A Fundamental Transaction or Change of Control
Transaction shall be deemed a Liquidation. The Corporation shall mail written notice of any such Liquidation, not less than 45
days prior to the payment date stated therein, to each Holder.

 

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Section 6.          Conversion.

 

a)         Conversions
at Option of Holder. After Shareholder Approval has been obtained, each share of Series C Preferred Stock shall be convertible,
at any time and from time to time at the option of the Holder thereof, into that number of shares of Common Stock (subject to the
limitations set forth in Section 6(d)) determined by dividing the Stated Value of such share of Series C Preferred Stock by the
Conversion Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto
as Annex A (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares of
Series C Preferred Stock to be converted, the number of shares of Series C Preferred Stock owned prior to the conversion at issue,
the number of shares of Series C Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion
is to be effected, which date may not be prior to the date the applicable Holder delivers by facsimile such Notice of Conversion
to the Corporation (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion,
the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. The calculations
and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions
of shares of Series C Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing the shares of
Series C Preferred Stock to the Corporation unless all of the shares of Series C Preferred Stock represented thereby are so converted,
in which case such Holder shall deliver the certificate representing such shares of Series C Preferred Stock promptly following
the Conversion Date at issue. Shares of Series C Preferred Stock converted into Common Stock or redeemed in accordance with the
terms hereof shall be canceled and shall not be reissued.

 

b)         Conversion
Price. The conversion price for the Series C Preferred Stock shall equal $3.05, subject to adjustment herein (the “Conversion
Price”). In addition, on the Second Closing Date, the Conversion Price shall be reduced, and only reduced, to the lesser
of (x) the then Conversion Price, as adjusted and taking into consideration any prior resets, or (y) 90% of the VWAP on
the Second Closing Date (the “Reset Conversion Price”, which shall thereafter be the new Conversion Price, subject
to further adjustment hereunder).

 

c)         Mechanics of Conversion

 

i.            Delivery
of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Corporation shall deliver, or cause to be delivered, to the converting Holder (A) a certificate or certificates
representing the Conversion Shares which, on or after the earlier of (i) the 6 month anniversary of the date of issuance and delivery
of a customary representation letter by the Holder (provided, however, if prior to the 12-month anniversary of the
date of issuance, such representation letter includes a representation by the Holder that the Conversion Shares have been sold
pursuant to Rule 144), or (ii) the Effective Date of a Conversion Shares Registration Statement covering the resale of such Conversion
Shares that continues to be effective, shall be free of restrictive legends and trading restrictions (other than those which may
then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of
the Series C Preferred Stock (including, if the Corporation has given continuous notice pursuant to Section 3(b) for payment of
dividends in shares of Common Stock at least 5 Trading Days prior to the date on which the Notice of Conversion is delivered to
the Corporation, shares of Common Stock representing the payment of accrued dividends otherwise determined pursuant to Section
3(a) but assuming that the Dividend Notice Period is the 5 Trading Days period immediately prior to the date on which the Notice
of Conversion is delivered to the Corporation and excluding for such issuance the condition that the Corporation deliver the Dividend
Share Amount as to such dividend payment), and (B) a bank check in the amount of accrued and unpaid dividends (if the Corporation
has elected or is required to pay accrued dividends in cash). On or after the earlier of (i) the 12 month (or 6 month if sold pursuant
to Rule 144 prior to issuance) anniversary of the date of issuance and delivery of a customary representation letter by the Holder
or (ii) the Effective Date of a Conversion Shares Registration Statement covering the resale of such Conversion Shares that continues
to be effective, the Corporation shall use its best efforts to deliver any certificate or certificates required to be delivered
by the Corporation under this Section 6 electronically through the Depository Trust Company or another established clearing corporation
performing similar functions.

 

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ii.         Failure
to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates are not delivered to
or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to
the Corporation at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which
event the Corporation shall promptly return to the Holder any original Series C Preferred Stock certificate delivered to the Corporation
and the Holder shall promptly return to the Corporation the Common Stock certificates issued to such Holder pursuant to the rescinded
Conversion Notice.

 

iii.        Obligation
Absolute; Partial Liquidated Damages. The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion
of Series C Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction
by a Holder to enforce the same, the recovery of any judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any
obligation to the Corporation or any violation or alleged violation of law by such Holder or any other person, and irrespective
of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the
issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Corporation
of any such action that the Corporation may have against such Holder. In the event a Holder shall elect to convert any or all of
the Stated Value of its Series C Preferred Stock, the Corporation may not refuse conversion based on any claim that such Holder
or any one associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason,
unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Series C
Preferred Stock of such Holder shall have been sought and obtained, and the Corporation posts a surety bond for the benefit of
such Holder in the amount of 150% of the Stated Value of Series C Preferred Stock which is subject to the injunction, which bond
shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall
be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Corporation shall issue Conversion
Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation fails to deliver to a Holder such certificate
or certificates pursuant to Section 6(c)(i) on the second Trading Day after the Share Delivery Date applicable to such conversion,
the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $2,000 of Stated Value
of Series C Preferred Stock being converted, $10 per Trading Day for each Trading Day after the second Trading Day after the Share
Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s
right to pursue actual damages for the Corporation’s failure to deliver Conversion Shares within the period specified herein
and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking
to enforce damages pursuant to any other Section hereof or under applicable law.

