Document:

Exhibit 4.1

 

NEITHER THE ISSUANCE NOR SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.

 

	Principal Amount: $112,500	Issue Date: April 1, 2016
	Purchase Price: $100,000	 

 

SENIOR SECURED CONVERTIBLE PROMISSORY
NOTE

 

FOR VALUE RECEIVED, EFACTOR GROUP
CORP., a NEVADA corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of __________________,
or registered assigns (the “Holder”) the sum of One Hundred Twelve Thousand Five Hundred Dollars ($112,500), on April
1, 2017 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of twelve percent
(12%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due
and payable, whether at maturity or upon acceleration or by prepayment or otherwise, compounded on a monthly basis. This Note may
not be prepaid in whole or in part except as otherwise explicitly set forth in Section 1.9 hereof. Any amount of principal or interest
on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date
thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the Issue Date, shall be computed
on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into
common stock, (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United
States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice
made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on
any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the
case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof
shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the
term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city
of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used herein,
and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date
hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

 

     

     

    

 

This Note is free from
all Liens with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders
of the Borrower and/or any other person/entity and will not impose personal liability upon the holder thereof. This Note shall
rank pari passu with all other Notes issued pursuant to the Purchase Agreement.

 

The following terms
shall apply to this Note:

 

ARTICLE 1. CONVERSION
RIGHTS

 

1.1           Conversion
Right. The Holder shall have the right from time to time, and at any time, except as defined in the subsequent paragraph, during
the period beginning on the date of this Note and ending on the later of (i) the Maturity Date and (ii) the date of payment of
the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding
principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully
paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or
other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price
(the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however,
that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion
of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares
of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised
or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the
limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this
Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder
and its affiliates of more than 4.99% of the outstanding shares of Common Stock (the “Beneficial Ownership Limitation”).
For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder,
except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations
on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior notice to the
Borrower and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later
date, as determined by the Holder, as may be specified in such notice of waiver) provided that the Beneficial Ownership Limitation
in no event exceeds 9.99% of the outstanding shares of the Common Stock. The number of shares of Common Stock to be issued upon
each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion
Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice
of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of
Conversion is submitted by facsimile (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower
before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”). The term “Conversion
Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted
in such conversion plus (2) at the Borrower’s option, accrued and unpaid interest, if any, on such principal amount
at the interest rates provided in this Note to the Conversion Date, provided, however, that the Company shall have the right to
pay any or all interest in cash plus (3) at the Borrower’s option, Default Interest, if any, on the amounts referred
to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof. 

 

     

     

    

 

1.2         Conversion
Price.

 

(a)          Calculation
of Conversion Price. The conversion price (the “Conversion Price”) shall be the Variable Conversion Price (as defined
herein)(subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the
Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events). The “Variable Conversion Price” shall mean the lesser of (i) 40% discount
from the lowest daily trading price during any of the five (5) trading days prior to conversion, or (ii) a fixed price of $1.00.
“Trading Price” means, for any security as of any date, the lowest trading price on the Over-the-Counter Bulletin Board,
or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”)
mutually acceptable to Borrower and Holder (i.e. Bloomberg). If the Trading Price cannot be calculated for such security on such
date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and
the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in
order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is
traded for any period on the OTCQB, or on the principal securities exchange or other securities market on which the Common Stock
is then being traded. If the Borrower’s Common Stock is chilled for deposit at DTC and/or becomes chilled at any point while
this Agreement remains outstanding, an additional 8% discount will be attributed to the Conversion Price defined hereof. If the
Borrower is unable to issue any shares under this provision due to the fact that there is an insufficient number of authorized
and unissued shares available, the Holder promises not to force the Borrower to issue these shares or trigger an Event of Default,
provided that Borrower takes immediate steps required to get the appropriate level of approval from shareholders or the board of
directors, where applicable to raise the number of authorized shares to satisfy the Notice of Conversion.

 

(b)          Conversion
Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower
(i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which
the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially
all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer
to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred
to in clause (i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective
upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to
the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and
(y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the
Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, “Adjusted Conversion Price
Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public
announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i)
above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment
of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

 

     

     

    

 

1.3         Authorized
Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock
upon the full conversion of the Notes issued pursuant to the Purchase Agreement. The Borrower is required at all times to have
authorized and reserved four times the number of shares that is actually issuable upon full conversion of the Notes issued pursuant
to the Purchase Agreement (based on the Conversion Price of the Notes in effect from time to time) (the “Reserved Amount”).
The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations pursuant to Section
4(g) of the Purchase Agreement. Commencing on the expiration of the first month from the issue date of this Note, the Reserved
Amount shall be recalculated each month based upon the Variable Conversion Price and the Company shall notify the Transfer Agent
and the Holder in writing by the fifth day of the following month of the new Reserved Amount. In the event the Company does not
notify the Transfer Agent of the new Reserved Amount in a timely manner, the Holder shall have the absolute right to notify the
Transfer Agent, without any further action by the Company. Notwithstanding the foregoing, in no event shall the Reserved Amount
be lower than the initial Reserved Amount, regardless of any prior conversions. The Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities
or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall
be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter
there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion
of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates
for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full
authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

 

If, at any time the Borrower
does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.

 

1.4         Method
of Conversion.

 

(a)          Mechanics
of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to
time after the Issue Date, by: (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section
1.4(b), surrendering this Note at the principal office of the Borrower.

 

     

     

    

 

(b)          Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid
principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount
so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower,
so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima facie, be controlling and determinative in the absence of manifest error. Notwithstanding
the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first
physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the
Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request,
representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of
this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this
Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the
face hereof.

 

(c)          Payment
of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that
of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities
or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are
to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such
tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

(d)          Delivery
of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other
reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section
1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for
the Common Stock issuable upon such conversion within three (3) business days after such receipt (but in any event the fifth (5th)
business day being hereinafter referred to as the “Deadline”) (and, solely in the case of conversion of the entire
unpaid principal amount hereof, surrender of the this Note) in accordance with the terms hereof and the Purchase Agreement.

 

(e)          Obligation
of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to
be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued
and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations
under this Article 1, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the
right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder
shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates
for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same,
any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce
the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower,
and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection
with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice
of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.

 

     

     

    

 

(f)          Delivery
of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable
upon conversion, provided the Borrower’s transfer agent is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions
contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC
through its Deposit Withdrawal Agent Commission (“DWAC”) system.

 

(g)          Failure
to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including
actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this
Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure
shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline
that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following
the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month
following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall
accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common
Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder.
The damages resulting from a failure, attempt to frustrate or interfere with such conversion right are difficult if not impossible
to quantify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.

 

(h)          Compensation
for Buy-In on Failure to Timely Deliver Common Stock Upon Conversion. In addition to any other rights available to the Holder,
if the Borrower fails for any reason to deliver to the Holder such certificate or certificates by the Deadline, and if after such
Deadline the 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 the Holder of the shares of
Common Stock which the Holder was entitled to receive upon the conversion relating to such Deadline (a “Buy-In”), then
the Borrower shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the
amount, if any, by which (x) the 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 the Holder was entitled to receive
from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation
was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Note
in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed
rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if the Borrower had timely
complied with its delivery requirements under Section 1.4(d). For example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Note with respect to which the actual
sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of
$10,000 under clause (A) of the immediately preceding sentence, the Borrower shall be required to pay the Holder $1,000. The Holder
shall provide the Borrower written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request
of the Borrower, 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 Borrower’s failure to timely deliver certificates representing shares of Common Stock upon conversion
of this Note as required pursuant to the terms hereof.

 

     

     

    

 

1.5           Concerning
the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall
have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) (“Rule
144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees
to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined
in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions
set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under
the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular
date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that
has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration
statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

 “NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

     

     

    

 

The legend set forth
above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i)
the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration
under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the
Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration
statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities
as of a particular date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel
provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or
Regulations S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

 

1.6         Effect
of Certain Events.

 

(a)          Effect
of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all
of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more
than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the
Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be
deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder
upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III)
or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability
company, partnership, association, trust or other entity or organization.

 

(b)          Adjustment
Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all
of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar
event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares
of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all
or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion,
such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted
in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such
case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the
provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities
or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section
1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen
(15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record
date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event
or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring
entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly
apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

     

     

    

 

(c)          Adjustment
Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets)
to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or
distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary
(i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this
Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets
which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder
been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

 

(d)          Adjustment
Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance
with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration
per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith)
less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive
Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration
per share received by the Borrower in such Dilutive Issuance, but in no event shall the Conversion Price be above the original
Conversion Price.

 

The Borrower shall
be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights or
options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to purchase Common
Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”) (such warrants,
rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”) and
the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then
in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the “price
per share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i) the total amount,
if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the
case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration
payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable,
by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion
of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance
of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon
exercise of such Options.

 

     

     

    

 

Additionally, the Borrower
shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities,
whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the price per
share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect, then
the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the “price per share
for which Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the total amount, if any,
received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will
be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

 

(e)          Purchase
Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights
to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of
any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) 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 Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

(f)          Notice
of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described
in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish
to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment
or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number
of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion
of the Note.

