Document:

FORM OF WARRANT

 

ELEPHANT TALK COMMUNICATIONS CORP.

 

Warrant
To Purchase Common Stock

 

Warrant No.: _________

Date of Issuance: June [__], 2013 (“Issuance
Date”)

 

Elephant Talk Communications
Corp., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, [Crede CG III, Ltd.][OTHER HOLDERS], the registered holder
hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase
from the Company, at the Exercise Price (as defined below) then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
at any time or times on or after the Issuance Date but not after 11:59 p.m., New York time, on the Expiration Date (as defined
below), [___________]1 (subject to adjustment as provided herein) fully paid and non-assessable shares of Common Stock
(as defined below) (the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in
this Warrant shall have the meanings set forth in Section 17. This Warrant is one of the Warrants to Purchase Common Stock (the
“SPA Warrants”) issued pursuant to that certain Securities Purchase Agreement, dated as of June 3, 2013, by
and among the Company and the investor(s) thereunder (the “Buyer” or “Buyers” as
applicable) referred to therein (the “Securities Purchase Agreement”).

 

 

1 Forty five percent (45%) warrant coverage.

 

    	 

    	 

    

 

1.          EXERCISE
OF WARRANT.

 

(a)          Mechanics
of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section
1(f)), this Warrant may be exercised by the Holder on any day on or after the Issuance Date but prior to the Expiration Date,
in whole or in part, by delivery (whether via facsimile or otherwise) of a written notice, in the form attached hereto as Exhibit
A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. Within one (1)
Trading Day following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company of an amount equal
to the Exercise Price in effect on the date of such exercise multiplied by the number of Warrant Shares as to which this Warrant
was so exercised (in respect of such specific exercise, the “Aggregate Exercise Price”) in cash or via wire
transfer of immediately available funds if the Holder did not notify the Company in such Exercise Notice that such exercise was
made pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver the original of
this Warrant in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice with respect to less than
all of the Warrant Shares shall have the same effect as cancellation of the original of this Warrant certificate and issuance
of a new Warrant certificate evidencing the right to purchase the remaining number of Warrant Shares. Execution and delivery of
an Exercise Notice for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original of
this Warrant certificate after delivery of the Warrant Shares in accordance with the terms hereof. On or before the first (1st)
Trading Day following the date on which the Company has received an Exercise Notice, the Company shall transmit by facsimile an
acknowledgment of confirmation of receipt of such Exercise Notice, in the form attached hereto as Exhibit C, to
the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the third (3rd)
Trading Day following the date on which the Company has received such Exercise Notice, the Company shall (X) provided that the
Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer
Program (which the Company shall cause the Transfer Agent to do at Holder’s request), upon the request of the Holder, credit
such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit/ Withdrawal at Custodian system, or (Y) if the Transfer Agent
is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the Holder or, at the Holder’s
instruction pursuant to the Exercise Notice, the Holder’s agent or designee, in each case, sent by reputable overnight courier
to the address as specified in the applicable Exercise Notice, a certificate, registered in the Company’s share register
in the name of the Holder or its designee (as indicated in the applicable Exercise Notice), for the number of shares of Common
Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of an Exercise Notice, the Holder shall be deemed
for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery
of the certificates evidencing such Warrant Shares (as the case may be). If this Warrant is submitted in connection with any exercise
pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than
the number of Warrant Shares being acquired upon an exercise, then, at the request of the Holder and upon surrender hereof by
the Holder at the principal office of the Company, the Company shall as soon as practicable and in no event later than three (3)
Business Days after any exercise and at its own expense, issue and deliver to the Holder (or its designee) a new Warrant (in accordance
with Section 8(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of
Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued
shall be rounded up to the nearest whole number. The Company shall pay any and all taxes and fees which may be payable with respect
to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

 

(b)          Exercise
Price. For purposes of this Warrant, “Exercise Price” means $0.975, subject to adjustment as provided herein.

 

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(c)          Company’s
Failure to Timely Deliver Securities. If the Company shall fail, for any reason or for no reason, to issue to the Holder within
the later of (i) three (3) Trading Days after the Company’s receipt of the applicable Exercise Notice or Exchange Notice,
as applicable, and (ii) two (2) Trading Days after the Company’s receipt of the Aggregate Exercise Price or valid notice
of a Cashless Exercise, as applicable (such later date, the “Share Delivery Deadline”), a certificate for the
number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s
share register or to credit the Holder’s balance account with DTC for such number of shares of Common Stock to which the
Holder is entitled upon the Holder’s exercise of this Warrant (as the case may be), and if on or after such Share Delivery
Deadline the Holder (or any other Person in respect, or on behalf, of the Holder) purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of all or any portion of the number of shares
of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common
Stock, issuable upon such exercise or exchange that the Holder so anticipated receiving from the Company, then, in addition to
all other remedies available to the Holder, the Company shall, within three (3) Business Days after the Holder’s request
and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including,
without limitation, by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which
point the Company’s obligation to so issue and deliver such certificate or credit the Holder’s balance account with
DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise or exchange hereunder
(as the case may be) (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to so issue
and deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit the Holder’s
balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise
or exchange hereunder (as the case may be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common Stock multiplied by (B) the lowest Closing Sale Price of the Common
Stock on any Trading Day during the period commencing on the date of the Share Delivery Deadline and ending on the date of such
issuance and payment under this clause (ii).

 

(d)          Cashless
Exercise. Notwithstanding anything contained herein to the contrary (other than Section 1(f) below), if at the time of an
exercise hereof any Equity Conditions Failure shall then exist, then the Holder may, in its sole discretion, exercise this Warrant
in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to make a cashless exercise (each a “Cashless Exercise”)
under this paragraph (d). A Cashless Exercise under this paragraph (d) may be made, at the election of the Holder from time to
time and irrespective of any other election to make a Cashless Exercise, so that upon such exercise Holder shall receive the “Net
Number” of shares of Common Stock determined according to the following formula:

 

	Net Number = 	(A x B) - (A x C)
	 	            B

 

For purposes of the
foregoing formula:

 

A= the total number of shares with
respect to which this Warrant is then being exercised.

 

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B= as applicable: (i) the Closing
Sale Price of the Common Stock on the Trading Day immediately preceding the date of the applicable Exercise Notice if such Exercise
Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day that is not a Trading Day or (2) both executed
and delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) the Bid Price
of the Common Stock as of the time of the Holder’s execution of the applicable Exercise Notice if such Exercise Notice is
executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter pursuant
to Section 1(a) hereof or (iii) the Closing Sale Price of the Common Stock on the date of the applicable Exercise Notice if the
date of such Exercise Notice is a Trading Day and such Exercise Notice is both executed and delivered pursuant to Section 1(a)
hereof after the close of “regular trading hours” on such Trading Day.

 

C= the Exercise Price then in effect
for the applicable Warrant Shares at the time of such exercise.

 

Notwithstanding anything
to the contrary contained herein, exercise of this Warrant on a cashless basis may also be made from time to time at the election
of the Holder (and irrespective of any election to make a Cashless Exercise under this paragraph (d)), pursuant to the exchange
provisions of Section 5 of this Warrant.

 

(e)          Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant
Shares to be issued pursuant to the terms hereof (including, without limitation, the Net Number), the Company shall promptly issue
to the Holder the number of Warrant Shares that are not disputed, provided that following such issuance to Holder such dispute
shall be resolved in accordance with Section 14.

 

(f)          Limitations
on Exercises and Exchanges.

 

(i)          Beneficial
Ownership. Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not be exercisable or exchangeable
by the Holder hereof to the extent (but only to the extent) that the Holder or any of its Affiliates would beneficially own in
excess of 9.9% (the “Maximum Percentage”) of the Common Stock. To the extent the above limitation
applies, the determination of whether this Warrant shall be exercisable or exchangeable (vis-à-vis other convertible, exercisable
or exchangeable securities owned by the Holder or any of its Affiliates) and of which such securities shall be exercisable or exchangeable
(as among all such securities owned by the Holder) shall, subject to such Maximum Percentage limitation, be determined on the basis
of the first submission to the Company for conversion, exercise or exchange (as the case may be). No prior inability to exercise
or exchange this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with
respect to any subsequent determination of exercisability or exchangeability. For the purposes of this paragraph, beneficial ownership
and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall
be determined in accordance with Section 13(d) of the 1934 Act (as defined in the Securities Purchase Agreement) and the rules
and regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a manner otherwise than in strict
conformity with the terms of this paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary
or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this paragraph shall apply
to a successor Holder of this Warrant. The holders of Common Stock shall be third party beneficiaries of this paragraph and the
Company may not waive this paragraph without the consent of holders of a majority of its Common Stock. For any reason at any time,
upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing to
the Holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise or exchange
of convertible or exercisable or exchangeable securities into Common Stock, including, without limitation, pursuant to this Warrant
or securities issued pursuant to the Securities Purchase Agreement.