 

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iv.         Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder,
if the Corporation fails for any reason to deliver to a Holder the applicable certificate or certificates within two Trading Days
after the Share Delivery Date pursuant to Section 6(c)(i), and if after such date such Holder is required by its brokerage firm
to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon
the conversion relating to such Share Delivery Date (a “Buy-In”), then the Corporation shall (A) pay in cash
to such Holder the amount, if any, by which (x) such Holder’s total purchase price (including any brokerage commissions)
for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder
was entitled to receive from the conversion at issue and that were sold multiplied by (2) the actual sale price at which the sell
order giving rise to such purchase obligation was executed and (B) at the option of such Holder, either reissue (if surrendered)
the shares of Series C Preferred Stock equal to the number of shares of Series C Preferred Stock submitted for conversion (in which
case, such conversion shall be deemed rescinded) or deliver to such Holder the number of shares of Common Stock that would have
been issued if the Corporation had timely complied with its delivery requirements under Section 6(c)(i). For example, if a Holder
purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion
of shares of Series C Preferred Stock with respect to which the actual sale price of the Conversion Shares giving rise to such
purchase obligation was a total of $10,000, under clause (A) of the immediately preceding sentence, the Corporation shall be required
to pay such Holder $1,000. The Holder shall provide the Corporation written notice indicating the amounts payable to such Holder
in respect of the Buy-In and, upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit
a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Corporation’s failure to timely deliver shares
of Common Stock upon conversion of the shares of Series C Preferred Stock as required pursuant to the terms hereof.

 

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v.           Reservation
of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series C Preferred Stock
and payment of dividends on the Series C Preferred Stock, each as herein provided, free from preemptive rights or any other actual
contingent purchase rights of Persons other than the Holder (and the other holders of the Series C Preferred Stock), not less than
such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement)
be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion of the then outstanding shares
of Series C Preferred Stock and payment of dividends hereunder. The Corporation covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if the Conversion
Shares Registration Statement is then effective under the Securities Act, shall be registered for public resale in accordance with
such Conversion Shares Registration Statement (subject to such Holder’s compliance with its obligations under the Registration
Rights Agreement).

 

vi.         Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Series C Preferred
Stock. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation
shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole share.

 

vii.         Transfer
Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Series C Preferred Stock
shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue
or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the
Holders of such shares of Series C Preferred Stock and the Corporation shall not be required to issue or deliver such certificates
unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax
or shall have established to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer
Agent fees required for processing of any Notice of Conversion.

 

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d)         Beneficial
Ownership Limitation. The Corporation shall not effect any conversion of the Series C Preferred Stock, and
a Holder shall not have the right to convert any portion of the Series C Preferred Stock, to the extent that, after
giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder (together with such
Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s
Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of
the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall
include the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock with respect to which
such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i)
conversion of the remaining, unconverted Stated Value of Series C Preferred Stock beneficially owned by such Holder or any of
its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the
Corporation subject to a limitation on conversion or exercise analogous to the limitation contained herein (including,
without limitation, the Series C Preferred Stock or the Warrants) beneficially owned by such Holder or any of its
Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 6(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this Section 6(d) applies, the determination of whether the Series
C Preferred Stock is convertible (in relation to other securities owned by such Holder together with any Affiliates) and of
how many shares of Series C Preferred Stock are convertible shall be in the sole discretion of such Holder, and the
submission of a Notice of Conversion shall be deemed to be such Holder’s determination of whether the shares of Series
C Preferred Stock may be converted (in relation to other securities owned by such Holder together with any Affiliates) and
how many shares of the Series C Preferred Stock are convertible, in each case subject to the Beneficial Ownership Limitation.
To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time it delivers
a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the
Corporation shall have no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For
purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on
the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s
most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement
by the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number
of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Corporation shall within
two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In
any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or
exercise of securities of the Corporation, including the Series C Preferred Stock, by such Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock issuable upon conversion of Series C Preferred Stock held by the
applicable Holder. A Holder, upon not less than 61 days’ prior notice to the Corporation, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 6(d) applicable to its Series C Preferred Stock provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon conversion of this Series C Preferred Stock held by the
Holder and the provisions of this Section 6(d) shall continue to apply. Any such increase or decrease will not be effective
until the 61st day after such notice is delivered to the Corporation and shall only apply to such Holder and no
other Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 6(d) to correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary
or desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor holder of Series C Preferred Stock.

 

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Section 7.         Certain
Adjustments.

 

a)         Stock
Dividends and Stock Splits. If the Corporation, at any time while this Series C Preferred Stock is outstanding: (i) pays a
stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or
any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation
upon conversion of, or payment of a dividend on, this Series C Preferred Stock), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into
a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital
stock of the Corporation, then in each case the Conversion Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such
event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date
in the case of a subdivision, combination or re-classification.