 

1.7         Trading
Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the
Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note
and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower
can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the “Maximum
Share Amount”), which shall be 19.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement),
subject to equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and
similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued, if
the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower’s
ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note,
this will be considered an Event of Default under Section 3.3 of the Note.

 

     

     

    

 

1.8           Status
as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares,
if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount
or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of
such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares
of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure
by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates
for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion
of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common
Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted
portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note
has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the
Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default
Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default
and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3)
for the Borrower’s failure to convert this Note.

 

1.9           Prepayment.
Notwithstanding anything to the contrary contained in this Note, so long as the Borrower has not received a Notice of Conversion
from the Holder, then at any time during the period beginning on the Issue Date and ending on the date which is ninety (90) days
following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written
notice to the Holder of the Note to prepay all or a portion of the outstanding Note (principal and accrued interest), in full,
in accordance with this Section 1.9, provided however, that any prepayment of this Note shall be made pro rata in proportion to
the unpaid principal balances of this Note and all other Notes issued pursuant to the Purchase Agreement. Any notice of prepayment
hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered address
and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be
not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional
Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order
of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment
Date. If the Borrower exercises its right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash
(the “Optional Prepayment Amount”) equal to 135%, multiplied by the sum of: (w) the then outstanding principal amount
of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment
Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed
to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers and Optional Prepayment Notice and fails to
pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment
Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

 

     

     

    

 

1.10       Certain
Definitions. The following terms have the following meanings:

 

(a)          “Contingent
Obligation” shall mean as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto.

 

(b)          “Indebtedness”
shall mean, with respect to any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed
money, (b) all obligations of such Person for the deferred purchase price of property or services, (c) all obligations
of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of
such property), (e) all capital lease obligations of such Person, (f) all obligations of such Person, contingent or otherwise,
as an account party or applicant under acceptance, letter of credit, surety bond or similar facilities, (g) all obligations
of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital stock of such Person,
(h) all obligations for any earn-out consideration, (i) the liquidation value of preferred capital stock of such Person, (j)
all guarantee obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (i) above,
(k) all obligations of the kind referred to in clauses (a) through (i) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of
such obligation and  all obligations of such Person in respect of hedge agreements; and (l) all Contingent Obligations in
respect to indebtedness or obligations of any Person of the kind referred to in clauses (a)-(k) above.  The Indebtedness of
any Person shall include, without duplication, the Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is
not liable therefor.

 

     

     

    

 

(c)          
“Liabilities” shall mean all direct and/or indirect liabilities, Indebtedness and obligations of any kind of
Borrower and/or its Subsidiaries to the Holder, howsoever created, arising or evidenced, whether now existing or hereafter arising
(including those acquired by assignment), absolute or contingent, due or to become due, primary or secondary, joint or several,
whether existing or arising through discount, overdraft, purchase, direct loan, participation, operation of law, or otherwise,
all Liabilities, Indebtedness and obligations of Borrower and/or its Subsidiaries to the Holder pursuant to this Note, and/or any
of the other Transaction Documents, any letter of credit, any standby letter of credit, and/or outside attorneys’ and paralegals’
fees or charges relating to the negotiation and preparation of the Transaction Documents, the actions required to be taken herein
and or therein and the enforcement of Holder’s rights, remedies and powers under this Agreement, the Note and/or any other
expenses and/or Transaction Documents.

 

(d)          “Permitted
Governmental Indebtedness” means Indebtedness provided by the Export and Import Bank of the United States of America
or other similar governmental entity for the purpose of supporting product sales by the Borrower.

 

(e)          “Permitted
Indebtedness” means (i) Indebtedness of the Borrower evidenced by the Notes, the Agreement and/or any other Transaction
Document in favor of the Holders thereof including all Liabilities, (ii) Indebtedness of the Borrower set forth in the unaudited
condensed, consolidated financial statements of the Borrower, included in the Borrower’s Quarterly Report on Form 10-Q for
the quarter ending September 30, 2015 filed with the SEC, (iii) Indebtedness secured by Permitted Liens described in clauses “(iv)”
and “(v)” of the definition of Permitted Liens, and (iv) Permitted Governmental Indebtedness.

 

(f)          “Permitted
Liens” means (i) any Lien for delinquent taxes being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with US GAAP, and/or (ii) any statutory Lien arising in the ordinary course of business
by operation of law with respect to a liability that is not yet due or delinquent.

 

(g)          “Person”
shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state, county, city, municipal or otherwise including, without

 

(h)          “Subsidiary”
shall mean, with respect to any Person, a corporation, partnership, limited liability company or other entity of which shares of
stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.

 

(i)          “Lien”
shall mean a lien, mortgage, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction,
clouds on title and/or encumbrances. 

 

     

     

    

 

ARTICLE 2. CERTAIN COVENANTS

 

2.1         Negative
Covenants As long as any portion of this Note remains outstanding, unless the holders of 75% of the aggregate principal amount
of the outstanding Notes issued under the Purchase Agreement shall have otherwise given prior written consent, the Borrower shall
not, and shall not permit any of its Subsidiaries (whether or not a subsidiary on the Issue Date) to, directly or indirectly:

 

(a)          other
than Indebtedness existing as of the Issue Date, enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness
in excess of $100,000;

 

(b)          other
than Permitted Liens enter into, create, incur, assume or suffer to exist any Liens, on or with respect to any of the Company’s
and/or its Subsidiaries property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

(c)          except
for an increase in the Borrower’s authorized shares, amend its charter documents, including, without limitation, its certificate
of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder;

 

(d)          repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common
Stock equivalents;

 

(e)          repay,
repurchase or offer to repay, repurchase or otherwise acquire any indebtedness, other than the Notes if on a pro-rata basis, other
than regularly scheduled principal and interest payments as such terms are in effect as of the Issue Date, provided that such payments
shall not be permitted if, at such time, or after giving effect to such payment, any Event of Default exist or occur;

 

(f)          pay
cash dividends or distributions on any equity securities of the Borrower;

 

(g)          sell,
lease or otherwise dispose of any portion of its assets. Any consent to the disposition of any assets may be conditioned on a use
of the proceeds of disposition specified by the Holders of the Notes;

 

(h)          so
long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent,
lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers,
directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed
on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course
of business or (c) not in excess of $1,000;

 

(i)          enter
into any transaction with any affiliate of the Borrower which would be required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s length basis and expressly approved by a majority of the disinterested directors
of the Borrower (even if less than a quorum otherwise required for board approval); or

 

(j)          enter
into any agreement with respect to any of the foregoing.

 

     

     

    

 

ARTICLE 3. EVENTS OF DEFAULT

 

If any of the following
events of default (each, an “Event of Default”) shall occur:

 

3.1           Failure
to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether
at maturity, upon acceleration or otherwise.

 

3.2           Conversion
and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that
it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with
the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form)
any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when
required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer
agent in transferring (or issuing( electronically or in certificated form) any certificate for shares of Common Stock to be issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove ( or
directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend
(or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to
the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement,
statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue
uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three
(3) business days after the Holder shall have delivered a Notice of Conversion.

 

3.3           Breach
of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and/or
any other Transaction Document;

 

3.4           Breach
of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement
or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, any Transaction Document),
shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have)
a material adverse effect on the rights of the Holder with respect to this Note and/or any other Transaction Document or the Purchase
Agreement;

  

3.5           Bankruptcy,
Receiver or Trustee. The Borrower or any Subsidiary of the Borrower shall commence, or there shall be commenced against the
Borrower or any Subsidiary of the Borrower under any applicable bankruptcy or insolvency laws as now or hereafter in effect or
any successor thereto, or the Borrower or any subsidiary of the Borrower commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether
now or hereafter in effect relating to the Borrower or any subsidiary of the Borrower or there is commenced against the Borrower
or any subsidiary of the Borrower any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of
61 days; or the Borrower or any subsidiary of the Borrower is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or the Borrower or any Subsidiary of the Borrower suffers any appointment
of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of sixty one (61) days; or the Borrower or any subsidiary of the Borrower makes a general
assignment for the benefit of creditors; or the Borrower or any subsidiary of the Borrower shall fail to pay, or shall state that
it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Borrower or any subsidiary of the
Borrower shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts;
or the Borrower or any subsidiary of the Borrower shall by any act or failure to act expressly indicate its consent to, approval
of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Borrower or any subsidiary of the
Borrower for the purpose of effecting any of the foregoing;

 

     

     

    

 

3.6           Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any Subsidiary of the Borrower or
any of their respective property or other assets for more than $25,000, and shall remain unvacated, unbonded or unstayed for a
period of five (5) days;

 

3.7           Indebtedness
Default. The Borrower or any Subsidiary of the Borrower shall default after the Issue Date in any of its obligations under
any other Note, Indebtedness, debenture, instrument, agreement, mortgage, credit agreement or other facility, indenture agreement,
factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any Indebtedness
of the Borrower or any Subsidiary of the Borrower, whether such Indebtedness now exists or shall hereafter be created;

 

3.8           Delisting
of Common Stock; DTC Chill. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCQB
or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or
the American Stock Exchange or there shall be no bid price for the stock for a period of one business day or the Depository Trust
Company places a chill on new deposits of Common Stock, which is not removed within ten (10) trading days;

 

3.9           Failure
to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or
the Borrower shall cease to be subject to the reporting requirements of the Exchange Act; provided however, if the Borrower files
its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 by May 31, 2016 and its Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 2016 by June 30, 2016, the Company shall not be in violation of this Section 3.9.