 

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(ii)         Principal
Market Regulation. In order to comply with the rules and regulations of the Principal Market, the Company shall not issue any
shares of Common Stock upon exercise or exchange of this Warrant if the issuance of such shares of Common Stock would, when added
to the number of Common Shares (as defined in the Securities Purchase Agreement) issued pursuant to the Securities Purchase Agreement
and the SPA Warrants, exceed [___________] shares of Common Stock in the aggregate (the “Exchange Cap”), based
upon the total issued and outstanding number of shares of common stock as of the preceding trading day of the Issuance Date, except
that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by
the applicable rules of the Principal Market for issuances of shares of Common Stock in excess of such amount, (B) is no longer
traded on the Principal Market, or (C) obtains a written opinion from outside counsel to the Company that such approval is not
required, which opinion shall be reasonably satisfactory to the Holder. For so long as the Exchange Cap is applicable, no Buyer
shall be issued in the aggregate, upon exercise or exchange of any SPA Warrants, shares of Common Stock in an amount greater than
the product of (i) the Exchange Cap multiplied by (ii) the quotient of (1) the Purchase Price paid by such Buyer pursuant to the
Securities Purchase Agreement divided by (2) the Purchase Price paid by all Buyers pursuant to the Securities Purchase Agreement
(with respect to each Buyer, the “Exchange Cap Allocation”). In the event that any Buyer shall sell or otherwise
transfer any of such Buyer’s SPA Warrants, the transferee shall be allocated a pro rata portion of such Buyer’s Exchange
Cap Allocation with respect to such portion of such SPA Warrants so transferred, and the restrictions in this Section 1(f)(ii)
shall apply to such transferee with respect to the portion of the Exchange Cap Allocation so allocated to such transferee. Upon
exercise or exchange in full of a holder’s SPA Warrants, the difference (if any) between such holder’s Exchange
Cap Allocation and the number of shares of Common Stock actually issued to such holder upon such holder's exercise or exchange
in full of such SPA Warrants shall be allocated to the respective Exchange Cap Allocations of the remaining holders of SPA Warrants
on a pro rata basis in proportion to the shares of Common Stock underlying the SPA Warrants then held by each such holder.

 

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(g)          Insufficient
Authorized Shares. The Company shall at all times keep reserved for issuance under this Warrant a number of shares of Common
Stock as shall be necessary to satisfy the Company’s obligation to issue shares of Common Stock hereunder (without regard
to any limitation otherwise contained herein with respect to the number of shares of Common Stock that may be acquirable
upon exercise or exchange of this Warrant). If, notwithstanding the foregoing, and not in limitation thereof, at any time while
any of the SPA Warrants remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of
Common Stock to satisfy its obligation to reserve for issuance upon exercise or exchange of the SPA Warrants at least a number
of shares of Common Stock equal to the number of shares of Common Stock as shall from time to time be necessary to effect the
exercise or exchange of all of the SPA Warrants then outstanding (the “Required Reserve Amount”) (an “Authorized
Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized
shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for all the SPA Warrants
then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence
of an Authorized Share Failure, but in no event later than ninety (90) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common
Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its reasonable
efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock.

 

(h)          Activity
Restrictions

 

(i)          For
so long as Holder or any of its Affiliates holds any Warrants or any Warrant Shares, neither Holder nor any Affiliate will:  (i)
vote any shares of Common Stock beneficially owned by it, solicit any proxies, or seek to advise or influence any Person with respect
to any voting securities of the Company; (ii) engage or participate in any actions, plans or proposals which relate to or would
result in (a) acquiring additional securities of the Company, alone or together with any other Person, which would result in Buyer
or its Affiliates beneficially owning (within the meaning of Section 13(d) under the 1934 Act) more than 9.9% of the Common Stock,
(b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Company or any of its Subsidiaries,
(c) a sale or transfer of a material amount of assets of the Company or any of its Subsidiaries, (d) any change in the present
board of directors or management of the Company, including any plans or proposals to change the number or term of directors or
to fill any existing vacancies on the board, (e) any material change in the present capitalization or dividend policy of the Company,
(f) any other material change in the Company’s business or corporate structure, including but not limited to, if the Company
is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a
vote is required by Section 13 of the Investment Company Act of 1940, (g) changes in the Company’s charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of control of the Company by any Person, (h) causing a
class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national securities association, (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act, or (j) any action, intention, plan
or arrangement similar to any of those enumerated above; or (iii) request the Company or its directors, officers, employees, agents
or representatives to amend or waive any provision of this paragraph. The restrictions contained in this Section 1(h)(i) shall
not limit Holder’s rights to enforce its rights or exercise its rights as to the Securities or under this Warrant or the
Transaction Documents.

 

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(ii)         Provided
that no Equity Condition Failure shall have occurred, if the trading price on the Principal Market at the time of an exercise of
this Warrant is greater than the then applicable Exercise Price then in effect, then in respect of such particular exercise Holder
may only exercise this Warrant for a cash exercise price (and not by means of a Cashless Exercise under Section 1(d) above or on
a cashless basis under Section 5 below).

 

2.          ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this Section 2.

 

(a)          Stock
Dividends and Splits. Without limiting any provision of Section 4, if the Company, at any time on or after the date of the
Securities Purchase Agreement, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock
or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by
any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock
into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its
then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and
of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment
made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph
shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment
under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise
Price shall be adjusted appropriately to reflect such event.

 

(b)          [Intentionally
Omitted].

 

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(c)          Number
of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to paragraph (a) of this Section 2, the
number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately,
so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be
the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on
exercise contained herein). In addition, and notwithstanding anything to the contrary contained herein, upon an Exchange as set
forth in Section 5 hereof, the number of Warrant Shares for which this Warrant is exercisable immediately following such Exchange
shall be equal to (i) the number of Warrant Shares for which this Warrant was exercisable immediately prior to such Exchange less
(ii) the number of Warrant Shares under the portion of the Warrant exchanged in Exchange (e.g., if this Warrant is exercisable
(without regard to limitations hereunder) for 100 shares immediately prior to an Exchange and 30% of the Warrant is submitted
for Exchange (i.e., the Warrant to acquire 30 Warrant Shares is submitted for Exchange), then this Warrant will be exercisable
for 70 Warrant Shares immediately following the completion of such Exchange), and the number of such Warrant Shares issuable hereunder
shall automatically be adjusted, as necessary, to enable to the Company to comply with its obligations to issue the full Exchange
Number under Section 5 hereof upon any Exchange hereunder.

 

(d)          Calculations.
All calculations under this Section 2 shall be made by rounding to the nearest 1/10000th of cent and the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned
or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common
Stock.

 

(e)          Other
Events. In the event that the Company (or any Subsidiary (as defined in the Securities Purchase Agreement)) shall take any
action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder
from dilution or if any event occurs of the type specifically contemplated by the provisions of this Section 2 but not expressly
provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights
or other rights with equity features), then the Company’s board of directors shall in good faith determine and implement
an appropriate adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights of
the Holder, provided that no such adjustment pursuant to this Section 2(e) will increase the Exercise Price or decrease the number
of Warrant Shares as otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such
adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors
and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such
appropriate adjustments, whose determination shall be final and binding and whose fees and expenses shall be borne by the Company.

 

3.          RIGHTS
UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above, if the Company shall declare or make
any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way
of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, indebtedness,
property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar
transaction, other than a distribution of Common Stock covered by Section 2(a)) (a “Distribution”), at any time
after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the
Maximum Percentage) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution
(provided, however, to the extent that the Holder’s right to participate in any such Distributions would result in the Holder
exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to such extent (or
the beneficial ownership of any such shares of Common Stock as a result of such Distribution to such extent) and such Distribution
to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Maximum Percentage).

 

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4.          PURCHASE
RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)          Purchase
Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders
of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
on exercise hereof, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the
extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Maximum
Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership
of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall
be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the
Maximum Percentage).

 

(b)          Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes
in writing all of the obligations of the Company under this Warrant and the other Transaction Documents related to this Warrant
in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to the
Holder and approved by the Holder prior to such Fundamental Transaction, including agreements confirming the obligations of the
Successor Entity as set forth in this paragraph (b) and (c) and elsewhere in this Warrant and an obligation to deliver to the
Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to this Warrant, including, without limitation, which is exercisable for a corresponding number of shares
of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard
to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common
Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such adjustments to the number of
shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately
prior to the consummation of such Fundamental Transaction). Notwithstanding the foregoing, at the election of the Holder upon
exercise of this Warrant following a Fundamental Transaction, the Successor Entity shall deliver to the Holder, in lieu of the
shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3
and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable
Fundamental Transaction, such shares of common stock (or its equivalent) of the Successor Entity (including its Parent Entity),
or other securities, cash, assets or other property, which the Holder would have been entitled to receive upon the happening of
the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction
(without regard to any limitations on the exercise of this Warrant).

 

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(c)          [Intentionally
Omitted].

 

(d)          Application.
The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and shall be applied
as if this Warrant (and any such subsequent warrants issued hereunder) were fully exercisable and without regard to any limitations
on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Maximum Percentage,
applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of
this Warrant (or any such other warrant)).

 

5.          EXCHANGE
RIGHTS. In addition to the rights of the Holder under Section 1 hereof, this Warrant shall be exchangeable by the Holder on
a cashless basis as further set forth below (and subject to the limitations set forth in Section 1(h)(ii) hereof).

 

(a)          Exchange
Right. The Holder shall be entitled at any time and from time to time from and after the ninety (90) day anniversary of the
Issuance Date and prior to the Expiration Date, by written notice to the Company in the form of Exhibit B attached
hereto (an “Exchange Notice”) to exchange (an “Exchange”) all or any portion of this Warrant
for cash or, if elected by the Company in compliance with the terms hereof, fully paid and non-assessable shares of Common Stock,
all as further set forth in this Section 5. If the Company does not elect to honor such Exchange in shares of Common Stock (or
is not permitted to elect to honor such Exchange in shares of Common Stock due to Section 5(d)(iii)), then the Company shall pay
to the holder, within ten (10) Business Days after receipt of the applicable Exchange Notice, the Exchange Amount (as defined
below) in cash in respect of such Exchange.

 

(b)          Exchange
Number. If the Company is permitted to honor an Exchange by issuing shares of Common Stock in respect thereof, then the number
of shares of Common Stock issuable in respect of such Exchange shall be determined by dividing (x) the Exchange Amount (as defined
below) in respect of such Exchange by (y) the Exchange Price (as defined below) in respect of such Exchange (such number of shares
of Common Stock so issuable being the “Exchange Number”).

 

(c)          Definitions.

 

(i)          “Exchange
Amount” means the Black-Scholes Exchange Value of the portion of the Warrant being exchanged pursuant to Section 5(a),
determined as of the applicable Exchange Date (as defined below).

 

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(ii)         “Exchange
Price” means the Closing Bid Price as of one (1) Trading Day prior to the Exchange Date.