 

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b)         Subsequent
Equity Sales. If, at any time while this Series C Preferred Stock is outstanding, the Corporation or any Subsidiary, as applicable
sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces
any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents at an effective price
per share less than the then in effect Conversion Price (such lower price, the “Base Conversion Price” and such
issuances, collectively, a “Dilutive Issuance”) (it being understood and agreed that if the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued
in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than
the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive
Issuance at such effective price), then simultaneously with the consummation of each Dilutive Issuance the Conversion Price shall
be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. Notwithstanding the foregoing, no adjustment shall be made, paid or issued under this Section
7(b) in respect of an Exempt Issuance. If the Corporation enters into a Variable Rate Transaction, despite the prohibition
set forth in the Purchase Agreement, the Corporation shall be deemed to have issued Common Stock or Common Stock Equivalents at
the lowest possible conversion price at which such securities may be converted or exercised. The Corporation shall notify the Holders
in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents
subject to this Section 7(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion
price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification,
whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b), upon the occurrence of any Dilutive
Issuance, the Holders are entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the
date of such Dilutive Issuance, regardless of whether a Holder accurately refers to the Base Conversion Price in the Notice of
Conversion.

 

c)         Subsequent
Rights Offerings. In addition to any adjustments pursuant to the other subsections of this Section
7, if at any time the Corporation grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities
or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”),
then the Holder of Series C Preferred Stock will be entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete conversion of such Holder’s Series C Preferred Stock (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that
the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership
of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall
be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).

 

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d)         Pro
Rata Distributions. During such time as this Series C Preferred Stock is outstanding, if the Corporation declares or makes
any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way
of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property
or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction)
(a "Distribution"), at any time after the issuance of this Series C Preferred Stock, then, in each such case,
the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein
if the Holder had held the number of shares of Common Stock acquirable upon complete Conversion of this Series C Preferred Stock
(without regard to any limitations on Conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately
before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however,
to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial
ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall
be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).

 

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e)         Fundamental
Transaction. If, at any time while this Series C Preferred Stock is outstanding, (i) the Corporation, directly or indirectly,
in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the
Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of
all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer,
tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the
holders of 50% or more of the outstanding Common Stock, (iv) the Corporation, directly or indirectly, in one or more related transactions
effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than a reclassification
under Section 7(a)), or (v) the Corporation, directly or indirectly, in one or more related transactions consummates a stock or
share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off
or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of
the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making
or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Series
C Preferred Stock, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to
any limitation in Section 6(d) on the conversion of this Series C Preferred Stock), the number of shares of Common Stock of the
successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Series C Preferred Stock is convertible immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 6(d) on the conversion of this Series C Preferred Stock). For purposes of any such
conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction,
and the Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any conversion of this Series C Preferred Stock following such Fundamental Transaction.
To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental
Transaction shall file a new Certificate of Designation with the same terms and conditions and issue to the Holders new preferred
stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate
Consideration. The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the
survivor (the “Successor Entity”) to assume in writing all of the obligations of the Corporation under this
Certificate of Designation and the other Transaction Documents in accordance with the provisions of this Section 7(e) pursuant
to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Series C Preferred Stock, deliver to
the Holder in exchange for this Series C Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Series C Preferred Stock which is convertible for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion
of this Series C Preferred Stock (without regard to any limitations on the conversion of this Series C Preferred Stock) prior to
such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital
stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the
value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of
protecting the economic value of this Series C Preferred Stock immediately prior to the consummation of such Fundamental Transaction),
and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction,
the provisions of this Certificate of Designation and the other Transaction Documents referring to the “Corporation”
shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of
the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents with the same effect
as if such Successor Entity had been named as the Corporation herein.

 

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f)         Calculations.
All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.

 

g)        Notice
to the Holders.

 

i.            Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation
shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.

 

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ii.         Notice
to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever form)
on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any
sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the Corporation shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation
shall cause to be filed at each office or agency maintained for the purpose of conversion of this Series C Preferred Stock, and
shall cause to be delivered to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least
ten (10) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record
is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such
notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Corporation or any of the Subsidiaries, the Corporation shall file such notice with the Commission pursuant to a Current Report
on Form 8-K within one Trading Day. The Holder shall remain entitled to convert the Conversion Amount of this Series C Preferred
Stock (or any part hereof) during the 10-day period commencing on the date of such notice through the effective date of the event
triggering such notice except as may otherwise be expressly set forth herein.

 

Section
8.         [RESERVED]

 

Section 9.        [RESERVED]

 

Section 10.       [RESERVED]

 

Section 11.        Miscellaneous.

 

a)         Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Corporation, at the address set forth above Attention: Chief Financial Officer, facsimile number
(949) 753-1504, or such other facsimile number or address as the Corporation may specify for such purposes by notice to the Holders
delivered in accordance with this Section 11. Any and all notices or other communications or deliveries to be provided by the Corporation
hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service
addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Corporation, or if no
such facsimile number or address appears on the books of the Corporation, at the principal place of business of such Holder, as
set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number
set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section on a day that is not
a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the third Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.

 

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b)         Absolute
Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the
obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends and accrued interest,
as applicable, on the shares of Series C Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.

 

c)         Lost
or Mutilated Series C Preferred Stock Certificate. If a Holder’s Series C Preferred Stock certificate shall be mutilated,
lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of
a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the
shares of Series C Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft
or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.