 

3.10         Liquidation.
Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.11         Cessation
of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts
as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

     

     

    

 

3.12         Maintenance
of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other
assets which are necessary to conduct its business (whether now or in the future).

 

3.13         Financial
Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period
from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement
would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder
with respect to this Note or the Purchase Agreement.

 

3.14         Reverse
Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

 

3.15         Replacement
of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior
to the effective date of such replacement, fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered
pursuant to the Purchase Agreement (including but not limited to the provision to irrevocable reserve shares of Common Stock in
the Reserved Amount) signed by the successor transfer agent to Holder and the Borrower.

 

3.16         Failure
to Pay Post-Closing Expenses. The failure by Borrower to pay any and all Post-Closing Expenses as defined in section 4.6.

 

3.17         Delisting.
From and after the initial trading, listing or quotation of the Common Stock on a Principal Market, an event resulting in the Common
Stock no longer being traded, listed or quoted on a Principal Market; failure to comply with the requirements for continued quotation
on a Principal Market; or notification from a Principal Market that the Borrower is not in compliance with the conditions for such
continued quotation and such non-compliance continues for seven (7) trading days following such notification.

 

3.18         Cross-Default.
Notwithstanding anything to the contrary contained in this Note or any of the other Transaction Documents, a breach or default
by the Borrower and/or any of its Subsidiaries of any covenant or other term or condition contained in any other Note issued under
the Purchase Agreement or any of the Transaction Documents, after the passage of all applicable notice and cure or grace periods,
shall, at the option of the Borrower, be considered a default under this Note and the Transaction Documents, in which event the
Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note
and the Other Agreements by reason of a default under said Other Agreement or hereunder.

 

3.19         Remedies.

 

(a)          Upon
the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to
pay the principal hereof or interest thereon when due at the Maturity Date (a “Maturity Default”), the Note shall become
immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount
equal to the Default Sum (as defined herein).

 

     

     

    

 

(b)          Upon
the occurrence and during the continuation of any Event of Default other than a Maturity Default, the Note shall become immediately
due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to
the greater of (i) 140% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued
and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”)
plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed
to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment
plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or
(ii) the “parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares
of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the
Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining
the lowest applicable Conversion Price, unless the Default Event arises as a result of such breach in respect of a specific Conversion
Date in which case such Conversion Date shall be the Conversion Date, multiplied by (b) the highest Closing Price for the
Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the
Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due
and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including,
without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies
available at low or in equity.

 

If the Borrower fails to pay the Default
Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right
at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares),
to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common
Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

  

ARTICLE 4. MISCELLANEOUS

 

4.1           Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

 

4.2           Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

 

     

     

    

 

If to the Borrower, to:

EFACTOR GROUP CORP.

340 West 42nd Street, Suite 880

New York, NY 10108

Attn: Mark Noffke, Chief Financial Officer

 

If to the Holder:

 

_______________

 

4.3           Amendments.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holders of all
Notes issued under the Purchase Agreement. The term “Note” and all reference thereto, as used throughout this instrument,
shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later
amended or supplemented, then as so amended or supplemented.

 

 

4.4           Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and
its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a)
of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with
a bona fide margin account or other lending arrangement.

 

4.5           Cost
of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.

 

4.6           Post-Closing
Expenses. The Borrower will bear any and all miscellaneous expenses that may arise as a result of this Agreement post-closing.
These expenses include, but are not limited to, the cost of legal opinion production, transfer agent fees, equity issuance fees,
etc. The failure to pay any and all Post-Closing Expenses will be deemed an Event of Default.

 

     

     

    

 

4.7           Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles
of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note
shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York. The
parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder
waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party
hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in
connection with this Agreement or any other Transaction Document 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.

 

4.8           Certain
Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount
(or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest,
the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult
to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate
the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock
acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower
and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the
Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

 

4.9           Notice
of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common
Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior
notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders).
In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including
by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property,
or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed
sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or
winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date
specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date
on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement
regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower
shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with
the notification to the Holder in accordance with the terms of this Section 4.9.

 

     

     

    

 

4.10         Relationship
to Security Agreement. This Note is one of the Notes referred to in the Security Agreement as amended, restated, and/or supplemented
(the “Security Agreement”) and the Pledge and Security Agreement as amended, restated, and/or supplemented, (the “Pledge
Agreement”) dated as of the date hereof by and between the Borrower, the Holder and the other parties named in any such agreements.
This Note is entitled to the benefits of, shall be construed in accordance with, and is secured by the Liens and security interests
granted in the Security Agreement and the Pledge Agreement.

 

4.11         Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for
a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the
Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law
or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing
any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic
loss and without any bond or other security being required.

 

4.12         Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note 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 shall violate applicable laws governing usury,
the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The
Borrower covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive
the Borrower from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Borrower
(to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will
suffer and permit the execution of every such as though no such law has been enacted.

 

(Signature Pages Follow)

 

     

     

    

 

IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by its duly authorized officer as of April 1, 2016.

 

	 	EFACTOR GROUP CORP.
	 	 	 
	 	By	/s/ Mark Noffke
	 	 	
        Name: Mark Noffke

        Title: Chief Financial Officer

 

     

     

    

 

Exhibit A.

 

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert
$________________ of the principal amount of the Note (defined below) into Shares of Common Stock of EFACTOR GROUP CORP., a NEVADA
Corporation (the “Borrower”) according to the conditions of the Convertible Note of the Borrower dated as of
April 1, 2016 (the “Note”). No fee will be charged to the Holder or Holder’s Custodian for any conversion,
except for transfer taxes, if any.

 

Box Checked as to applicable instructions:

 

	 	 ̈	The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
	 	 	 
	 	 	Name of DTC Prime Broker: ___________________________________________
	 	 	 
	 	 	Account Number: __________________________________________________
	 	 	 
	 	  ̈	The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below:
	 	 	 
	 	 	Name:
	 	 	EIN #: 

 

	Date of Conversion:	 
	Conversion Price: 	 
	Shares to Be Delivered:	 
	
        Remaining Principal Balance Due

        After This Conversion:
	 
	Signature	
         

         

         

         

        

	Print Name:	Joshua SasonExhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), is made as of April 1, 2016, by and between EFACTOR
GROUP CORP., a Nevada corporation, with its principal offices located at 340 West 42nd Street Suite 880 New York, NY
10108 (the “Company”), MAGNA EQUITIES II, LLC, a New York corporation, with its address at 40 Wall Street, New
York, New York 10005 (“Magna”) and Increasive Ventures B.V. with its principal address at Stevensweg 2, 2141 VL Vijfhuizen,
The Netherlands (“IV”, each a “Buyer” and together with Magna, collectively, the “Buyers”).

 

WHEREAS:

 

A.           The
Company and the Buyers are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “1933 Act”);

 

B.           Each
Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement
a 12% senior secured convertible promissory note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal
amount of $112,500 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect
thereto in accordance with the terms thereof, each a “Note” and collectively, the “Notes”), convertible
into shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”), upon the terms and subject
to the limitations and conditions set forth in such Note.

 

C.           Each
Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of the Notes as is set
forth immediately below its name on the signature pages hereto; and

 

NOW THEREFORE,
the Company and the Buyers severally (and not jointly) hereby agree as follows:

 

1.             Purchase
and Sale of Notes.

 

(a)          Purchase
of Note. On or prior to the Closing Date (as defined below), the Company shall issue and sell to each Buyer and, subject to
the terms and conditions set forth in this Agreement, each Buyer agrees to purchase from the Company a Note for a purchase price
of $100,000 per Note (the “Purchase Price”).

 

(b)          Form
of Payment. On or prior to the Closing Date, each Buyer shall have paid the Purchase Price per Note by wire transfer of immediately
available funds to the Company, in accordance with the Company’s written wiring instructions, against future delivery of
the Notes. At the Closing, the Company shall deliver such duly executed Notes and other Transaction Documents (as defined below)
on behalf of the Company, to each Buyer, against delivery of such Purchase Price.

 

    	1

     

    

 

(c)          Closing
Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below,
the date and time of the issuance and sale of the Notes pursuant to this Agreement (the “Closing Date”) shall be 12:00
noon, Eastern Standard Time on or about April 12, 2016, or such other mutually agreed upon time. The closing of the transactions
contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to
by the parties.

 

(d)          Security
Agreement. On the Closing Date, the Company shall have duly authorized and delivered to the Buyers a Security Agreement executed
by the Company in favor of the Buyers dated as of the Closing Date in the form attached hereto as Exhibit B (the “Security
Agreement”), and such Security Agreement shall be in full force and effect as of the Closing Date.