 

(d)          Mechanics
of Exchange.

 

(i)          Optional
Exchange. To exchange any Exchange Amount on any date (an “Exchange Date”), the Holder shall transmit by
facsimile (or otherwise deliver), for receipt on such date, a copy of an executed Exchange Notice. The Holder shall not be required
to deliver the original of this Warrant in order to effect an exchange hereunder. Execution and delivery of an Exchange Notice
with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original of this Warrant
and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. Execution and delivery of
an Exchange Notice for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original of this
Warrant after delivery of the Warrant Shares in accordance with the terms hereof.

 

(ii)         Exchange
for Shares of Common Stock. If the Company is permitted to elect, and has elected, to pay the Exchange Amount in shares of
Common Stock in respect of a specific Exchange Notice, which election shall be made on or before the first (1st) Trading
Day following the date on which the Company has received such Exchange Notice, the Company shall transmit by facsimile an acknowledgment
of confirmation of receipt of such Exchange Notice, in the form attached hereto as Exhibit C, to the Holder and the
Transfer Agent and stating that such Exchange Notice shall be honored in shares of Common Stock. In such event, then on or before
the third (3rd) Trading Day following the date on which the Company has received such Exchange Notice, the Exchange
Number of shares of Common Stock shall be issued to Holder, or at Holder’s instruction, as if such shares of Common Stock
were issuable upon an exercise under Section 1 hereof.

 

(iii)        Equity
Condition Failure. Notwithstanding the above, if at the time on an Exchange Date, an Equity Conditions Failure with respect
to clauses (v) or (vi) of the definition of Equity Conditions has occurred and is still then continuing, then the Company shall
not be permitted to elect to honor such Exchange in shares of Common Stock and shall instead honor such Exchange in cash.

 

(iv)        Disputes.
Dispute as to the determination of the Exchange Amount, the Exchange Price or the arithmetic calculation of the number of Warrant
Shares to be issued pursuant to the terms hereof, and shares subject to such dispute, shall be handled in the same manner as for
disputes under Section 1(e) hereof.

 

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6.          NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation (as defined
in the Securities Purchase Agreement), Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good
faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions
as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares
of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as any of the SPA Warrants are outstanding, take all
action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose
of effecting the exercise of the SPA Warrants, the maximum number of shares of Common Stock as shall from time to time be necessary
to effect the exercise of the SPA Warrants then outstanding (without regard to any limitations on exercise).

 

7.          WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a
holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company
for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity as
the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to
any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance
or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained
in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors
of the Company. Notwithstanding this Section 7, the Company shall provide the Holder with copies of the same notices and other
information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

 

8.          REISSUANCE
OF WARRANTS.

 

(a)          Transfer
of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 8(d)), registered as the
Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less
than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section
8(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

(b)          Lost,
Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant (as to which a written certification and the indemnification contemplated below shall
suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to
the Company in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Warrant,
the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 8(d)) representing the right to
purchase the Warrant Shares then underlying this Warrant.

 

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(c)          Exchangeable
for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the
Company, for a new Warrant or Warrants (in accordance with Section 8(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion
of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, no warrants for fractional
shares of Common Stock shall be given.

 

(d)          Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 8(a)
or Section 8(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying
the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date,
and (iv) shall have the same rights and conditions as this Warrant.

 

9.          NOTICES.
Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance
with Section 9(f) of the Securities Purchase Agreement. Unless the same shall be made available to the public through a filing
with the SEC through EDGAR and are available to the public through the EDGAR system, the Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action
and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i)
as soon as practicable upon each adjustment of the Exercise Price and the number of Warrant Shares, setting forth in reasonable
detail, and certifying, the calculation of such adjustment(s) and (ii) at least fifteen (15) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B)
with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities,
indebtedness, or other property pro rata to holders of shares of Common Stock or (C) for determining rights to vote with respect
to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information (to the extent it constitutes,
or contains, material, non-public information regarding the Company or any of its Subsidiaries) shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder and (iii) at least ten (10) Trading Days prior to the
consummation of any Fundamental Transaction. To the extent that any notice provided hereunder (whether under this Section 9 or
otherwise) constitutes, or contains, material, non-public information regarding the Company or any of its Subsidiaries, the Company
shall simultaneously file such notice with the SEC (as defined in the Securities Purchase Agreement) pursuant to a Current Report
on Form 8-K. It is expressly understood and agreed that the time of execution specified by the Holder in each Exercise Notice shall
be definitive and may not be disputed or challenged by the Company.

 

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10.         AMENDMENT
AND WAIVER. Except as otherwise provided herein, the provisions of this Warrant (other than Section 1(f)) may be amended and
the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the
Company has obtained the written consent of the Holder. The Holder shall be entitled, at its option, to the benefit of any amendment
of any other warrant issued under the Securities Purchase Agreement. No waiver shall be effective unless it is in writing and signed
by an authorized representative of the waiving party.

 

11.         SEVERABILITY.
If any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties
or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

12.         GOVERNING
LAW. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from
bringing suit or taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations
to the Holder or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

13.         CONSTRUCTION;
HEADINGS. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against
any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or
affect the interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction Documents shall have
the meanings ascribed to such terms on the Closing Date (as defined in the Securities Purchase Agreement) in such other Transaction
Documents unless otherwise consented to in writing by the Holder.

 

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14.         DISPUTE
RESOLUTION. In the case of a dispute as to the determination of the Exercise Price, the Exchange Amount, the Exchange Price,
the Closing Sale Price, the Closing Bid Price, the Bid Price or fair market value or the arithmetic calculation of the Warrant
Shares (as the case may be), the Company or the Holder (as the case may be) shall submit the disputed determinations or arithmetic
calculations (as the case may be) via facsimile (i) within two (2) Business Days after receipt of the applicable notice giving
rise to such dispute to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute, at any time
after the Holder or the Company (as the case may be) learned of the circumstances giving rise to such dispute. If the Holder and
the Company are unable to agree upon such determination or calculation (as the case may be) of the Exercise Price, the Exchange
Amount, the Exchange Price, the Closing Sale Price, the Closing Bid Price, the Bid Price or fair market value or the number of
Warrant Shares (as the case may be) within three (3) Business Days of such disputed determination or arithmetic calculation being
submitted to the Company or the Holder (as the case may be), then the Company shall, within two (2) Business Days submit via facsimile
(a) the disputed arithmetic calculation of the Warrant Shares, the disputed determination of the Exercise Price, the Exchange Amount,
the Exchange Price, the Closing Sale Price, the Closing Bid Price, the Bid Price or fair market value (as the case may be) to an
independent, reputable investment bank selected with the agreement of the Company and the Holder or (b) if acceptable to the Holder,
the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall
cause at its expense the investment bank or the accountant (as the case may be) to perform the determinations or calculations (as
the case may be) and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it receives
such disputed determinations or calculations (as the case may be). Such investment bank’s or accountant’s determination
or calculation (as the case may be) shall be binding upon all parties absent demonstrable error.

 

15.         REMEDIES,
CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant and the other Transaction Documents, at law or in equity (including
a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue
only actual damages for any failure by the Company to comply with the terms of this Warrant. The Company covenants to the Holder
that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or
provided for herein with respect to payments, exercises and the like (and the computation thereof) shall be the amounts to be received
by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and
that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach
or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. The
Company shall provide all information and documentation to the Holder that is reasonably requested by the Holder to enable the
Holder to confirm the Company’s compliance with the terms and conditions of this Warrant (including, without limitation,
compliance with Section 2 hereof). The issuance of shares and certificates for shares as contemplated hereby upon the exercise
of this Warrant shall be made without charge to the Holder or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than the Holder or its agent on its behalf.

 

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16.         TRANSFER.
This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company. In order to validly exercise
this Warrant, any Holder other than the original Holder of this Warrant must, concurrently with or prior to the delivery of an
Exercise Notice to the Company, provide the Company with definitive documentation conclusively evidencing, in the Company’s
reasonable discretion, that the Person delivering such Exercise Notice is the actual owner of this Warrant possessing the right
to cause the exercise hereof.

 

17.         CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:

 

(a)          “Bid
Price” means, for any security as of the particular time of determination, the bid price for such security on the Principal
Market as reported by Bloomberg as of such time of determination, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the bid price of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg as of such time of determination, or if the foregoing does not apply,
the bid price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg as of such time of determination, or, if no bid price is reported for such security by Bloomberg as of such time of determination,
the average of the bid prices of all of the market makers for such security as reported in the “pink sheets” by OTC
Markets Group Inc. (formerly Pink Sheets LLC) (the “Pink Sheets”) as of such time of determination. If the Bid
Price cannot be calculated for a security as of the particular time of determination on any of the foregoing bases, the Bid Price
of such security as of such time of determination shall be the fair market value as mutually determined by the Company and the
Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall
be resolved in accordance with the procedures in Section 14. All such determinations shall be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction during such period.

 

(b)          “Black
Scholes Exchange Value” means the value of an option for the number of shares equal to the portion of the Warrant being
exchanged at the applicable Exchange Date as set forth in the applicable Exchange Notice as such value is determined calculated
using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying
price per share equal to the Closing Sale Price of the Common Stock as of the Issuance Date (adjusted upward to the same extent
that the Exercise Price hereunder has been adjusted upward pursuant to Section 2(a) hereof), (ii) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the remaining term of the Warrant as of such Exchange Date, (iii) a strike price
equal to the Exercise Price in effect at the time of the applicable Exchange, (iv) an expected volatility equal to 135% and (v)
a deemed remaining term of the Warrant of five (5) years (regardless of the actual remaining term of the Warrant).

 

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(c)          “Bloomberg”
means Bloomberg, L.P.

 

(d)          “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.

 

(e)          “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price
and the last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the
Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade
price (as the case may be) then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New
York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for
such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for
such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of all of the market makers for such
security as reported in the Pink Sheets. If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the case may be) of such
security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the
Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with
the procedures in Section 14. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during such period.