 

d)         Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation
shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to
the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement
and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts
sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts 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 such New York Courts, or such New York Courts are improper or 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 Certificate of Designation 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 applicable law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Certificate of Designation or the transactions contemplated hereby. If any party shall commence an action or proceeding
to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution
of such action or proceeding.

 

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e)         Waiver.
No provision of this Certificate of Designation may be waived, modified, supplemented or amended except in a written instrument
signed by the Company and approved by the Holders of a majority of the then outstanding shares of Series C Preferred Stock. Any
waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be
construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation
or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder)
of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation on any
other occasion. Any waiver by the Corporation or a Holder must be in writing.

 

f)         Severability.
If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation
shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable
to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates
the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum
rate of interest permitted under applicable law.

 

g)        Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.

 

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

 

i)         Status
of Converted or Redeemed Series C Preferred Stock. Shares of Series C Preferred Stock may only be issued pursuant to the Purchase
Agreement. If any shares of Series C Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares
shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series C 6% Convertible
Preferred Stock.

 

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

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RESOLVED, FURTHER, that the Chairman, the
president or any vice-president, and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized
and directed to prepare and file this Certificate of Designation of Preferences, Rights and Limitations in accordance with the
foregoing resolution and the provisions of Delaware law.

 

IN WITNESS WHEREOF,
the undersigned have executed this Certificate this ___ day of May 2013.

 

	 	 	 	 	 
	Name:	 	 	Name:	 
	Title:	 	 	Title:	 

 

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ANNEX A

 

NOTICE OF CONVERSION

 

(To
be Executed by the Registered Holder in order to Convert Shares of Series C Preferred Stock)

 

The undersigned hereby irrevocably elects
to convert the number of shares of Series C 6% Convertible Preferred Stock indicated below into shares of common stock, par value
$0.001 per share (the “Common Stock”), of CombiMatrix Corporation, a Delaware corporation (the “Corporation”),
according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates and opinions as may be required by the Corporation in accordance with the Purchase Agreement. No fee will be
charged to the Holders for any conversion, except for any such transfer taxes.

 

The undersigned is an “accredited
investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended. The undersigned represents
and warrants to the Corporation that in giving effect to the conversion evidenced hereby, the undersigned will not own in excess
of the number of shares of Common Stock permitted to be owned under Section 6(d) of the Certificate of Designation.

 

Conversion calculations:

 

	
        Date to Effect Conversion: _____________________________________________

         

	
        Number of shares of Series C Preferred Stock owned prior to
        Conversion: _________

         

	
        Number of shares of Series C Preferred Stock to be Converted:
        __________________

         

	
        Stated Value of shares of Series C Preferred Stock to be Converted:
        ______________

         

	
        Number of shares of Common Stock to be Issued: ___________________________

         

	
        Applicable Conversion Price:____________________________________________

         

	
        Number of shares of Series C Preferred Stock subsequent to Conversion:
        __________

         

  

    	72

    	 

    

 

	
        Address for Delivery: ______________________

        or

        DWAC Instructions:

        Broker no: _________

        Account no: ___________

 

	 	[HOLDER]
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

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EXHIBIT B

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights
Agreement (this “Agreement”) is made and entered into as of May 3, 2013, between CombiMatrix Corporation, a
Delaware corporation (the “Company”), and each of the several purchasers signatory hereto (each such purchaser,
a “Purchaser” and, collectively, the “Purchasers”).

 

This Agreement is made
pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser (the “Purchase
Agreement”).

 

The Company and each
Purchaser hereby agrees as follows:

 

1.            Definitions.

 

Capitalized terms
used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

 

“Advice”
shall have the meaning set forth in Section 6(d).

 

“Effectiveness
Date” means, with respect to each Registration Statement required to be filed hereunder, the 90th calendar
day following the applicable Closing Date and with respect to any additional Registration Statements which may be required pursuant
to Section 2(c) or Section 3(c), the 90th calendar day following the date on which the Company first knows an additional
Registration Statement is required to be filed hereunder; provided, however, that in the event the Company is notified
by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date
on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness
Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.

 

“Effectiveness
Period” shall have the meaning set forth in Section 2(a).

 

“Event”
shall have the meaning set forth in Section 2(d).

 

“Event
Date” shall have the meaning set forth in Section 2(d).

 

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“Filing
Date” means, with respect to each Registration Statement required to be filed hereunder, the 15th calendar
day following the applicable Closing Date and, with respect to any additional Registration Statements which may be required pursuant
to Section 2(c) or Section 3(c), the 30th calendar day following the earliest practical date on which the Company is
permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.

 

“Holder”
or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.

 

“Indemnified
Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying
Party” shall have the meaning set forth in Section 5(c).

 

“Initial
Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.

 

“Losses”
shall have the meaning set forth in Section 5(a).

 

“Plan
of Distribution” shall have the meaning set forth in Section 2(a).

 

“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated
by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to
be incorporated by reference in such Prospectus.