 

(e)          Pledge
Agreement; Escrow Agreement. On the Closing Date, the Company shall have duly authorized and delivered to the Buyers (i) a
Security and Stock Pledge Agreement with respect to the Pledged Securities and Pledge Collateral (as such terms are defined in
the Pledge Agreement) all the issued and outstanding equity interests (the “Pledged Equity”) in each of the Company’s
Subsidiaries (defined below), in the form of Exhibit C attached hereto (the “Pledge Agreement”), which shall be in
full force and effect as of the Closing Date; and (ii) an Escrow Agreement, in the form of Exhibit D attached hereto (the “Escrow
Agreement”) appointing an escrow agent to hold the Pledged Securities and Pledge Collateral in escrow pursuant to and in
accordance with the terms of the Escrow Agreement.

 

(f)          Certain
Definitions. Capitalized Terms not otherwise defined herein shall have the meanings set forth in the Notes.

 

2.             Buyer’s
Representations and Warranties. Each Buyer for itself only and not for the other Buyer represents and warrants to the Company
that:

 

(a)          Investment
Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of
or otherwise pursuant to the Note, (such shares of Common Stock being collectively referred to herein as the “Conversion
Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards
the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act;
provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act.

 

(b)          Accredited
Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D of
the 1933 Act (an “Accredited Investor”).

 

(c)          Reliance
on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the
Buyer to acquire the Securities.

 

    	2

     

    

 

(d)          Governmental
Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.

 

(e)          Legends.
The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act may be
sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can
then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):

 

“NEITHER THE ISSUANCE
AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF
COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.”

 

The legend set forth above shall be removed
and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless
otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration
statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to
the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with
an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect
that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted
by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities, including those represented by
a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.
In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities
pursuant to an exemption from registration, such as Rule 144 or Regulation S, it will be considered an Event of Default of the
Note.

 

(f)          Authorization;
Enforcement. This Agreement has been duly and validly authorized by the Buyer. This Agreement has been duly executed and delivered
on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with
its terms.

 

    	3

     

    

 

(g)          Residency.
The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.

 

3.             Representations
and Warranties of the Company. The Company represents and warrants to each Buyer that:

 

(a)          Organization
and Qualification. The Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease,
use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. Schedule
3(a) sets forth a list of all of the subsidiaries of the Company (the “Subsidiaries”), whose issued and outstanding
securities are owed by the Company and which are being pledged and will be held pursuant to and in accordance with the Pledge Agreement
and the Escrow Agreement, respectively, and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries
is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership
or use of property or the nature of the business conducted by it makes such qualification necessary except where the failure to
be so qualified or in good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material
adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any,
taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection
herewith. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which
the Company owns, directly or indirectly, any equity or other ownership interest.

 

(b)          Authorization;
Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the
Notes, the Security Agreement, the Pledge Agreement, the Escrow Agreement, the Transfer Agent Letters (as defined below) and each
of the other agreements, documents and instruments expressly contemplated by this Agreement or otherwise relating to the Notes,
and any amendments, renewals, restatements, replacements or other modifications of the foregoing from time to time and to consummate
the transactions contemplated hereby and thereby and to issue the Note, in accordance with the terms hereof and thereof (collectively,
the “Transaction Documents”), (ii) the execution and delivery of the Transaction Documents by the Company and the consummation
by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Notes, the reservation
for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s
Board of Directors, including by a majority of the disinterested directors, and no further consent or authorization of the Company,
its Board of Directors, or its shareholders is required, (iii) each of the Transaction Documents has been duly executed and delivered
by the Company by its authorized representative, and such authorized representative is the true and official representative with
authority to sign this Agreement and the other Transaction Documents executed in connection herewith and bind the Company accordingly,
and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such Transaction Documents
will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

 

    	4

     

    

 

(c)          Capitalization.
As of the date hereof, the authorized capital stock of the Company consists of: (i) 300,000,000 shares of Common Stock, of which
4,376,752 shares are issued and outstanding; no shares are reserved for issuance except (i) 63,792 shares pursuant to the Company’s
stock option plans, (ii) 7,807,373 shares issuable upon conversion of all outstanding convertible notes, and (iii) 1,993,629 shares
reserved for issuance pursuant to warrants exercisable for shares of Common Stock. All of such outstanding shares of capital stock
are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable and have been issued in compliance
with all federal and state securities laws. No shares of capital stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of
the Company. As of the effective date of this Agreement, (i) except as set forth in this Section 3(c), there are no outstanding
options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or
other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for
any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) except as set
forth on Schedule 3(c)(1), there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated
to register the sale of any of its or their securities under the 1933 Act and (iii) except as set forth on Schedule 3(c)(2) and
for the Notes and the notes issued to the Buyers and warrants previously issued to each Buyer, there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders)
that will be triggered by the issuance of the Notes or the Conversion Shares. Except as set forth in the SEC Documents, none of
the Company’s and/or any of its Subsidiaries’ assets (whether tangible or non-tangible), including, but not limited
to, any securities of any of the Company’s Subsidiaries is directly and/or indirectly subject to any Liens. Neither the Company
nor any of its Subsidiaries is a direct or indirect party to any security agreement, pledge agreement or other agreement, relating
or effecting any of the Company’s and/or its Subsidiaries’ assets and no third party has any claim, asserted any claim
or informed the Company and/or any of its Subsidiaries that it believes it has a claim in or to any of the Company’s and/or
its Subsidiaries assets. All issued and outstanding securities of the Subsidiaries are owed beneficially and of record by the Company
free and clear of all Liens.

 

(d)          Issuance
of Shares and Notes. The Conversion Shares and the Notes are duly authorized, and the Conversion Shares are reserved for issuance
and the Notes and the Conversion Shares when issued will be validly issued, fully paid and non-assessable, and free from Liens
and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and/or any other person and
will not impose personal liability upon the holder thereof.

 

(e)          Acknowledgment
of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance
of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue Conversion
Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

 

    	5

     

    

 

(f)          No
Conflicts. The execution, delivery and performance of this Agreement, the Note and the other Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) conflict with or result in
a violation of any provision of the Articles of Incorporation or By-laws of the Company or any Subsidiary, each as amended through
and including the Closing Date (collectively, the “Internal Documents”), (ii) violate or conflict with, or result in
a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, note, debenture,
indenture, and/or any other Indebtedness (as defined below), and/or interest evidencing any such Indebtedness, patent, patent license
or instrument to which the Company or any of its Subsidiaries is a party, or by which any of its and/or any of its Subsidiaries’
assets are bound by and/or subject to or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company and/or
any of its Subsidiaries or their respective securities and/or assets are subject) applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is bound or affected. Neither the Company nor any of
its Subsidiaries is in violation of their Internal Documents or other organizational documents and neither the Company nor any
of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the Company or
any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to
take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company
or any of its Subsidiaries is bound or affected. The businesses of the Company and its Subsidiaries, if any, are not being conducted,
and shall not be conducted so long as a Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable
state securities laws, neither the Company nor any of its Subsidiaries is required to obtain any corporate, shareholder and/or
other consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency,
self regulatory organization or stock market or any third party in order for it to execute, deliver or perform each of its respective
obligations under this Agreement, the Note and/or any of the other Transaction Documents in accordance with the terms hereof or
thereof or to issue and sell the Note in accordance with the terms hereof and to issue the Conversion Shares upon conversion of
the Note. All consents, authorizations, orders, filings and registrations which the Company and/or any of its Subsidiaries is required
to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not
in violation of the listing requirements of the Over-the-Counter Bulletin Board (the “OTCQB”) and does not reasonably
anticipate that the Common Stock will be delisted by the OTCQB in the foreseeable future. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any of the foregoing.

 

    	6

     

    

 

(g)           SEC
Documents; Financial Statements. As of the date hereof, except for the failure of the Company to file its Annual Report on
Form 10-K for the year ended December 31, 2015 on or prior to March 30, 2016, the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated
by reference therein, being hereinafter referred to herein as the “SEC Documents”). The Company has delivered to the
Buyers true and complete copies of the SEC Documents, except for such exhibits and incorporated documents. As of their respective
dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations
of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, 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 light of the circumstances under which they were made, not misleading. None
of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except
for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates,
the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods
involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the
Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business subsequent to four months prior to the date hereof and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected
in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating
results of the Company. The Company is subject to the reporting requirements of the 1934 Act.

 

(h)           Absence
of Certain Changes. Except as set forth in the SEC Documents, since the date of the latest financial statements included in
the SEC reports: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result
in a Material Adverse Effect, (ii) neither the Company nor any of its Subsidiaries has 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 United States
generally accepted accounting principles (“GAAP”) or disclosed in filings made with the SEC, (iii) neither the Company
nor any of its Subsidiaries has altered its method of accounting, (iv) neither the Company nor any of its Subsidiaries has 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 their respective capital stock and (v) neither the Company nor any of its Subsidiaries has
issued any equity securities to any officer, director or affiliate, except pursuant to existing Company equity incentive plans.
Neither the Company nor any of its Subsidiaries has pending before the SEC any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by this Agreement, no event, liability or development has occurred or exists
with respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that
would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least one trading day prior to the date that this representation is made.