 

(f)          “Common
Stock” means (i) the Company’s shares of common stock, $0.00001 par value per share, and (ii) any capital
stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common
stock.

 

(g)          “Convertible
Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly
or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any
shares of Common Stock.

 

(h)          “Eligible
Market” means the New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market or the Principal Market.

 

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(i)          “Equity
Conditions” means: (i) the Company shall have complied in all respects with all applicable securities laws and regulations
and all rules and regulations of the Eligible Markets in respect of the offer, sale and issuance of the Securities under the Transaction
Documents, (ii) the Common Stock (including all shares of Common Stock to be received by Holder) shall be listed or designated
for quotation (as applicable) on an Eligible Market and no Trading Market Event (or event which with notice or passage of time
would be a Trading Market Event) has occurred, (iii) the Company shall be in compliance in all material respects with all of its
obligations under all of the Transaction Documents, (iv) each of the Registration Statement and the
Prospectus contained therein (each as defined in the Securities Purchase Agreement) shall continue to be effective and fully available
for use with respect to issuance of all of the Securities, including, without limitation, any issuance of Warrant Shares pursuant
to a cash exercise hereof, including without limitation a Mandatory Exercise under Section 18, (v) all Common Shares and Warrant
Shares (including any Warrant Shares to be received upon exercise or exchange of this Warrant and including any Warrant Shares
to be issued in a cash exercise) shall be then (or upon such issuance (as the case may be)) freely tradeable by Holder without
restriction of any kind or nature (and the Company shall have no knowledge of any fact which would reasonably be expected to negate
the foregoing in the foreseeable future), (vi) no limitation shall be applicable with respect to the issuance of any Warrant Shares
hereunder (other than under Section 1(f)(i)), and (vii) the Company is fully reporting under the 1934 and Rule 144 and has been
such on a timely basis for the 15 months immediately preceding the date of determination. For purposes hereof a “Trading
Market Event” shall mean if the Company or the Common Stock or any shares of Common Stock issued or issuable hereunder
or under any other Transaction Document shall cease or fail to be listed for trading or quoted on an Eligible Market.

 

(j)          “Equity
Conditions Failure” means that on any applicable date of determination, any of the Equity Conditions have not been satisfied
then.

 

(k)          “Expiration
Date” means the date that is the fifth (5th) anniversary of the Issuance Date or, if such date falls on a
day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”),
the next date that is not a Holiday.

 

(l)          “Fundamental
Transaction” means that (i) the Company shall, directly or indirectly, in one or more related transactions, (1) consolidate
or merge with or into (whether or not the Company is the surviving corporation) any other Person unless the stockholders of the
Company immediately prior to such consolidation or merger continue to hold more than 50% of the outstanding shares of Voting Stock
after such consolidation or merger, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially
all of its properties or assets to any other Person, or (3) consummate a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby
such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares of
Voting Stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated with the
other Persons making or party to, such stock or share purchase agreement or other business combination), or (ii) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations
promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly
or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Voting Stock of the Company.

 

(m)          “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

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(n)          “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock
or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity,
the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

(o)          “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.

 

(p)          “Principal
Market” means the NYSE MKT.

 

(q)          “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving
any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction
shall have been entered into.

 

(r)          “Trading
Day” means, as applicable, (x) with respect to all price determinations relating to the Common Stock, any day on which
the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common
Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that “Trading
Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5
hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or
if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the
hour ending at 4:00:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or
(y) with respect to all determinations other than price determinations relating to the Common Stock, any day on which The New York
Stock Exchange (or any successor thereto) is open for trading of securities.

 

(s)          “Voting
Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have
the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or
trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might
have voting power by reason of the happening of any contingency).

 

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18.         MANDATORY
EXERCISE. If at any time after the ninety (90) day anniversary of the Issuance Date, for twenty (20) consecutive Trading Days
the Closing Bid Price of the Common Stock for each Trading Day during such period is at a price greater than or equal to 20% above
the Exercise Price as in effect at the end of such Trading Day, and the average daily dollar volume during such twenty (20) consecutive
Trading Days is equal to or exceeds $350,000 (such period being the “Trigger Period”), then (provided no Equity
Conditions Failure shall have occurred or be continuing at any time during such period), the Company shall have the right to require
the Holder to exercise for cash all, but not less than all, of this Warrant for all of the then-remaining Warrant Shares as further
set forth below. The Company may exercise its right to require exercise under this Section 18 (the “Mandatory Exercise
Right”) on one occasion (or, if a Mandatory Exercise Notice becomes null and void pursuant to this Section 18, or if
the Holder delivers to the Company a Blocker Notice (as defined below)), such number of additional occasions as necessary to permit
a Mandatory Exercise with respect to the entire amount of Warrant Shares issuable hereunder). The Company shall exercise its Mandatory
Exercise Right (to the extent permitted hereby) by delivering, within ten (10) Trading Days following the end of the Trigger Period,
a written notice thereof by facsimile and overnight courier to the Holder (the “Mandatory Exercise Notice” and
the date such notice by facsimile is deemed to be delivered in accordance with Section 9(f) of the Securities Purchase Agreement
is referred to as the “Mandatory Exercise Notice Date”). The Mandatory Exercise Notice shall be irrevocable.
The Mandatory Exercise Notice shall (1) state the Trading Day selected for the Mandatory Exercise in accordance with this Section
18, which Trading Day shall be at least five (5) Trading Days but not more than fifteen (15) Trading Days following the Mandatory
Exercise Notice Date (the “Mandatory Exercise Date”), (2) state the number of shares of Common Stock to be issued
to the Holder on the Mandatory Exercise Date and (3) contain a certification from the Chief Executive Officer of the Company
that there has been no Equity Conditions Failure as of the Mandatory Exercise Notice Date. Any portion of this Warrant exercised
by the Holder after the Mandatory Exercise Notice Date shall reduce the number of Warrant Shares for which this Warrant is required
to be exercised on the Mandatory Exercise Date. If the Company has elected a Mandatory Exercise, the mechanics of exercise set
forth in Section 1 shall apply, to the extent applicable, as if the Company had received from the Holder on the Mandatory Exercise
Date an Exercise Notice with respect to all of the then-remaining Warrant Shares (or the Permitted Exercise Amount (as defined
below) of Warrant Shares, as applicable). Notwithstanding anything contained in this Section 18 to the contrary (but subject to
the last sentence of this Section 18), if (I) the Closing Bid Price of the Common Stock on any Trading Day during the period commencing
on the Mandatory Exercise Notice Date and ending on the Trading Day immediately preceding the Mandatory Exercise Date is less than
the Exercise Price then in effect at the end of trading on such day; (II) the daily dollar trading volume (as reported on Bloomberg)
of the Common Stock on the applicable Eligible Market on any Trading Day during the period commencing on the Mandatory Exercise
Notice Date and ending on the Trading Day immediately preceding the Mandatory Exercise Date is less than $350,000; or (III) an
Equity Conditions Failure occurs on any day since the occurrence of the Trigger Period and prior to the Mandatory Exercise Date,
then the Mandatory Exercise Notice delivered to the Holder shall be null and void ab initio and the Mandatory Exercise shall not
occur and the Mandatory Exercise Right shall not be available to the Company unless and until the conditions precedent to such
Mandatory Exercise Right are again satisfied. If the Company elects to cause a mandatory exercise of this Warrant pursuant to this
Section 18, then it must simultaneously take the same action with respect to all of the other SPA Warrants, if any, held by any
person other than Holder. Notwithstanding anything contained in this Section 18 to the contrary, an effort by the Company to exercise
its right under this Section 18 shall be stayed to the extent the Holder delivers a written notice to the Company stating that
such exercise would result in a violation of Section 1(f) (a “Blocker Notice”), which Blocker Notice may be
delivered at any time prior to the Mandatory Exercise Date, in which case the Company shall have the right to require the Holder
to exercise this Warrant for such number of Warrant Shares that may be exercise hereunder without violating Section 1(f) (the “Permitted
Exercise Amount”) and from time to time thereafter the Holder shall exercise this Warrant (so long as no Equity Conditions
Failure has occurred from and after the Mandatory Exercise Notice Date) in such amounts and from time to time until fully exercised,
subject to ongoing compliance with Section 1(f) hereof and subject to Holder’s rights hereunder and the other terms and conditions
hereof following the Mandatory Exercise Date.

 

[signature page follows]

 

    	20

    	 

    

 

IN WITNESS WHEREOF,
the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

	 	ELEPHANT TALK COMMUNICATIONS CORP.
	 	 	 
	 	By:	                              
	 	Name:
	 	Title:

 

    	21

    	 

    

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

ELEPHANT TALK COMMUNICATIONS CORP.

 

The undersigned holder
hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of
Elephant Talk Communications Corp., a Delaware corporation (the “Company”), evidenced by Warrant to Purchase
Common Stock No. _______ (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.

 

1.          Form
of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as:

 

		____________	a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

 

		____________	a “Cashless Exercise” with respect to _______________ Warrant Shares.

 

In the event that the
Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder
hereby represents and warrants that (i) this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on the date
set forth below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice was $________.

 

2.          Payment
of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares,
the Holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms
of the Warrant.

 

3.          Delivery
of Warrant Shares and Net Number of shares of Common Stock. The Company shall deliver to Holder, or its designee or agent as
specified below, __________ shares of Common Stock in respect of the exercise contemplated hereby. Delivery shall be made to Holder,
or for its benefit, to the following address:

 

	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

Date: _______________ __, ______

 

    	 

    	 

    

 

	 	 
	  Name of Registered Holder	 

 

	By:	 	 
	 	Name:	 
	 	Title:	 

 

	 	Account Number:	 
	 	  (if electronic book entry transfer)

 

	 	Transaction Code Number:	 
	 	  (if electronic book entry transfer)

 

    	 

    	 

    

 

EXHIBIT B

 

EXCHANGE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXCHANGE THIS

WARRANT TO PURCHASE COMMON STOCK

 

ELEPHANT TALK COMMUNICATIONS CORP.