 

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“Registrable
Securities” means, as of any date of determination, (a) all shares of Common Stock then issued and issuable upon conversion
in full of the then outstanding Series C Preferred Stock (assuming for such purposes that all of such shares of Series C Preferred
Stock are converted in full without regard to any conversion limitations therein), (b) all shares of Common Stock issuable as dividends
(as defined in the Certificate of Designation) on the Series C Preferred Stock assuming all dividend payments are made in shares
of Common Stock and the Series C Preferred Stock is held for at least 3 years, (c) all Warrant Shares then issuable upon exercise
of the then outstanding Warrants (assuming on such date the Warrants are exercised in full without regard to any exercise limitations
therein), (d) any additional shares of Common Stock issuable in connection with any anti-dilution provisions in the Series C Preferred
Stock or the Warrants (in each case, without giving effect to any limitations on conversion set forth in the Certificate of Designation
or limitations on exercise set forth in the Warrants) and (e) any securities issued or then issuable upon any stock split, dividend
or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that any
such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness
of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration Statement with
respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable
Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities
have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale
restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect,
addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities
issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable,
were at no time held by any Affiliate of the Company, and all Warrants are exercised by “cashless exercise” as provided
in Section 2(c) of each of the Warrants), as reasonably determined by the Company, upon the advice of counsel to the Company.

 

“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional
registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements
to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in any such registration statement.

 

“Rule
415” means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such Rule.

 

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

 

“Selling
Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).

 

“SEC
Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements
or requests of the Commission staff and (ii) the Securities Act.

 

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2.           Shelf Registration.

 

(a)          On
or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale
of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall
be on another appropriate form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless otherwise
directed by at least 67% in interest of the Holders) substantially the “Plan of Distribution” attached hereto
as Annex A. Subject to the terms of this Agreement, the Company shall use its best efforts to cause a Registration Statement
filed under this Agreement (including, without limitation, under Section 3(c)) to be declared effective under the Securities Act
as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use
its best efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable Securities
covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume
or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current
public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter
to such effect, addressed and acceptable to the Transfer Agent and the affected Holders (the “Effectiveness Period”).
The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day.
The Company shall immediately notify the Holders via facsimile or by e-mail of the effectiveness of a Registration Statement no
later than one Trading Day after the Company telephonically confirms effectiveness with the Commission, which shall be the date
requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. Eastern Time on the second Trading
Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424.
Failure to so notify the Holder within one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus
as foresaid shall be deemed an Event under Section 2(d).

 

(b)          
Notwithstanding the registration obligations set forth in Section 2(a), if the Commission informs the Company that all of the Registrable
Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration
statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable efforts to file
amendments to the Initial Registration Statement as required by the Commission, covering the maximum number of Registrable Securities
permitted to be registered by the Commission, on Form S-3 to register for resale the Registrable Securities as a secondary offering,
subject to the provisions of Section 2(e); provided, however, that prior to filing such amendment, the Company shall
be obligated to use diligent efforts to advocate with the Commission for the registration of all of the Registrable Securities
in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.

 

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(c)          Notwithstanding
any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the Commission
or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular
Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the
Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by
a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement
will be reduced as follows: 

 

		a.	First,
the Company shall reduce or eliminate any securities to be included by any Person other than a Holder;

 

		b.	Second,
the Company shall reduce Registrable Securities represented by Warrant Shares (applied, in the case that some Warrant Shares may
be registered, to the Holders on a pro rata basis based on the total number of unregistered Warrant Shares held by such Holders);
and

 

		c.	Third,
the Company shall reduce Registrable Securities represented by Conversion Shares (applied, in the case that some Conversion Shares
may be registered, to the Holders on a pro rata basis based on the total number of unregistered Conversion Shares held by such
Holders).

 

In the
event of a cutback hereunder, the Company shall give the Holder at least five (5) Trading Days prior written notice along with
the calculations as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement in accordance
with the foregoing, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed
by Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements
on Form S-3 to register for resale those Registrable Securities that were not registered for resale on the Initial Registration
Statement, as amended.

 

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(d)          If:
(i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration
Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) herein, the
Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request
for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities
Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission
that such Registration Statement will not be “reviewed” or will not be subject to further review, or (iii) prior to
the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing
to comments made by the Commission in respect of such Registration Statement within ten (10) Trading Days after the receipt of
comments by or notice from the Commission that such amendment is required in order for such Registration Statement to be declared
effective, or (iv) a Registration Statement filed or required to be filed hereunder is not declared effective by the Commission
by its Effectiveness Date, or (v) after the effective date of a Registration Statement, such Registration Statement ceases for
any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, or the Holders
are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than twenty (20)
consecutive Trading Days or more than an aggregate of thirty (30) Trading Days (which need not be consecutive Trading Days) during
any 12-month period (any such failure or breach being referred to as an “Event”, and for purposes of clauses
(i) and (iv), the date on which such Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period
is exceeded, and for purpose of clause (iii) the date which such twenty (20) Trading Day period is exceeded, and for purpose of
clause (v) the date on which such twenty (20) or thirty (30) Trading Day period, as applicable, is exceeded being referred to as
“Event Date”), then, in addition to any other rights the Holders may have hereunder or under applicable law,
on each such Event Date the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty,
equal to 1.0% of the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement, and on each monthly
anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event
is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to
1.5% of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement. Notwithstanding anything herein to
the contrary, the parties agree that the maximum aggregate liquidated damages payable to a Holder under this Agreement shall be
6% of the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement and that, during any periods that
a Registration Statement is either effective as to the then resale of Registrable Securities or Registrable Securities may be then
resold pursuant to Rule 144 (and as to non-Affiliates of the Company, without volume or manner restrictions on resales), liquidated
damages shall not accrue hereunder with respect to such Registrable Securities. If the Company fails to pay any partial liquidated
damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate
of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from
the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial
liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure
of an Event.