 

    	7

     

    

 

(i)            Absence
of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. To the knowledge of the Company, there are no threatened proceedings against or affecting
the Company or any of its Subsidiaries, without regard to whether it would have a Material Adverse Effect. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

 

(j)            Patents,
Copyrights, etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents,
patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service
names, trade names and copyrights (“Intellectual Property”) necessary to enable each to conduct their respective business
as now operated (and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining
to, or proceeding pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary
with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated
to be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current
and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person;
and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and each of
its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual
Property.

 

(k)           No
Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or
other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers
has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party
to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse
Effect. Except as set forth in the SEC Documents or in Schedule 3(k), 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, note, instrument, loan, credit agreement, security agreement,
pledge agreement or any other material agreement or instrument to which any of such entities is a party or by which any of such
entities’ properties and/or assets is directly and/or indirectly bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or governmental body or (ii) is or has been in violation
of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and
local laws applicable to its business and all such laws that affect the environment, except in each of the foregoing cases as could
not have or reasonably be expected to result in a Material Adverse Effect.

 

    	8

     

    

 

(l)             Tax
Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other income
tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and 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, except those being contested in good faith and has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the
statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None of the Company’s
tax returns is presently being audited by any taxing authority.

 

(m)           Certain
Transactions. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments
in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third
parties that are disclosed in the Company’s SEC documents, and none of the officers, directors, or employees of the Company
is presently a party to any transaction with the Company or any of its Subsidiaries (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, or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or partner. 

 

(n)            Disclosure.
All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the
Buyers pursuant hereto and otherwise in connection with the transactions contemplated hereby and/or in the other Transaction Documents
is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make
the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance
has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects,
operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports
filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act). 

 

(o)            Acknowledgment
Regarding Buyers’ Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the
capacity of arm’s length purchasers with respect to this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of
the Company and/or any of its Subsidiaries (or in any similar capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by any Buyer or any of their respective representatives or agents in connection with this Agreement,
the other Transaction Documents and the transactions contemplated hereby and thereby is not advice or a recommendation and is merely
incidental to a Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s
decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.

 

    	9

     

    

 

(p)            No
Integrated Offering. Neither the Company, any of its Subsidiaries nor any of their respective affiliates, nor any person acting
on behalf of the Company, any of its Subsidiaries or their respective affiliates, will sell, offer for sale, or solicit offers
to buy or otherwise negotiate with respect to any security (as defined in the 1933 Act) which will be integrated with the sale
of the securities in a manner which would require the registration of the securities under the Securities Act of 1933, or require
stockholder approval, under the rules and regulations of the trading market for the common stock. The Company will take all action
that is appropriate or necessary to assure that its offerings of other securities will not be integrated for purposes of the 1933
Act or the rules and regulations of the trading market, with the issuance of securities contemplated hereby.

 

(q)            No
Brokers. Neither the Company nor any of its Subsidiaries has taken action which would give rise to any claim by any person
for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.

 

(r)            Permits;
Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there
is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company
Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company
Permits. In the prior six months to the date hereof, neither the Company nor any of its Subsidiaries has received any notification
with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts,
defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

 

(s)            Environmental
Matters.

 

(i)          There
are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company,
no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal,
state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of
the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing.
The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment,
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

    	10

     

    

 

(ii)         Other
than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained
on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials
were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the
period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s
or any of its Subsidiaries’ business. 

 

(iii)        There
are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law. 

 

(t)            Title
to Property. The Company and its Subsidiaries each have exclusive and sole good and marketable title in fee simple to all real
property owned by them and good and marketable title to all personal property and/or other assets owned by them, in each case free
and clear of all direct and/or indirect liens, security interests, pledges, encumbrances, defects and/or other clouds on title.
Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting
and enforceable leases.

 

(u)           Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such 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 at a cost that would not have a Material Adverse Effect. The Company has provided
to each Buyer true and correct copies of all policies relating to directors’ and officers’ liability coverage, errors
and omissions coverage, and commercial general liability coverage. 

 

(v)           Internal
Accounting Controls. Except as set forth in the SEC Reports, the Company is in material compliance with all provisions of the
Sarbanes-Oxley Act of 2002 which are applicable to it as of the 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 has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company 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 Company’s disclosure controls
and procedures as of the end of the period covered by the Company’s 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 Company’s internal
control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial reporting.

 

    	11

     

    

 

(w)          Foreign
Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated
or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

(x)            Application
of Takeover Protections. The Company, its Subsidiaries and the Board of Directors of each has 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 articles of incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could become applicable to a Buyer as a result of a Buyer,
the Company and/or the Company’s Subsidiaries 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, the Buyers’ ownership
of the Securities and/or the actions and/or transactions contemplated by the Security Agreement, the Pledge Agreement and/or the
other Transaction Documents.

 

(y)           No
Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement
will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment
Company”). The Company is not controlled by an Investment Company. 

 

(z)            No
Disagreements with Accountants and Lawyers; Outstanding SEC Comments. 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 or immediately after the Closing Date will be current with respect to any fees owed to its accountants
which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. There
are no unresolved comments or inquiries received by the Company or its Affiliates from the SEC which remain unresolved as of the
date hereof.

 

    	12

     

    

 

(aa)          Bad
Actor Disqualification.

 

(i)          No
Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506 under the Securities
Act ("Regulation D Securities"), none of the Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering, any beneficial owner of 20% or more of the Company's outstanding
voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under
the Securities Act) connected with the Company in any capacity at the time of sale (each, an "Issuer Covered Person"
and, together, "Issuer Covered Persons") is subject to any of the "Bad Actor" disqualifications described in
Rule 506(d)(1)(i) to (viii) under the Securities Act (a "Disqualification Event"), except for a Disqualification Event
covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is
subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under
Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.

 

(ii)         Other
Covered Persons. The Company is not aware of any person that (i) has been or will be paid (directly or indirectly) remuneration
for solicitation of the Buyers in connection with the sale of the Securities and (ii) who is subject to a Disqualification Event.

 

(iii)        Notice
of Disqualification Events. The Company will notify the Buyers in writing of (i) any Disqualification Event relating to any Issuer
Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer
Covered Person, prior to any Closing of this Offering.

 

(bb)         Certain
Actions. Neither the Company nor any Subsidiary is aware of any actions taken and/or contemplated to be taken to effectuate
any change of control of the Company and/or any Subsidiary, the acquisition, sale, transfer and/or other disposition of any securities,
assets and/or rights of the Company and/or any Subsidiary.

 

(cc)         Indebtedness.
Other than as set forth in the SEC Documents or the schedules hereto, neither the Company nor any of its Subsidiaries has and or
is obligated to pay any Indebtedness. 

 

(dd)         Liens.
Other than Permitted Liens, neither the Company nor any Subsidiary and/or any of their respective assets are subject to any Liens.

 

(ee)          Breach
of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth
in this Section 3, and in addition to any other remedies available to each Buyer pursuant to this Agreement, it will be considered
an Event of default under the Notes.

 

    	13

     

    

 

(ff)           Bankruptcy
Status; Indebtedness. Neither the Company nor any Subsidiary has any current intention or expectation to file for reorganization
or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the date of this Agreement.
All outstanding Indebtedness of the Company and/or its Subsidiaries is set forth in the SEC Documents.

 

(gg)         Subsidiary
Rights.  The Company has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive
dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or any Subsidiary.

 

4.             COVENANTS.

 

(a)            Best
Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of
this Agreement.

 

(b)           Form
D; Blue Sky Laws; Form 8-K. The Company agrees to file a Form D with respect to the Securities if required under Regulation
D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyers at the applicable
closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or
prior to the Closing Date. The Company shall file a Current Report on Form 8-K disclosing this transaction not later than one business
day after the Closing Date.

 

(c)            Use
of Proceeds. The Company shall use the proceeds received by the Company from the Buyers from the sale of the Notes (i) to pay
$50,000 to HT Skills Ltd., and (ii) $5,000 to each of the Buyer’s respective legal counsel and the Company’s legal
counsel and (iii) the balance for working capital.