 

The undersigned holder
hereby exercises the right to exchange the Warrant to Purchase Common Stock No. _______ (the “Warrant”) of Elephant
Talk Communications Corp., a Delaware corporation (the “Company”) as described. Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

Date of Exchange:____________

 

		19.	The total number of shares with respect to which this
Warrant is being exchanged: _________________

 

		20.	Black Scholes Exchange Value (as defined in Section 17)
for an option to purchase _________________________ [SAME # AS FROM 1 ABOVE] shares of Common Stock: $ ______________.

 

Resulting Exchange Amount: $______________
[insert from item 2 above]

 

		21.	Exchange Price: Closing Bid Price of the Common
Stock as of two (2) Trading Days prior to the date of Exchange (as such Closing Bid Price is defined in Section 17 herein): $______________.

 

Resulting Exchange Number [Exchange
Amount/Exchange Price as set forth in 3 above] (if issuer is permitted to elect to issue shares of Common Stock):_____________
shares of Common Stock

 

Account for Wire Transfer:__________________________________________________

 

Account for Share issuance (if Company
is permitted to elect and so elects):___________

 

	 	 

 

Date: _______________ __, ______

 

	 	 
	  Name of Registered Holder	 

 

	By:	 	 
	 	Name:	 
	 	Title:	 

 

    	 

    	 

    

 

EXHIBIT C

 

ACKNOWLEDGMENT

 

The Company hereby
acknowledges this [Exercise Notice][Exchange Notice] and hereby directs ______________ to issue the above indicated number of shares
of Common Stock in accordance with the Transfer Agent Instructions dated _________, 20__, from the Company and acknowledged and
agreed to by _______________.

 

	 	ELEPHANT TALK COMMUNICATIONS CORP.
	 	 	 
	 	By:	                         
	 	 	Name:
	 	 	Title:SECURITIES PURCHASE AGREEMENT

 

This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of June 3, 2013, is by and among Elephant Talk Communications
Corp., a Delaware corporation with offices located at 9705 N. Broadway Ext. Ste. 200, 2nd Floor, Oklahoma City, OK 73114 (the “Company”),
and each of the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively,
the “Buyers”).

 

RECITALS

 

A.           The
Company and each Buyer desire to enter into this transaction to purchase the Common Shares and Warrants (as defined below) set
forth herein pursuant to a currently effective shelf registration statement on Form S-3, which has at least 63,559,332 unallocated
shares of common stock, $0.00001 par value per share, of the Company (the “Common Stock”) registered thereunder
(Registration Number 333-181738) (the “Registration Statement”), which Registration Statement has been declared
effective in accordance with the Securities Act of 1933, as amended (the “1933 Act”), by the United States Securities
and Exchange Commission (the “SEC”).

 

B.           Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms stated in this Agreement, (i) the aggregate number of
shares of Common Stock, set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers (which aggregate amount
for all Buyers shall be collectively referred to herein as the “Common Shares”) and (ii) warrants (the “Warrants”)
to initially acquire up to the aggregate number of shares of Common Stock set forth opposite such Buyer’s name in column
(4) on the Schedule of Buyers (all shares of Common Stock acquirable upon exercise or exchange of the Warrants, collectively, the
“Warrant Shares”), as evidenced by the warrant certificate in the form attached hereto as Exhibit A,
and which Warrants shall be issued to such Buyer for no additional consideration.

 

C.           The
Common Shares, the Warrants and the Warrant Shares are collectively referred to herein as the “Securities.”

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:

 

		1.	PURCHASE AND SALE OF COMMON SHARES AND WARRANTS.

 

(a)          Common
Shares and Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company
shall issue and sell to each Buyer, and each Buyer severally, but not jointly, shall purchase from the Company on the Closing
Date (as defined below), the aggregate number of Common Shares, as is set forth opposite such Buyer’s name in column (3)
on the Schedule of Buyers and (ii) Warrants, to initially acquire up to that number of Warrant Shares as is set forth opposite
such Buyer’s name in column (4) on the Schedule of Buyers.

 

    	 

    	 

    

 

(b)          Closing.
The closing and settlement (the “Closing”) of the purchase of the Common Shares and Warrants by the Buyers
shall occur at the offices of Greenberg Traurig, LLP, 77 W. Wacker Drive, Suite 3100, Chicago, Illinois 60601. The date and time
of the Closing shall be 9:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing
set forth in Sections 6 and 7 below are satisfied or waived (or such later time or date as is mutually agreed to by the Company
and each Buyer) (the “Closing Date”). As used herein “Business Day” means any day other
than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to remain
closed.

 

(c)          Purchase
Price. The aggregate purchase price for the Common Shares and the Warrants to be purchased by each Buyer (the “Purchase
Price”) shall be the amount set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers. For
clarification purposes, the Warrants shall be issued to such Buyer for no additional consideration.

 

(d)          Form
of Payment; Deliveries. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price to the Company for the
Common Shares and the Warrants to be issued and sold to such Buyer at the Closing (less for Crede (as defined below), the amounts,
if any, withheld pursuant to Section 4(g)), by wire transfer of immediately available funds in accordance with the Company’s
written wire instructions, and (ii) the Company shall (A) cause Continental Stock Transfer & Trust Company (together
with any subsequent transfer agent, the “Transfer Agent”) through the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program to credit, without restriction, to such Buyer’s or its designee’s balance
account with DTC through its Deposit/Withdrawal at Custodian (“DWAC”) system such aggregate number of Common
Shares that such Buyer is purchasing as is set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers,
(B) deliver to each Buyer a warrant certificate, in the form attached hereto as Exhibit A, pursuant to which such
Buyer shall have the right to initially acquire up to the number of Warrant Shares as is set forth opposite such Buyer’s
name in column (4) on the Schedule of Buyers and (C) deliver to such Buyer the other documents, instruments and certificates set
forth in Section 7. Notwithstanding anything to the contrary contained in the Warrants, all Warrant Shares shall be delivered
via DWAC.

 

		2.	BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally
and not jointly, represents and warrants to the Company with respect to only itself that:

 

(a)          Organization;
Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the
Transaction Documents (as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.

 

    	2

    	 

    

 

(b)          Validity;
Enforcement. This Agreement has been duly and validly authorized, executed and delivered
on behalf of such Buyer and constitutes the legal, valid and binding obligations of such Buyer enforceable against such Buyer in
accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies.

 

(c)          No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement
and the consummation by such Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational
documents of such Buyer or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

 

(d)          Certain
Trading Activities. Such Buyer has not directly or indirectly, nor has any Person
(as defined below) acting on behalf of or pursuant to any understanding with such Buyer, engaged in any transactions in the securities
of the Company (including, without limitation, any Short Sales (as defined below) involving the Company’s securities) during
the period commencing as of the time that such Buyer and the Company (or the Placement Agent (as defined below) if any) first began
discussions regarding the specific investment in the Company contemplated by this Agreement and ending immediately prior to the
execution of this Agreement by such Buyer (it being understood and agreed that for all purposes of this Agreement, and, without
implication that the contrary would otherwise be true, that neither transactions nor purchases nor sales shall include
the location and/or reservation of borrowable shares of Common Stock). “Short Sales” means all “short
sales” as defined in Rule 200 promulgated under Regulation SHO under the 1934 Act (as defined below).

 

(e)          No
Brokers and Finders. Other than the Placement Agent such Buyer has not been contacted
by or is not a party to any agreement, arrangement or understanding pursuant to which, as a result of the transactions contemplated
by this Agreement, any Person will have any valid right, interest or claim against or upon the Company or any Subsidiary for any
commission, fee or other compensation.

 

		3.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents
and warrants to each of the Buyers that:

 

(a)          Organization
and Qualification. Each of the Company and its Subsidiaries (which for purposes of this Agreement means any “Significant
Subsidiary” as such term is defined in Rule 1-02 of Regulation S-X of the 1933 Act) is an entity
each of its Subsidiaries are entities duly organized and validly existing and in good standing under the laws of the jurisdiction
in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business
as now being conducted and as presently proposed to be conducted and each of the foregoing is individually referred to herein
as a “Subsidiary.” Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to
do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted
by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would
not have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial
or otherwise) or prospects (to the extent disclosed in the SEC Documents) of the Company or any Subsidiary, individually or taken
as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or (iii) the authority or ability
of the Company to perform any of its obligations under any of the Transaction Documents.

 

    	3

    	 

    

 

(b)          Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this
Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Shares, the issuance
of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable upon exercise of the Warrants) have
been duly authorized by the Company’s board of directors and (other than the filing with the SEC of the prospectus supplement
required by the Registration Statement pursuant to Rule 424(b) under the 1933 Act (the “Prospectus Supplement”)
supplementing the base prospectus forming part of the Registration Statement (the “Prospectus”) and any other
filings as may be required by any state securities agencies, all of which shall be made prior to the Closing) no further filing,
consent or authorization is required by the Company, its board of directors or its stockholders or other governing body. This
Agreement has been, and the other Transaction Documents will be prior to the Closing, duly executed and delivered by the Company,
and each constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with
its respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities
law. “Transaction Documents” means, collectively, this Agreement, the Warrants, the Irrevocable Transfer Agent
Instructions (as defined below) and each of the other agreements and instruments entered into or delivered by any of the parties
hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.