 

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(e)          If
the Company is not eligible to use Form S-3 for the registration of the resale of Registrable Securities hereunder, the Company
shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable
Securities on Form S-3 as soon as the Company becomes eligible to use such form, provided that the Company shall maintain the effectiveness
of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities
has been declared effective by the Commission.

 

3.            Registration Procedures.

 

In connection with
the Company’s registration obligations hereunder, the Company shall:

 

(a)          Not
less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior
to the filing of any related Prospectus or any amendment or supplement thereto (but not including any document that would be incorporated
or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review
of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation
within the meaning of the Securities Act. Notwithstanding the above, the Company shall not be obligated to provide the Holders
advance copies of any universal shelf registration statement registering securities in addition to those required hereunder, or
any Prospectus prepared thereto. The Company shall not file a Registration Statement or any such Prospectus or any amendments or
supplements thereto (other than documents incorporated or deemed to be incorporated therein by reference) to which the Holders
of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such
objection in writing no later than three (3) Trading Days after the Holders have been so furnished copies of a Registration Statement
or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto.
Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex B
(a “Selling Stockholder Questionnaire”) on a date that is not less than five (5) Trading Days prior to the Filing
Date or by the end of the second (2nd) Trading Day following the date on which such Holder receives draft materials in accordance
with this Section. The Company shall not be required to include the Registrable Securities of a Holder in a Registration Statement
if after written notice to the Holder and commercially reasonable efforts to contact such Holder, such Holder fails to timely furnish
to the Company a Selling Stockholder Questionnaire in accordance with this Section 3(a).

 

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(b)          (i)
Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements
in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to
be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented
or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the
Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to
the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided
that, the Company shall excise any information contained therein which would constitute material non-public information regarding
the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during
the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders
thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.

 

(c)          If
during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common
Stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case
prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the
number of such Registrable Securities.

 

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(d)          Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied
by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible
(and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement
or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether
there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration
Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration
Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities
or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that
makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a
Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case
of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect
to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best
interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided, however,
in no event shall any such notice contain any information which would constitute material, non-public information regarding the
Company or any of its Subsidiaries.

 

(e)          Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness
of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

 

(f)          Furnish
to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent
requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available
on the EDGAR system (or successor thereto) need not be furnished in physical form.

 

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(g)          Subject
to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus
and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).

 

(h)          
The Company shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting
a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder, and the Company
shall pay the filing fee required by such filing within two (2) Business Days of request therefor.

 

(i)          Prior
to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification)
of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition
in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall not
be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such
jurisdiction.

 

(j)          If
requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free,
to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be
in such denominations and registered in such names as any such Holder may request.

 

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(k)          Upon
the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into
account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature
disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain
an 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, in light of the circumstances under which they were made, not misleading. If
the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any
Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus.
The Company will use commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right under this Section 3(k) to suspend the availability of a Registration
Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for
a period not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.

 

(l)          Comply
with all applicable rules and regulations of the Commission.

 

(m)          The
Company shall use commercially reasonable efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for
the registration of the resale of Registrable Securities.

 

(n)          The
Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive
control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration
of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s
request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise
occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.

 

4. Registration
Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred
to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made
with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then
listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in
writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications
or exemptions of the Registrable Securities) and (D) if not previously paid by the Company in connection with an Issuer Filing,
with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable
Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission
in connection with such sale, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable
Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall
be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions
of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.

 

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5.            Indemnification.

 

(a)          Indemnification
by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder,
the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal
as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and
any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or
any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and
any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or
any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material
fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance
of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein,
or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such
Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this
purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the use by such Holder
of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus
is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated
in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise
to such Loss would have been corrected. The Company shall notify the Holders promptly of the institution, threat or assertion of
any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware.
Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person
and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(h).

 

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(b)          Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with any applicable prospectus delivery requirements of the Securities Act through no fault of the Company or
(y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the
extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company
expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such
information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved
Annex A hereto for this purpose), such Prospectus or in any amendment or supplement thereto or (iii) in the case of an occurrence
of an event of the type specified in Section 3(d)(ii)-(vi), to the extent, but only to the extent, related to the use by such Holder
of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus
is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated
in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise
to such Loss would have been corrected. In no event shall the liability of any selling Holder under this Section 5(b) be greater
in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving
rise to such indemnification obligation.

 

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(c)          Conduct
of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder
(an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses
incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that
it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have materially and adversely prejudiced the Indemnifying Party.

 

An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named
parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate
counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect
of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

 

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Subject to
the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses
to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.