 

(d)            Right
of First Refusal. Unless it shall have first delivered to the Buyers, at least seventy two (72) hours prior to the closing
of such Future Offering (as defined herein), written notice describing the proposed Future Offering, including the terms and conditions
thereof and proposed definitive documentation to be entered into in connection therewith, and providing each Buyer an option during
the seventy two (72) hour period following delivery of such notice to purchase the securities being offered in the Future Offering
on the same terms as contemplated by such Future Offering (the limitations referred to in this sentence and the preceding sentence
are collectively referred to as the “Right of First Refusal”) (and subject to the exceptions described below), the
Company will not conduct any equity financing (including debt with an equity component or debt convertible into equity securities)
(hereinafter referred to as “Future Offerings”) during the period beginning on the Closing Date and ending two (2)
years following the Closing Date. In the event the terms and conditions of a proposed Future Offering are amended in any respect
after delivery of the notice to each Buyer concerning the proposed Future Offering, the Company shall deliver a new notice to each
Buyer describing the amended terms and conditions of the proposed Future Offering and each Buyer thereafter shall have an option
during the seventy two (72) hour period following delivery of such new notice to purchase its pro rata share of the securities
being offered on the same terms as contemplated by such proposed Future Offering, as amended. The foregoing sentence shall apply
to successive amendments to the terms and conditions of any proposed Future Offering. The Right of First Refusal shall not apply
to any transaction involving (i) issuances of securities in a firm commitment or “best efforts” underwritten public
offering (excluding a continuous offering pursuant to Rule 415 under the 1933 Act) or firm commitment or “best efforts”
secondary offering or (ii) issuances of securities as consideration for a merger, consolidation or purchase of assets, or in connection
with any strategic partnership or joint venture (the primary purpose of which is not to raise equity capital), or in connection
with the disposition or acquisition of a business, product or license by the Company. The Right of First Refusal also shall not
apply to the issuance of securities upon exercise or conversion of the Company’s options, warrants or other convertible securities
outstanding as of the date hereof or to the grant of additional options or warrants, or the issuance of additional securities,
under any Company stock option or restricted stock plan approved by the shareholders of the Company.

 

    	14

     

    

 

(e)            Financial
Information. Upon written request the Company agrees to send or make available the following reports to each Buyer until such
Buyer transfers, assigns, or sells all of the Securities: (i) within two (2) days after the filing with the SEC, a copy of its
Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after
release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making
available or giving to the shareholders of the Company, copies of any notices or other information the Company makes available
or gives to such shareholders.

 

(f)            Authorization
and Reservation of Shares. The Company shall at all times have authorized, and reserved for the purpose of issuance, a sufficient
number of shares of Common Stock to provide for the full conversion or exercise of the outstanding Note and issuance of the Conversion
Shares in connection therewith (based on the Conversion Price of the Note in effect from time to time) and as otherwise required
by the Note. The Company shall not reduce the number of shares of Common Stock reserved for issuance upon conversion of Note without
the consent of the Buyers. The Company shall at all times maintain the number of shares of Common Stock so reserved for issuance
at an amount (“Reserved Amount”) equal to four times the number that is then actually issuable upon full conversion
of the Note and Additional Note (based on the Conversion Price of the Note in effect from time to time). If at any time the number
of shares of Common Stock authorized and reserved for issuance (“Authorized and Reserved Shares”) is below the Reserved
Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of shareholders to authorize additional shares to meet the Company’s obligations
under this Section 4(f), in the case of an insufficient number of authorized shares, obtain shareholder approval of an increase
in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized
shares of the Company to ensure that the number of authorized shares is sufficient to meet the Reserved Amount. If the Company
fails to obtain such shareholder approval within thirty (30) days following the date on which the number of Reserved Amount exceeds
the Authorized and Reserved Shares, it will be considered an Event of default under Section 3.4 of the Note.

 

    	15

     

    

 

(g)            Listing.
The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as any
Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing
of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so long as any Buyer
owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCQB or any equivalent replacement exchange,
the Nasdaq Global Select Market, Nasdaq Global Market or Nasdaq Capital Market (collectively, “Nasdaq”), , the New
York Stock Exchange (“NYSE”), or the NYSE MKT (“NYSE MKT”) and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”)
and such exchanges, as applicable. The Company shall promptly provide to each Buyer copies of any notices it receives from the
OTCQB and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility
of the Common Stock for listing on such exchanges and quotation systems. If the market price of the Company’s Common Stock
shall at any time fall below the price required to continue to be quoted on the Company’s then principal exchange or automated
quotation system, the Company shall as soon as practicable take all actions necessary to effect a reverse split of the Company’s
Common Stock, such that the price would then be at least fifty percent (50%) above the required price, post-split. If the Company
fails to achieve the required reverse split within thirty (30) days following the date on which the price fell below the required
minimum trading price, it will be considered an Event of default under Section 3.4 of the Note.

 

(h)           Corporate
Existence. So long as any Note remains outstanding, the Company shall maintain its and each of its Subsidiaries’ corporate
existence and shall not directly and/or indirectly sell, transfer and/or otherwise dispose of any of its or any of its Subsidiaries’
assets including, but not limited to, the Pledged Equity and/or allow any lien to be placed on any of such assets or the Pledged
Equity, except in the event of a merger or consolidation or sale of all or substantially all of the Company’s assets, where
the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the other
Transaction Documents and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the Nasdaq, NYSE or
the NYSE MKT.

 

(i)             No
Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the
Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision
applicable to the Company or its securities.

 

(j)             Breach
of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies
available to the Buyers pursuant to this Agreement, it will be considered an Event of default under Section 3.4 of the Notes.

 

(k)            Failure
to Comply with the 1934 Act. So long as the Buyers beneficially own the Notes, the Company shall comply with the reporting
requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934 Act; provided,
however, if the Company files its Annual Report on Form 10-K for the fiscal year ended December 31, 2015 by May 31, 2016 and its
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2016 by June 30, 2016, the Company shall not be in default
in respect of this covenant.

 

    	16

     

    

 

(l)             Trading
Activities. Neither the Buyers nor their affiliates has an open short position in the common stock of the Company and the Buyers
agree that they shall not, and that they will cause their affiliates not to, engage in any short sales of or hedging transactions
with respect to the common stock of the Company.

 

(m)           Exclusivity.
Until the later of (i) one hundred eighty (180) days after the Issuance Date and (ii) the date the Buyers nor any of their affiliates
hold any Securities, neither the Company, any Subsidiary nor any of their respective agents, employees, affiliates and/or any person
acting on their behalf shall, directly or indirectly, initiate, publicly announce, seek, negotiate, solicit. encourage enter into
or discuss with any Person other than the Buyers, any transaction involving the sale, issuance, transfer, assignment and/or other
disposition of any securities, assets and/or rights of the Company and/or any of its Subsidiaries including, but not limited to,
the Pledge Agreement or any other transaction having an effect or result similar thereto. Neither the Company, any of its Subsidiaries
nor any of their respective employees, officers, directors, affiliates, representatives, agents or other related persons shall,
directly and/or indirectly negotiate, discuss, enter into any transaction and/or agreement with one Buyer and not the other Buyer
and shall provide the same documents and other information it provides to one Buyer simultaneously to the other Buyer.

 

(n)           Non-Frustration
of Purpose. So long as either Buyer or its affiliates hold any Securities, neither the Company nor any of its affiliates or
Subsidiaries, nor any of its or their respective officers, employees, directors, agents or other representatives, will effect,
enter into, announce or recommend to its stockholders any agreement, plan, arrangement or transaction the terms of which would
or would reasonably be expected to (i) have a material adverse effect on the Buyers’ investment in the Notes or Conversion
Shares and/or the other actions and/or transactions contemplated by the Transaction Documents or (ii) restrict, delay, conflict
with or impair the ability or right of the Company to timely perform its obligations under this Agreement, the Notes, and/or other
Transaction Documents including, without limitation, the obligation of the Company to timely deliver shares of Common Stock to
the Buyers or their affiliates in accordance with this Agreement or the Notes.

 

(o)           Restricted
Transactions. Until the later the date neither Buyer and/or any of their respective affiliates hold any Securities, neither
the Company nor any of its affiliates or Subsidiaries, nor any of its or their respective officers, employees, directors, agents
or other representatives, will, without the prior written consent of the Investor, directly or indirectly, solicit, accept, enter
into, announce, or otherwise cooperate in any way, assist or participate in or facilitate or encourage, any exchange (i) of any
security of the Company or any of its subsidiaries for any other security of the Company or any of its subsidiaries, except to
the extent (x) consummated pursuant to an exchange registered under a registration statement of the Company filed pursuant to the
1933 Act and declared effective by the SEC or (y) such exchange is exempt from registration pursuant to an exemption provided under
the 1933 Act (other than Section 3(a)(10) of the 1933 Act) or (ii) of any indebtedness or other securities of the Company or any
of its subsidiaries relying on the exemption provided by Section 3(a)(10) of the 1933 Act. Notwithstanding the foregoing or anything
contained herein to the contrary, neither the Company nor any of its affiliates or subsidiaries, nor any of its or their respective
officers, employees, directors, agents or other representatives, will, without the prior written consent of the Buyers (which consent
may be withheld, delayed or conditioned in the Buyers’ sole discretion), directly or indirectly, cooperate in any way, assist
or participate in, facilitate or encourage any effort or attempt by any third party to effect any acquisition of securities of
the Company by such third party from an existing holder of such securities in connection with a proposed exchange of such securities
of the Company (whether pursuant to Section 3(a)(9) or 3(a)(10) of the 1933 Act or otherwise).