 

    	4

    	 

    

 

(c)          Issuance
of Securities; Registration Statement. The issuance of the Common Shares and the Warrants are duly authorized and, upon issuance
in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and non-assessable and free from
all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof. As of the Closing,
the Company shall have reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable upon
exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth therein). The
issuance of the Warrant Shares is duly authorized, and upon exercise in accordance with the Warrants, the Warrant Shares, when
issued, will be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, taxes, liens, charges
and other encumbrances with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of
Common Stock. The issuance by the Company of the Securities has been properly registered under the 1933 Act, the Securities are
being issued pursuant to the Registration Statement and all of the Securities are freely transferable and freely tradable by each
of the Buyers without restriction. The Registration Statement is effective and available for the issuance of the Securities thereunder
and the Company has not received any notice that the SEC has issued or intends to issue a stop-order with respect to the Registration
Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily
or permanently, or intends or has threatened in writing to do so. The “Plan of Distribution” section under the Registration
Statement permits the issuance and sale of the Securities hereunder and as contemplated by the other Transaction Documents. Upon
receipt of the Securities, each of the Buyers will have good and marketable title to the Securities. The Registration Statement
and any prospectus included therein, including the Prospectus and the Prospectus Supplement, comply and complied in all material
respects with the requirements of the 1933 Act and the 1934 Act and the rules and regulations of the SEC promulgated thereunder
and all other applicable laws and regulations. At the time the Registration Statement and any amendments thereto became effective,
at the date of this Agreement and at each deemed effective date thereof pursuant to Rule 430B(f)(2) of the 1933 Act, the Registration
Statement and any amendments thereto complied and will comply in all material respects with the requirements of the 1933 Act and
did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto
(including, without limitation the Prospectus Supplement), at the time the Prospectus or any amendment or supplement thereto was
issued and at the Closing Date, complied and, to the Company’s knowledge, will comply in all material respects with the
requirements of the 1933 Act and did not and will not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
The Company meets all of the requirements for the use of Form S-3 under the 1933 Act for the offering and sale of the Securities
contemplated by this Agreement and the other Transaction Documents, and the SEC has not notified the Company of any objection
to the use of the form of the Registration Statement pursuant to Rule 401(g)(1) under the 1933 Act. The Registration Statement
meets the requirements set forth in Rule 415(a)(1)(x) under the 1933 Act. At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under
the 1933 Act) relating to any of the Securities, the Company was not and is not an “Ineligible Issuer” (as defined
in Rule 405 under the 1933 Act). The Company (i) has not distributed any offering material in connection with the offering and
sale of any of the Securities and (ii) until no Buyer holds any of the Securities, shall not distribute any offering material
in connection with the offering and sale of any of the Securities to, or by, any of the Buyers, in each case, other than the Registration
Statement, the Prospectus or the Prospectus Supplement.

 

    	5

    	 

    

 

(d)          No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Shares,
the Warrants and Warrant Shares and the reservation for issuance of the Warrant Shares) will not (i) result in a violation of
the Certificate of Incorporation (as defined below) (including, without limitation, any certificates of designation contained
therein) or other organizational documents of the Company or any of its Subsidiaries, any capital stock of the Company, or Bylaws
(as defined below), (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or 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 (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including, without limitation, federal and state and foreign securities laws and
regulations and the rules and regulations of the NYSE MKT (the “Principal Market”) 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 except,
in the case of clause (ii) above, to the extent such violations that could not reasonably be expected to have a Material Adverse
Effect.

 

(e)          Consents.
Except for the NYSE MKT Approval, the Company is not required to obtain any consent from, authorization or order of, or make any
filing which has not already been obtained or made (including, without limitation as to the listing on the Principal Market of
the Common Shares and the Warrant Shares upon issuance) or registration
with (other than the filing with the SEC of the Prospectus Supplement and any other filings as may be required by any state securities
agencies), any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute,
deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case, in accordance with
the terms hereof or thereof. Except for the NYSE MKT Approval, all consents, authorizations, orders, filings and registrations
which the Company is required to obtain at or prior to the Closing will have been obtained or effected on or prior to the Closing
Date, and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company
from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. The Company
is not in violation of the requirements of the Principal Market or foreign, federal, state or local securities laws, and has no
knowledge of any facts or circumstances which could reasonably lead to such violation or delisting or suspension of the Common
Stock in the foreseeable future. No statute, rule, regulation, executive order, decree, ruling or injunction has been enacted,
entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation
of any of any of the transactions contemplated by the Transaction Documents, and no actions, suits or proceedings are pending
or threatened by any Person that seeks to enjoin, prohibit or otherwise adversely affect any of the transactions contemplated
by the Transaction Documents.

 

    	6

    	 

    

 

(f)          Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby and that no Buyer is, to the knowledge of the Company (i) an officer or director of the Company or any of its Subsidiaries,
(ii) an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (collectively,
“Rule 144”)) of the Company (an “Affiliate”) or any of its Subsidiaries or (iii)
a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the “1934 Act”)). The Company further acknowledges that no Buyer
is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect
to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s
decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

 

(g)          Placement
Agent’s Fees. Except for Dawson James Securities, Inc. (the “Placement Agent”), neither the Company
nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the sale of the Securities. The
Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions
(other than for Persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated
hereby (including, without limitation, the fees of the Placement Agent).

 

(h)          No
Integrated Offering. None of the Company, its Subsidiaries or any of their Affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would cause this offering of the Securities to require approval of stockholders of the Company under any applicable stockholder
approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system
on which any of the securities of the Company are listed or designated for quotation. None of the Company, its Subsidiaries, their
Affiliates nor any Person acting on their behalf will take any action or steps that would cause the offering of any of the Securities
to be integrated with other offerings of securities of the Company. No registration of the offer, sale or transfer of any of the
Securities is required, except for registration contemplated hereby pursuant to the Registration Statement.

 

(i)          Dilutive
Effect. The Company understands and acknowledges that the number of Warrant Shares may increase in certain circumstances.
The Company further acknowledges that its obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with
this Agreement and the Warrants is absolute and unconditional, regardless of the dilutive effect that such issuance may have on
the ownership interests of other stockholders of the Company.

 

(j)          Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any,
in order to render inapplicable any control share acquisition, interested stockholder, business combination, poison pill (including
any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation, Bylaws
or other organizational documents or the laws of the jurisdiction of its incorporation or otherwise that can be waived by approval
of the board of directors and which is or could become applicable to any Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership
of the Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable
any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock
or a change in control of the Company or any of its Subsidiaries.

 

    	7

    	 

    

 

(k)          SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, 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 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements,
notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC
Documents”). The Company has delivered to each Buyer (or such Buyer’s representatives) true, correct and complete
copies of each of the SEC Documents not available on the EDGAR system. 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 the light of the circumstances under which they were made, not misleading. As of their respective dates,
the financial statements of the Company included in the SEC Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such
financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during
the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the
case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments
which will not be material, either individually or in the aggregate). No other information provided by or on behalf of the Company
to the Buyers which is not included in the SEC Documents contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein not misleading, in the light of the circumstance under which they
are or were made.

 

    	8

    	 

    

 

(l)          Absence
of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K,
except as disclosed in the SEC Documents filed subsequent thereto, there has been no material adverse change and no material adverse
development in the business, assets, liabilities, properties, operations (including results thereof), condition (financial or
otherwise) or prospects of the Company or any of its Subsidiaries. Since the date of the Company’s most recent audited financial
statements contained in a Form 10-K, except as disclosed in the SEC Documents filed subsequent thereto, neither the Company nor
any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside
of the ordinary course of business or (iii) made any material capital expenditures, individually or in the aggregate. Neither
the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy,
insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge
or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at
the Closing will not be, Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent” means,
(I) with respect to the Company and its Subsidiaries, on a consolidated basis, (i) the present fair saleable value of the Company’s
and its Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’ total
Indebtedness (as defined below), (ii) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and matured or (iii) the Company and its Subsidiaries intend
to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature; and (II) with respect
to the Company and each Subsidiary, individually, (i) the present fair saleable value of the Company’s or such Subsidiary’s
(as the case may be) assets is less than the amount required to pay its respective total Indebtedness, (ii) the Company or such
Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured or (iii) the Company or such Subsidiary (as the case may be) intends
to incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature. Neither
the Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in any business
or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably small
capital.

 

    	9

    	 

    

 

(m)          No
Undisclosed Events, Liabilities, Developments or Circumstances. Except as set forth in the SEC Documents, no event, liability,
development or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any
of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects (to the extent disclosed in the
SEC Documents), operations (including results thereof) or condition (financial or otherwise) that (i) would be required to be
disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating
to an issuance and sale by the Company of its Common Stock and which has not been publicly announced, (ii) could have a material
adverse effect on any Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.

 

(n)          Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation, any certificate of designation, preferences or rights of any other outstanding series
of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation
or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any
judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries,
and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in
all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect. Without limiting
the generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal
Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Common
Stock by the Principal Market in the foreseeable future and the Company is in compliance with all requirements in order to maintain
listing or quotation on the Principal Market (including reporting requirements under the 1934 Act). Since December 5, 2011, (i)
the Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not
been suspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the
SEC or, except as disclosed in the SEC Documents, the Principal Market regarding or relating to the suspension or delisting of
the Common Stock from the Principal Market. The Company and each of its Subsidiaries possess all certificates, authorizations
and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except where the
failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material Adverse
Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit.

 

    	10

    	 

    

 

(o)          Foreign
Corrupt Practices; Certain Other Unlawful Matters. 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 of its Subsidiaries has, in the course of its actions for,
or on behalf of, the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended (or rules or regulations or interpretations thereunder); or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or
employee or otherwise. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot
Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation,
the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including,
without limitation, (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations
contained in 31 CFR, Subtitle B, Chapter V.

 

(p)          Sarbanes-Oxley
Act. The Company and each Subsidiary is in compliance with all applicable requirements of the Sarbanes-Oxley Act of 2002 that
are effective as of the date hereof, and all applicable rules and regulations promulgated by the SEC thereunder that are effective
as of the date hereof.