 

(d)          Contribution.
If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified
Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified
Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party,
and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement
or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations
set forth in this Agreement, any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection
with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its terms.

 

The parties
hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute
pursuant to this Section 5(d), in the aggregate, any amount in excess of the amount by which the net proceeds actually received
by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

 

The indemnity
and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to
the Indemnified Parties.

 

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6.           Miscellaneous.

 

(a)          Remedies.
In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder
or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company
and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance
in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

 

(b)          No
Piggyback on Registrations; Prohibition on Filing Other Registration Statements. Neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statements
other than the Registrable Securities. Other than filings to keep all currently effective S-3 registration statements available
for use by the Company, registration statements covering only other securities owned by the Purchasers, and registration statements
covering securities owned by HLM Venture Partners III, L.P. or its affiliates as set forth on Schedule 3.1(v) to the Purchase
Agreement, the Company shall not file any other registration statements until all Registrable Securities are registered pursuant
to a Registration Statement that is declared effective by the Commission.

 

(c)          Compliance.
Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable
to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration
Statement.

 

(d)          Discontinued
Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(d)(ii) through (vi), such Holder will forthwith discontinue disposition
of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company
will use commercially reasonable efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.
The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the
Registrable Securities hereunder shall be subject to the provisions of Section 2(d).

 

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(e)          Piggy-Back
Registrations. If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all
of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection
with the Company’s stock option or other employee benefit plans and other than registration statements covering only other
securities owned by the Purchasers and registration statements covering securities owned by HLM Venture Partners III, L.P. or its
Affiliates as set forth on Schedule 3.1(v) to the Purchase Agreement, then the Company shall deliver to each Holder a written
notice of such determination and, if within 15 days after the date of the delivery of such notice, any such Holder shall so request
in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder
requests to be registered, subject in the event of a firm commitment underwritten offering, to customary underwriter cutbacks applied
or a pro rata basis to all Holders of Registrable Securities and securities of other holders of registration rights; provided,
however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that
are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements) promulgated
by the Commission pursuant to the Securities Act or that are the subject of a then effective Registration Statement.

 

(f)          Amendments
and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed
by the Company and the Holders of 67% or more of the then outstanding Registrable Securities (for purposes of clarification, this
includes any Registrable Securities issuable upon exercise or conversion of any Security). If a Registration Statement does not
register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then
the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder
shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the
rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only
by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however,
that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of
the first sentence of this Section 6(f). No consideration shall be offered or paid to any Person to amend or consent to a waiver
or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this
Agreement.

 

(g)         Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as
set forth in the Purchase Agreement.

 

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(h)         Successors
and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations
hereunder without the prior written consent of the Holders of 67% or more of the then outstanding Registrable Securities. Each
Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase
Agreement.

 

(i)          No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of
the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 3.1(v) to the Purchase
Agreement, neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person that have not been satisfied in full.

 

(j)          Execution
and Counterparts. 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.

 

(k)          Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined
in accordance with the provisions of the Purchase Agreement.

 

(l)      
    Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any
other remedies provided by law.

 

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

 

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

 

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(o)          Independent
Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations
of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association,
a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert
or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters,
and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not asset any such
claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as
an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company
contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience
of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that
each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders
collectively and not between and among Holders.

 

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

 

(Signature Pages Follow)

 

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IN WITNESS WHEREOF,
the parties have executed this Registration Rights Agreement as of the date first written above.

 

	 	combimatrix corporation
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

  

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

    	 

    	 

    

 

[SIGNATURE
PAGE OF HOLDERS TO CBMX RRA]

 

Name of Holder: __________________________

 

Signature of Authorized Signatory of Holder: __________________________

 

Name of Authorized Signatory: _________________________

 

Title of Authorized Signatory: __________________________

 

[SIGNATURE PAGES CONTINUE]

 

    	 

    	 

    

 

Annex A

 

Plan of Distribution

 

Each Selling Stockholder
(the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their securities covered hereby on the Nasdaq Capital Market or any other stock exchange,
market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated
prices. A Selling Stockholder may use any one or more of the following methods when selling securities:

 

		·	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

		·	block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion
of the block as principal to facilitate the transaction;

 

		·	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

		·	an exchange distribution in accordance with the rules of the applicable exchange;

 

		·	privately negotiated transactions;

 

		·	settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a
part;

 

		·	in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities
at a stipulated price per security;

 

		·	through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

		·	a combination of any such methods of sale; or

 

		·	any other method permitted pursuant to applicable law.

 

The Selling Stockholders
may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”),
if available, rather than under this prospectus.

 

    	 

    	 

    

 

Broker-dealers engaged
by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction
not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction
a markup or markdown in compliance with FINRA IM-2440.

 

In connection with
the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions
they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions,
or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter
into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities
which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which
securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).

 

The Selling Stockholders
and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within
the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement
or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive
fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).

 

The Selling Stockholders
may from time to time pledge or grant a security interest in some or all of the securities owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties may offer and sell the securities from time to time
under this prospectus after the Company has filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest
as Selling Stockholders under this prospectus.