 

    	17

     

    

 

5.              Transfer
Agent Instructions. The Company covenants and agrees that it will at all times while any Securities remain outstanding maintain
a duly qualified independent transfer agent. On or prior to the initial Closing Date, the Company shall provide a copy of its agreement
with the transfer agent to each Buyer. If a new transfer agent is appointed at any time, the Company shall provide each Buyer with
a copy of the new agreement within three (3) business days of its execution. The Company shall issue irrevocable instructions to
its transfer agent to issue certificates, registered in the name of each Buyer or its nominee, for the Conversion Shares in such
amounts as specified from time to time by the applicable Buyer to the Company upon conversion of the Notes in accordance with the
terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its
transfer agent, the Company shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer
Agent Instructions in a form as initially delivered pursuant to this Agreement (including but not limited to the provision to irrevocably
reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Company and the Company. Prior
to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to
Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all
such certificates shall bear the restrictive legend specified in Section 2(e) of this Agreement. The Company warrants that: (i)
no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions
to give effect to Section 2(e) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under
the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number
of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and
that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided
in this Agreement and the Notes; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its
transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion Shares to be
issued to the Buyers upon conversion of or otherwise pursuant to the Notes as and when required by the Notes and this Agreement;
and (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer
agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate
for any Conversion Shares issued to the Buyers upon conversion of or otherwise pursuant to the Notes as and when required by the
Notes and this Agreement. If a Buyer provides the Company, at the cost of such Buyer, with (i) an opinion of counsel in form, substance
and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may
be made without registration under the 1933 Act and such sale or transfer is effected or (ii) such Buyer provides reasonable assurances
that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion
Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and
in such denominations as specified by such Buyer. The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyers, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyers shall be entitled,
in addition to all other available remedies, to seek an injunction restraining any breach and requiring immediate transfer, without
the necessity of showing economic loss and without any bond or other security being required.

 

    	18

     

    

 

6.             Conditions
to the Company’s Obligation to Sell and Perform. The obligation of the Company hereunder to issue and sell the Notes
to the Buyers at the Closing and perform all other actions and/or transactions as contemplated by this Agreement and the other
Transaction Documents, is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto,
provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole
discretion:

 

(a)            Each
Buyer shall have executed this Agreement and delivered the same to the Company.

 

(b)           Each
Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

 

(c)            The
representations and warranties of the each Buyer shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date),
and the applicable Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied with by the applicable Buyer at or prior to the Closing
Date.

 

(d)           No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

7.             Conditions
to The Buyers’ Obligation to Purchase. The obligation of each Buyer to purchase the Notes at the Closing is subject to
the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the
Buyers’ sole benefit and may be waived by the Buyers (but solely as to such Buyer) at any time in its sole discretion:

 

(a)            The
Company shall have executed and delivered to each Buyer the following:

 

		(i)	this Agreement

		(ii)	the Security Agreement and all other documents contemplated
therein including, but not limited to, UCC-1 financing statements in form and on terms satisfactory to the Buyers

		(iii)	the Pledge Agreement and all other documents contemplated
therein including, but not limited to, the Pledged Securities (as defined in the Pledge Agreement), the Pledge Collateral and
stock transfer powers for the Pledged Securities executed but not dated in form and substance satisfactory to the Buyers

 

    	19

     

    

 

		(iv)	the Escrow Agreement

		(v)	such other documents, instruments and/or certificates requested
by the Buyers

 

(b)            The
Company shall have delivered to each Buyer a duly executed Note (in such denominations as each Buyer shall request) in accordance
with Section 1(b) above.

 

(c)            The
Irrevocable Transfer Agent Instructions, in form and substance satisfactory to each Buyer, which shall have been delivered to and
acknowledged in writing by the Company’s Transfer Agent.

 

(d)            The
representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as
of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement and the other Transaction Documents to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. Each Buyer shall have received a certificate or certificates, executed by the chief executive officer
and chief financial officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters
as may be reasonably requested by the Buyers including, but not limited to certificates with respect to the Company’s Internal
Documents and Board of Directors’ resolutions relating to the transactions contemplated hereby and in the other Transaction
Documents.

 

(e)            No
litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated
or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement
and in the other Transaction Documents.

 

(f)            No
event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company and/or any Subsidiary
including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely
in its 1934 Act reporting obligations, or in the sole discretion of Buyers, the transaction’s risk profile, market pricing
or implied volatility substantially changes, due diligence concerns arise, or any other conditions material to the successful closing
of the transaction are not acceptable to the Buyers.

 

(g)            The
Conversion Shares shall have been authorized for quotation on the OTCQB and trading in the Common Stock on the OTCQB or such equivalent
exchange and shall not have been suspended by the SEC or the OTCQB or such equivalent exchange.

 

    	20

     

    

 

8.             Governing
Law; Miscellaneous.

 

(a)            Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard
to principles of conflicts of laws. Any action brought by any party hereto (including the Subsidiaries who are not a party hereto
but are controlled by and are affiliates of the Company) against any other party directly and/or indirectly concerning, related
to and/or arising out of this Agreement, any other Transaction Document and/or the actions and/or other transactions contemplated
hereby and/or thereby shall be brought only and exclusively in the state courts or in the federal courts located in the state,
city and county of New York. The parties hereto (including the Subsidiaries who are not a party hereto but are controlled by and
are affiliates of the Company) hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The prevailing
party(s) shall be entitled to recover from the other party(s) its reasonable attorney's fees and costs (except neither Buyer shall
be obligated to pay the other Buyer unless one Buyer brings action against the other). In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule
of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified
to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service
of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other
Transaction Documents, 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.

 

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.

 

(b)           Counterparts;
Signatures by Facsimile. 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.

 

(c)            Headings.
The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of,
this Agreement.

 

(d)           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.

 

    	21

     

    

 

(e)            Entire
Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company
nor the Buyers make any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by the majority in interest of each Buyer.

 

(f)            Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, email or facsimile, addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall
be deemed effective (a) upon hand delivery or delivery by facsimile and/or email with accurate confirmation generated by the transmitting
facsimile machine or emailing computer, at the address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day following such delivery (if delivered other than
on a business day during normal business hours where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:

 

If to the Company:

 

EFACTOR GROUP CORP.

340 West 42nd Street, Suite
880

New York, NY 10108 USA

Attn: Mark Noffke

Email: markn@efactorgroup.com

Facsimile: 888-311-9659

 

If to MAGNA:

 

MAGNA GROUP

40 Wall Street

New York, NY 10005

Attn: Joshua Sason, Managing
Member

Email: joshua.sason@mag.na

Facsimile: _N/A_____

 

    	22

     

    

 

If to IV:

 

INCREASIVE VENTURES B.V:

Increasive Ventures B.V.

Stevensweg 2,

2141 VL Vijfhuizen,

The Netherlands

Attn: Ad Prins

Email: ad@whiteeagle.nl

Facsimile: N/A

 

Each party shall provide
written notice to the other parties of any change in address.

 

(g)           Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor any Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, subject to Section 2(e), any Buyer may assign its rights hereunder to any
person that purchases Securities in a private transaction from a Buyer or to any of its “affiliates,” as that term
is defined under the 1934 Act, without the consent of the Company.

 

(h)           Third
Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

(i)             Survival.
The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the
closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyers. The Company agrees to
indemnify and hold harmless each of the Buyers and all their officers, directors, employees and agents for loss or damage arising
as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants
set forth in this Agreement or the Transaction Documents or any of its covenants and obligations under this Agreement or the Transaction
Documents, including advancement of expenses as they are incurred.

 

(j)             Publicity.
The Company, and each of the Buyers shall have the right to review a reasonable period of time before issuance of any press releases,
SEC, OTCQB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of each of the Buyers, to make any SEC, OTCQB (or
other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations;
provided however, each of the Buyers shall be consulted by the Company in connection with any such press release prior to its release
and shall be provided with a copy thereof and be given an opportunity to comment thereon and no such press release shall be issued
without the prior approval of the Buyers).

 

    	23

     

    

 

(k)            Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby and thereby.

 

(l)             No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.

 

(m)           Remedies.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyers by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Agreement and the Transaction Documents will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Agreement, that the Buyers shall be entitled, in addition
to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to seek an injunction
or injunctions restraining, preventing or curing any breach of this Agreement or the Transaction Documents and to enforce specifically
the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.

 

(n)           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 a Buyer 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 Buyer 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 a Note, the Buyer shall be required to return any shares of Common Stock subject to any such rescinded
conversion or exercise notice.

 

(o)           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 Buyers 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 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 the Buyers with respect to indebtedness evidenced by the Transaction Documents, such excess shall
be applied by the Buyers to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of
handling such excess to be at the Buyers’ election.

 

    	24

     

    

 

IN WITNESS WHEREOF,
the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.

 

	EFACTOR GROUP CORP.	 
	 	 
	By:	/s/ Mark Noffke	 
	 	Name: Mark Noffke	 
	 	Title: Chief Financial Officer	 
	 	 	 
	MAGNA EQUITIES II, LLC	 
	 	 	 
	By:	/s/ Joshua Sason	 
	 	Name:  Joshua Sason	 
	 	Title:  Managing Member	 

 

INCREASIVE VENTURES B.V.