 

(q)          Transactions
With Affiliates. Except as disclosed in the SEC Documents, none of the officers, directors or employees or Affiliates of the
Company or any of its Subsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries (other
than for ordinary course services as employees, officers or 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 such officer, director or employee or, to the knowledge of the Company or any of its Subsidiaries,
any corporation, partnership, trust or other Person in which any such officer, director or employee or Affiliate has a substantial
interest or is an employee, officer, director, trustee or partner.

 

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(r)          Equity
Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 250,000,000 shares of Common
Stock, of which 118,220,964 are issued and outstanding and 62,225,625 shares are reserved for issuance pursuant to securities
(other than the Warrants) exercisable or exchangeable for, or convertible into, shares of Common Stock and (ii) 50,000,000 shares
of preferred stock, of which none are issued and outstanding. no shares of Common Stock are held in treasury. All of such outstanding
shares are duly authorized and have been, or upon issuance will be, validly issued and are fully paid and non-assessable. 42,210,910
shares of the Company’s issued and outstanding Common Stock on the date hereof are owned by Persons who are “Affiliates”
(as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at
least 10% of the Company’s issued and outstanding Common Stock are “Affiliates” without conceding that any such
Persons are “Affiliates” for purposes of federal securities laws) of the Company or any of its Subsidiaries. To the
Company’s knowledge, except as set forth in the SEC Documents, no Person owns 10% or more of the Company’s issued
and outstanding shares of Common Stock (calculated based on the assumption that all Convertible Securities (as defined below),
whether or not presently exercisable or convertible, have been fully exercised or converted (as the case may be) taking
account of any limitations on exercise or conversion (including “blockers”) contained therein without conceding that
such identified Person is a 10% stockholder for purposes of federal securities laws). (i) None of the Company’s or any Subsidiary’s
capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by
the Company or any Subsidiary; (ii) except pursuant to the 2006 Non-Qualified Stock and Option Compensation Plan and the 2008
Long-Term Incentive Compensation Plan of the Company disclosed in the SEC Documents (collectively, the “Company Stock
Plans”), there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding
debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness
of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there
are no financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries;
(v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale
of any of their securities under the 1933 Act (except pursuant to this Agreement); (vi) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities; (viii) neither the Company nor any Subsidiary has any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement other than pursuant to
the Company Stock Plans; and (ix) neither the Company nor any of its Subsidiaries have any liabilities or obligations required
to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary
course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do
not or could not have a Material Adverse Effect. The SEC Documents contain true, correct and complete copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”),
and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms
of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the
holders thereof in respect thereto.

 

    	12

    	 

    

 

(s)          Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries (i) except as disclosed in the SEC Documents, has any
outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of which,
or default under which, by the other party or parties to such contract, agreement or instrument could reasonably be expected to
result in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement or instrument
relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in
a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance
of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. For purposes
of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without
limitation, “capital leases” in accordance with generally accepted accounting principles) (other than trade payables
entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness
created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with
respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary
obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently
applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through
(F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts
and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others
of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means, 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; and (z) “Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or
agency thereof.

 

    	13

    	 

    

 

(t)          Absence
of Litigation. Except as disclosed in the SEC Documents, there
is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory
organization (including the Principal Market) or body pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’ officers or
directors which is outside of the ordinary course of business or individually or in the aggregate material to the Company or any
of its Subsidiaries. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation
by the SEC involving the Company, any of its Subsidiaries or any current of former director or officer of the Company or any of
its Subsidiaries. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement
filed by the Company under the 1933 Act or the 1934 Act, including, without limitation, the Registration Statement.

 

(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 been refused any insurance coverage sought or
applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable 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.

 

(v)         Employee
Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. The Company believes that its and its Subsidiaries’ relations with their respective employees are good.
No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any of
its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary
or otherwise terminate such officer’s employment with the Company or any such Subsidiary. No executive officer or other
key employee of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment of each such executive officer or other key employee
(as the case may be) does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting
labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where
failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

 

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(w)          Title.
The Company and its Subsidiaries have good and marketable title in fee simple to all real property, and have good and marketable
title to all personal property, owned by them which is material to the business of the Company and its Subsidiaries, in each case,
free and clear of all liens, encumbrances and defects except as set forth in the SEC Documents and such as do not materially affect
the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and
any of its Subsidiaries. Any real property and facilities held under lease by the Company or any of its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company or any of its Subsidiaries.

 

(x)          Intellectual
Property Rights. Except as disclosed in the SEC Documents: (i) the Company and its Subsidiaries own or possess adequate rights
or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights,
copyrights, original works, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual
property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary
to conduct their respective businesses as now conducted and as presently proposed to be conducted, (ii) none of the Company’s
or its Subsidiaries’ Intellectual Property Rights (which are necessary to conduct their respective businesses as now conducted
and as presently proposed to be conducted) have expired, terminated or been abandoned, or are expected to expire, terminate or
be abandoned, within three years from the date of this Agreement. The Company has no knowledge of any infringement by the Company
or any of its Subsidiaries of Intellectual Property Rights of others, (iv) there is no claim, action or proceeding being made
or brought, or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its
Subsidiaries regarding their Intellectual Property Rights and (v) the Company is not aware of any facts or circumstances which
might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and each of its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property
Rights.

 

(y)          Environmental
Laws. The Company and its Subsidiaries (i) are in compliance with all Environmental Laws (as defined below), (ii) have received
all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses
and (iii) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing
clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws of
the applicable jurisdictions to which the Company is subject 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.

 

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(z)           Subsidiary
Rights. The Company or one of its Subsidiaries 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 such Subsidiary.

 

(aa)         Tax
Status. Except to the extent that the failure to do so would not have a Material Adverse Effect, the Company and each of its
Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (ii) has timely 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 (iii) has set aside on its books provision 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 and its Subsidiaries know of no basis for
any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined
in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.

 

(bb)         Internal
Accounting and Disclosure Controls. The Company and each of its Subsidiaries maintains internal control over financial reporting
(as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles, including 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 generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence
of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded
accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate
action is taken with respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined
in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company
in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods
specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated
to the Company’s management, including its principal executive officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding required disclosure. Neither the Company nor any of its Subsidiaries
has received any notice or correspondence from any accountant or other Person relating to any potential material weakness or significant
deficiency in any part of the internal controls over financial reporting of the Company or any of its Subsidiaries.

 

(cc)         Off
Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of its
Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934
Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.

 

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(dd)         Investment
Company Status. The Company is not,
and upon consummation of the sale of the Securities will not be, an “investment company,” an Affiliate of an “investment
company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter”
or “principal underwriter” for, an “investment company” as such terms are defined in the Investment Company
Act of 1940, as amended.

 

(ee)         Acknowledgement
Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure
of the transactions contemplated by the Transaction Documents, in accordance with the terms thereof, none of the Buyers have been
asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries,
to desist from effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or
short) any securities of the Company, or “derivative” securities based on securities issued by the Company or to hold
the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which any
such Buyer is a party, directly or indirectly, presently may have a “short” position in the Common Stock which was
established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction Documents; and (iii) each
Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any “derivative”
transaction. The Company further understands and acknowledges that following the public disclosure of the transactions contemplated
by the Transaction Documents pursuant to the Press Release (as defined below) one or more Buyers may engage in hedging and/or
trading activities at various times during the period that the Securities are outstanding, including, without limitation, during
the periods that the value and/or number of the Warrant Shares deliverable with respect to the Securities are being determined
and (b) such hedging and/or trading activities, if any, can reduce the value of the existing stockholders’ equity interest
in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges
that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement or any other Transaction
Document or any of the documents executed in connection herewith or therewith.

 

(ff)          Manipulation
of Price. Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their
behalf has, directly or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of
the price of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities (other than the Placement
Agent), or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities
of the Company or any of its Subsidiaries.

 

(gg)         U.S.
Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any
of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company and each Subsidiary shall so certify upon any Buyer’s
request.

 

(hh)         Registration
Eligibility. The Company is eligible to register the issuance and sale of the Securities
to the Buyers using Form S-3 promulgated under the 1933 Act.

 

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(ii)           Transfer
Taxes. On the Closing Date, all stock transfer or other taxes (other than income or
similar taxes) which are required to be paid in connection with the issuance and sale of the Securities to be sold to each Buyer
hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will
have been complied with.

 

(jj)           Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to
the Bank Holding Company Act of 1956, as amended (the “BHCA”) or to regulation by the Board of Governors of
the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates
owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities
or twenty-five percent (25%) or more of the total equity of a bank or any equity that is subject to the BHCA or to regulation by
the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management
or policies of a bank or any entity that is subject to the BHCA or to regulation by the Federal Reserve.

 

(kk)          Registration
Rights. No holder of securities of the Company has rights to the registration of any
securities of the Company because of the filing of the Registration Statement or the issuance of the Securities hereunder that
could expose the Company to material liability or any Buyer to any liability or that could impair the Company’s ability to
consummate the issuance and sale of the Securities in the manner, and at the times, contemplated hereby, which rights have not
been waived by the holder thereof as of the date hereof.

 

(ll)            Public
Utility Holding Act. None of the Company nor any of its Subsidiaries is a “holding
company,” or an “Affiliate” of a “holding company,” as such terms are defined in the Public Utility
Holding Act of 2005.

 

(mm)        Federal
Power Act. None of the Company nor any of its Subsidiaries is subject to regulation
as a “public utility” under the Federal Power Act, as amended.

 

(nn)         Disclosure.
The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or
counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning
the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other
Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries,
their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf
of the Company or any of its Subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which
they were made, not misleading. Each material press release issued by the Company or any of its Subsidiaries during the twelve
(12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading. No event or circumstance has occurred or, to the Company’s
knowledge, no information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities,
prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or
regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly
disclosed. The Company acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to
the transactions contemplated hereby other than those specifically set forth in Section 2.

 

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		4.	COVENANTS.