 

The Selling Stockholders
also may transfer the securities in other circumstances, in which case the transferees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus and may sell the securities from time to time under this
prospectus after the Company has filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as
Selling Stockholders under this prospectus.

 

    	2

    	 

    

 

The Company is required
to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed
to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.

 

Because Selling Stockholders
may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus
which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus.
The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed
sale of the resale securities by the Selling Stockholders.

 

We agreed to keep this
prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without
registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for
the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of
similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or
any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if
required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be
sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

 

Under applicable rules
and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation
M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and
sales of securities of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus
available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser
at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

    	3

    	 

    

 

Annex B

 

combimatrix
corporation

 

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial
owner of common stock (the “Registrable Securities”) of Combimatrix Corporation, a Delaware corporation (the
“Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission
(the “Commission”) a registration statement (the “Registration Statement”) for the registration
and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable
Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”)
to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the
address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration
Rights Agreement.

 

Certain legal consequences
arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial
owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities
owned by it in the Registration Statement.

 

    	 

    	 

    

 

The undersigned hereby provides the following
information to the Company and represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

		1.	Name.

 

		(a)	Full Legal Name of Selling Stockholder

 

	 
	 

 

		(b)	Full Legal Name of Registered Holder (if not the same
as (a) above) through which Registrable Securities are held:

 

	 
	 

 

		(c)	Full Legal Name of Natural Control Person (which means
a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this
Questionnaire):

 

	 
	 

 

2. Address for Notices to Selling
Stockholder:

 

	 
	 
	 

	Telephone:	 
	Fax:	 
	Contact Person:	 

 

3. Broker-Dealer Status:

 

		(a)	Are you a broker-dealer?

 

Yes  ̈
                 No  ̈

 

		(b)	If “yes” to Section 3(a), did you receive
your Registrable Securities as compensation for investment banking services to the Company?

 

Yes  ̈
                 No
 ̈

 

    	5

    	 

    

 

		Note:	If “no” to Section 3(b), the Commission’s
staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

		(c)	Are you an affiliate of a broker-dealer?

 

Yes  ̈
                 No
 ̈

 

		(d)	If you are an affiliate of a broker-dealer, do you certify
that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable
Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable
Securities?

 

Yes  ̈
                 No  ̈

 

		Note:	If “no” to Section 3(d), the Commission’s
staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

4. Beneficial Ownership of Securities
of the Company Owned by the Selling Stockholder.

 

Except as set forth below
in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.

 

		(a)	Type and Amount of other securities beneficially owned
by the Selling Stockholder:

 

			Of the amount described below, please indicate the number of securities as to which you have both
sole investment power and sole voting power, and describe the nature of your ownership of any securities as to which you do not
have sole voting power and sole investment power. Indicate the securities (if any) as to which you disclaim beneficial ownership
and why.

 

			Of the amount described below, please indicate the number of securities (if any) which you have
a right to acquire within 60 days of [___], including, but not limited to, any right to acquire securities: (i) through the exercise
of any option, warrant or right; (ii) through the conversion of a security; (iii) pursuant to the power to revoke a trust, discretionary
account or similar arrangement; or (iv) pursuant to the automatic termination of a trust, discretionary account or similar arrangement.

 

	 
	 
	 

 

		(b)	Please state the number of securities of the Company
that you propose to sell in the offering:

 

    	6

    	 

    

 

5. Relationships with the Company:

 

Except as set forth below,
neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company
(or its predecessors or affiliates) during the past three years.

 

State
any exceptions here:

 

	 
	 
	 

 

6. Other Arrangements:

 

Except as set forth below,
the undersigned does not know of any arrangement made or to be made by any person, or of any transaction already effected to limit
or restrict the sale of the Company’s securities during the period of the offering; to stabilize the market for the Company’s
securities; or to withhold commissions or otherwise to hold each underwriter or dealer responsible for the distribution of his
participation in the offering.

 

State
any exceptions here:

 

	 
	 
	 

 

Describe any agreement, arrangement
or understanding that you have entered into with an securities underwriter, broker or dealer relating to the sale or proposed sale
of any securities of the Company held by you, or as to which you have the right to acquire.

 

Except as set forth below,
neither the undersigned nor any associate of the undersigned is a party to any contract with the Company or any of its subsidiaries,
or in which the Company or any subsidiary has a beneficial interest, which is to be performed in whole or in party at or after
the date of the Registration Statement, or which was made not more than two years prior thereto.

 

State
any exceptions here:

 

	 
	 
	 

 

    	7

    	 

    

 

 

The undersigned agrees
to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the
date hereof at any time while the Registration Statement remains effective.

 

By signing below, the
undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 6 and the inclusion
of such information in the Registration Statement and the related prospectus, and any amendments or supplements thereto, and in
communications with the Commission and trading markets. The undersigned understands that such information will be relied upon by
the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments
or supplements thereto.

 

IN WITNESS WHEREOF
the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person
or by its duly authorized agent.

 

	Date:	 	 	Beneficial Owner:	 

 

	 	By:	 
	 	 	Name:
	 	 	Title:

   

PLEASE FAX A COPY (OR EMAIL A .PDF COPY)
OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

    	8

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