 

	By:	/s/ Ad Prins	 
	 	Name: Ad Prins	 
	 	Title: Managing Director	 

 

    	25

     

    

 

EXHIBIT A

 

FORM OF NOTE

 

    	26

     

    

 

EXHIBIT B

 

SECURITY AGREEMENT

 

    	27

     

    

 

EXHIBIT C

 

PLEDGE AGREEMENT

 

    	28

     

    

 

EXHIBIT D

 

ESCROW AGREEMENT

 

    	29

     

    

 

SCHEDULE 3(a)

 

LIST OF SUBSIDIARIES’ NAME,
ADDRESS AND PLACE OF INCORPORATION

 

	Name of Subsidiary	 	Address	 	Jurisdiction of Incorporation
	 	 	 	 	 
	The E-Factor Corporation	 	
        340 West 42nd Street, Suite 880

        New York, NY 10108 USA
	 	Delaware
	 	 	 	 	 
	MCC International Limited	 	
        Southampton Science Park

        2 Venture Road

        Chilworth, Southampton 

Hampshire SO16 7NP
	 	United Kingdom
	 	 	 	 	 
	RocketHub Inc.	 	
        119 W. 24th Street

        4th Floor

        New York, NY 10011
	 	New York
	 	 	 	 	 
	ELEQT Ltd	 	
        29 Portland Place

        London W1B 1QB

        UK
	 	United Kingdom
	 	 	 	 	 
	HT Skills Ltd	 	
        321 Chase Road

        London, N14 6JT GB
	 	United Kingdom
	 	 	 	 	 
	GroupCard BV	 	
        Hornweg 5 1432 GD Aalsmeer

        Postbus 8004 1180 LA Amstelveen

        The Netherlands
	 	The Netherlands
	 	 	 	 	 
	Member Digital Ltd	 	
        The Guild

        Guildhall

        High Street

        Bath BA1 5EB

        United Kingdom
	 	United Kingdom
	 	 	 	 	 
	SubHub LLC	 	
        The Guild

        Guildhall

        High Street

        Bath BA1 5EB

        United Kingdom
	 	Florida
	 	 	 	 	 
	Robson Dowry Associates Ltd.	 	
        7 Berkeley Square

        Clifton, Bristol BS8 1HG

        United Kingdom
	 	United Kingdom

 

    	30

     

    

 

SCHEDULE 3(c)(1)

 

REGISTRATION RIGHTS

 

		·	Promissory Note dated January 9, 2015

 

		·	Promissory Notes dated January 26, 2015, September 21, 2015 and February 5, 2016

 

    	31

     

    

 

SCHEDULE 3(c)(2)

 

ANTI-DILUTION PROVISIONS

 

		·	Promissory Note dated 11/13/2015

		·	Promissory Note dated 11/20/2015

		·	Promissory Note dated 11/20/2015

		·	Promissory Note dated 11/23/2015

		·	Promissory Note dated 1/13/2016

		·	Promissory Note dated 1/27/2016

		·	Promissory Note dated 1/28/2016

		·	Promissory Note dated 1/28/2016

		·	Promissory Note dated 11/24/2015

 

    	32

     

    

 

SCHEDULE 3(k)

 

DEFAULTS

 

	Promissory Notes	 	 	 	 	 	 	 	 	 	 
	 	 	Date	 	Amount	 	Maturity date	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	5/13/2008	 	€	15,000	 	 	N/A	 	 	 	 	 	 	 	 
	 	 	12/6/2012	 	$	200,000	 	 	12/5/2013	 	 	 	 	 	 	 	 
	 	 	7/20/2010	 	€	15,000	 	 	N/A	 	 	 	 	 	 	 	 
	 	 	8/30/2013	 	$	39,610	 	 	10/29/2014	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	8/30/2013	 	 	100,000	 	 	10/29/14	 	 	 	 	 	 	 	 
	 	 	10/22/2013	 	$	85,000	 	 	4/22/2014	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	10/26/2012	 	$	40,000	 	 	11/15/2012	 	 	 	 	 	 	 	 
	 	 	12/26/2013	 	$	20,399	 	 	6/28/2014	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	12/22/2014	 	 	17,500.00	 	 	2/28/2014	 	 	 	 	 	 	 	 
	 	 	1/2/2014	 	 	62,180.00	 	 	2/28/2014	 	 	 	 	 	 	 	 
	 	 	1/9/2014	 	 	13,559.00	 	 	2/28/2014	 	 	 	 	 	 	 	 
	 	 	11/1/2013	 	 	40,739.00	 	 	1/14/2014	 	 	 	 	 	 	 	 
	 	 	7/30/2014	 	 	36,833.00	 	 	8/30/2014	 	 	 	 	 	 	 	 
	 	 	9/3/2014	 	 	129,658.00	 	 	3/3/2015	 	 	 	 	 	 	 	 
	 	 	10/30/2015	 	 	154,000.00	 	 	12/15/2015	 	 	 	 	 	 	 	 
	 	 	7/22/2015	 	 	120,000.00	 	 	11/19/2015	 	 	 	 	 	 	 	 
	 	 	7/31/2015	 	 	1,250,000.00	 	 	12/31/2015	 	 	 	 	 	 	 	 
	 	 	6/19/2015	 	 	226,560.00	 	 	10/31/2015	 	 	 	 	 	 	 	 
	 	 	1/9/2015	 	 	125,000.00	 	 	1/9/2016	 	 	 	 	 	 	 	 
	 	 	1/26/2015	 	 	78,750.00	 	 	7/25/2015	 	 	 	 	 	 	 	 
	 	 	9/21/2015	 	 	19,300.00	 	 	9/21/2016	 	 	 	 	 	 	 	 
	 	 	2/5/2016	 	 	58,300.00	 	 	2/5/2017	 	 	 	 	 	 	 	 
	 	 	3/2/2015	 	 	175,000.00	 	 	3/1/2016	 	 	 	 	 	 	 	 
	 	 	3/2/2015	 	 	200,000.00	 	 	3/1/2016	 	 	 	 	 	 	 	 
	 	 	2/26/2015	 	 	25,000.00	 	 	2/26/2016	 	 	 	 	 	 	 	 
	 	 	3/15/2015	 	 	15,000.00	 	 	3/14/2016	 	 	 	 	 	 	 	 
	 	 	3/27/2015	 	 	29,500.00	 	 	3/26/2016	 	 	 	 	 	 	 	 
	 	 	4/8/2015	 	 	200,000.00	 	 	4/7/2016	 	 	 	 	 	 	 	 
	 	 	5/1/2015	 	 	53,000.00	 	 	4/30/2016	 	 	 	 	 	 	 	 
	 	 	5/22/2015	 	 	200,000.00	 	 	5/21/2016	 	 	 	 	 	 	 	 
	 	 	5/27/2015	 	 	85,000.00	 	 	5/26/2016	 	 	 	 	 	 	 	 
	 	 	11/13/2015	 	 	110,000.00	 	 	11/12/2016	 	 	 	 	 	 	 	 
	 	 	11/20/2015	 	 	29,700.00	 	 	11/19/2016	 	 	 	 	 	 	 	 
	 	 	11/20/2015	 	 	57,750.00	 	 	11/19/2016	 	 	 	 	 	 	 	 
	 	 	11/17/2015	 	 	11,000.00	 	 	2/17/2016	 	 	 	 	 	 	 	 
	 	 	11/20/2015	 	 	5,500.00	 	 	12/31/2015	 	 	 	 	 	 	 	 
	 	 	11/23/2015	 	 	5,500.00	 	 	12/31/2015	 	 	 	 	 	 	 	 
	 	 	11/23/2015	 	 	5,500.00	 	 	12/31/2015	 	 	 	 	 	 	 	 
	 	 	1/13/2016	 	 	50,000.00	 	 	1/12/2017	 	 	 	 	 	 	 	 
	 	 	1/27/2016	 	 	63,000.00	 	 	10/26/2016	 	 	 	 	 	 	 	 
	 	 	1/28/2016	 	 	35,000.00	 	 	1/27/2017	 	 	 	 	 	 	 	 
	 	 	3/11/2016	 	 	60,000.00	 	 	3/11/2017	 	 	 	 	 	 	 	 
	 	 	1/28/2016	 	 	35,000.00	 	 	1/27/2017	 	 	 	 	 	 	 	 
	 	 	11/24/2015	 	 	150,000.00	 	 	11/23/2016	 	 	 	 	 	 	 	 
	 	 	4/27/2015	 	 	150,000.00	 	 	8/31/2015	 	 	 	 	 	 	 	 
	 	 	1/31/2013	 	 	10,000.00	 	 	5/31/2016	 	 	 	 	 	 	 	 
	 	 	4/27/2012	 	 	20,000.00	 	 	8/31/2015	 	 	 	 	 	 	 	 
	 	 	4/27/2012	 	 	10,000.00	 	 	8/31/2015	 	 	 	 	 	 	 	 
	 	 	4/27/2012	 	 	30,000.00	 	 	4/27/2015	 	 	 	 	 	 	 	 
	 	 	4/27/2012	 	 	25,000.00	 	 	4/27/2015	 	 	 	 	 	 	 	 
	 	 	4/27/2012	 	 	10,000.00	 	 	4/27/2015	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

Other Defaults

 

		·	Employment and non-competition agreement dated as of July 30, 2012.

 

		·	Company Voluntary Arrangement for MCC International, Ltd.

 

    	33

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00256-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00256-of-00352.parquet"}]]