 

(a)          Maintenance
of Registration Statement  For so long as any of the Warrants remain outstanding, the Company shall use its reasonable
best efforts to maintain the effectiveness of the Registration Statement for the issuance thereunder of the Warrant Shares, provided
that, if at any time while the Warrants are outstanding the Company shall be ineligible to utilize Form S-3 (or any successor
form) for the purpose of issuance of the Warrant Shares, the Company shall promptly amend the Registration Statement on such other
form as may be necessary to maintain the effectiveness of the Registration Statement for this purpose. If at any time following
the date hereof the Registration Statement is not effective or is not otherwise available for the issuance of the Securities or
any prospectus contained therein is not available for use, the Company shall immediately notify the holders of the Securities
in writing that the Registration Statement is not then effective or a prospectus contained therein is not available for use and
thereafter shall promptly notify such holders when the Registration Statement is effective again and available for the issuance
of the Securities or such prospectus is again available for use.

 

(b)          Prospectus
Supplement and Blue Sky. Immediately prior to execution of this Agreement, the Company
shall have delivered, and as soon as practicable after execution of this Agreement the Company shall file, the Prospectus Supplement
with respect to the Securities as required under, and in conformity with, the 1933 Act, including Rule 424(b) thereunder. If required,
the Company, on or before the Closing Date, shall take such action as necessary in order to obtain an exemption for, or to, qualify
the Securities for sale to the Buyers at the 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. Without limiting any other obligation of the Company under
this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities required
under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable
“Blue Sky” laws), and the Company shall comply with all applicable federal, state and local laws, statutes, rules,
regulations and the like relating to the offering and sale of the Securities to the Buyers. The Company shall take all necessary
action to ensure the compliance with all applicable securities laws (including without limitation “Blue Sky” laws)
of the issuance of any Warrant Shares from time to time upon exercise of the Warrants.

 

(c)          Reporting
Status. Until the date on which no Warrants are outstanding (the “Reporting Period”), the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status
as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no
longer require or otherwise permit such termination.

 

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(d)          Use
of Proceeds.  The Company shall use the net proceeds from the sale of the Securities solely for (1) continuing product development
and sales and marketing, in each case, of the Company’s business (2) general corporate purposes and (3) repayment of principal
and interest payable under the JGB Convertible Notes (hereinafter defined). Without limiting the foregoing, none of such proceeds
shall be used, directly or indirectly, for: (i) the satisfaction of any debt of the Company or any of its Subsidiaries (other
than payment of trade payables incurred after the date hereof in the ordinary course of the Company’s business and consistent
with prior practices and the debt set forth in Section 4(d)(3) above), (ii) the redemption of any securities of the Company or
(iii) the settlement of any outstanding litigation.

 

(e)          [Intentionally
Omitted].

 

(f)          Listing.
The Company shall promptly (but in no event later than the Closing Date) secure the listing of all of the Common Shares and Warrant
Shares (subject to NYSE MKT Approval) on the Principal Market in connection with the transactions contemplated hereby and by the
Warrants and shall secure the listing or designation for quotation (as the case may be) of all of the Common Shares and Warrant
Shares upon each other national securities exchange and automated quotation system, if any, upon which the Common Stock is then
listed or designated for quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing
or designation for quotation (as the case may be) of all the shares of Common Stock from time to time issuable under the terms
of the Transaction Documents on the Principal Market and such national securities exchange or automated quotation system. The
Company shall maintain the Common Stock’s listing or designation for quotation (as the case may be) on the Principal Market,
the New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Capital Market or the Nasdaq Global Select Market (each, an
“Eligible Market”). Neither the Company nor any of its Subsidiaries shall take any action which could be reasonably
expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(f).

 

(g)          Fees.
Prior to the date hereof, the Company has paid, for the benefit of Crede CG III, Ltd. (“Crede”), a non-refundable,
non-accountable document preparation fee in the amount of $25,000. In addition, by virtue of the execution of this Agreement by
Crede, the Company shall be obligated to pay to Crede an additional non-refundable amount equal to $250,000 as an unallocated
expense reimbursement (the “Expense Fee”) hereunder, which shall be paid by the Company to Crede in
cash, or at the option of Crede, by Crede withholding such amount from the Purchase Price to be paid by it at the Closing. The
Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, consultant fees, transfer
agent fees, DTC fees or broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising out of
the transactions contemplated hereby (including, without limitation, any fees payable to the Placement Agent, who is the Company’s
sole placement agent in connection with the transactions contemplated by this Agreement). The Company shall pay, and hold each
Buyer harmless against, any liability, loss or expense (including, without limitation, out-of-pocket expenses) arising in connection
with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement
shall bear its own expenses in connection with the sale of the Securities to the Buyers.

 

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(h)          Pledge
of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company acknowledges and agrees that
the Securities may be pledged by a Buyer in connection with a bona fide margin agreement or other loan or financing arrangement
that is secured by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other Transaction Document. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities
to such pledgee by a Buyer.

 

(i)          Disclosure
of Transactions and Other Material Information. The Company shall, on or before 9:30 a.m.,
New York time, on the first (1st) Trading Day after the date hereof, issue a press release (the “Press Release”)
reasonably acceptable to the Buyers disclosing all the material terms of the transactions contemplated
by the Transaction Documents. On or before 9:30 a.m., New York time, on the first
(1st) Trading Day after the date hereof, the Company shall file a Current Report on Form 8-K describing all
the material terms of the transactions contemplated by the Transaction Documents in the form required by the 1934 Act and attaching
all the material Transaction Documents (including, without limitation, this Agreement (and all schedules to this Agreement) and
the form of Warrants) (including all attachments, the “8-K Filing”). From and after the issuance of the Press
Release, the Company shall have disclosed all material, non-public information (if any) delivered to any of the Buyers by the
Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. The Company shall not, and the Company shall cause each of its Subsidiaries
and each of its and their respective officers, directors, employees and agents, not to, provide any Buyer with any material, non-public
information regarding the Company or any of its Subsidiaries from and after the issuance of the Press Release without the express
prior written consent of such Buyer. In the event of a breach of any of the foregoing covenants by the Company, any of its Subsidiaries,
or any of its or their respective officers, directors, employees and agents (as determined in the reasonable good faith judgment
of such Buyer), in addition to any other remedy provided herein or in the Transaction Documents, such Buyer shall have the right
to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, non-public information
without the prior approval by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees
or agents. No Buyer shall have any liability to the Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees, stockholders or agents, for any such disclosure. Subject to the foregoing, neither the Company, its Subsidiaries
nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby;
provided, however, the Company shall be entitled, without the prior approval of any Buyer, to make any press release or other
public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted
by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written
consent of the applicable Buyer, the Company shall not (and shall cause each of its Subsidiaries and Affiliates to not) disclose
the name of such Buyer in any filing (other than in the Transaction Documents filed as exhibits to the 8-K Filing), announcement,
release or otherwise. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary
would otherwise be true, the Company expressly acknowledges and agrees that no Buyer has had, and no Buyer shall have (unless
expressly agreed to by a particular Buyer after the date hereof in a written definitive and binding agreement executed by the
Company and such particular Buyer), any duty of confidentiality with respect to, or a duty not to trade on the basis of, any material,
non-public information regarding the Company or any of its Subsidiaries.

 

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(j)          Additional
Issuance of Securities. The Company agrees that for the period commencing on the date hereof and ending on the date immediately
following the ninety (90) day anniversary of the date hereof (provided that such period shall be extended by the number of days
during such period and any extension thereof contemplated by this proviso on which the Registration Statement is not effective
or any prospectus contained therein is not available for use) (the “Restricted Period”), neither the
Company nor any of its Subsidiaries shall directly or indirectly issue, offer, sell, grant any option or right to purchase, or
otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of)
any Common Stock or any security or any debt or other instrument convertible or exchangeable or exercisable into Common Stock
or which constitutes (or would constitute but for lack of a fixed exercise or conversion or similar price or if it were not solely
cash settled) a “derivative security” (as defined under the rules and regulations under Section 16 of the 1934 Act)
or otherwise an equity-linked or related security (including, without limitation, any “equity security” (as that term
is defined under Rule 405 promulgated under the 1933 Act) or which does or would otherwise constitute any Option or Convertible
Security (as defined in the Warrants) (any such issuance, offer, sale, grant, disposition or announcement (occurring during the
Restricted Period) is referred to as a “Subsequent Placement”). Notwithstanding the foregoing, the immediately
preceding sentence in this Section 4(j) shall not apply in respect of the issuance of (A) shares of Common Stock or standard options
to purchase Common Stock or other standard equity linked securities (e.g., stock appreciation rights) to directors, officers or
employees of the Company in their capacity as such pursuant to an Approved Share Plan (as defined below), provided that (1) all
such issuances (taking into account the shares of Common Stock issuable upon exercise of such options) after the date hereof pursuant
to this clause (A) do not, in the aggregate, exceed more than 500,000 shares of Common Stock and (2) the exercise price of any
such options is not lowered, other than for standard anti-dilution provisions such as stock dividends or stock splits, none of
such options are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such
options are otherwise materially changed in any manner that adversely affects any of the Buyers; (B) shares of Common Stock issued
upon the conversion or exercise of Convertible Securities (other than standard options to purchase Common Stock issued pursuant
to an Approved Share Plan that are covered by clause (A) above which shall also be allowed) issued prior to the date hereof (including
the 8% Convertible Promissory Notes issued pursuant to the Securities
Purchase Agreement, dated March 29, 2012 (the “JGB Convertible Notes”),
provided that the conversion price of any such Convertible Securities (other than standard options to purchase Common Stock issued
pursuant to an Approved Share Plan that are covered by clause (A) above) is not lowered (other than as required by the terms of
the Convertible Securities), none of such Convertible Securities (other than standard options to purchase Common Stock issued
pursuant to an Approved Share Plan that are covered by clause (A) above) are amended to increase the number of shares issuable
thereunder other than for standard anti-dilution provisions such as stock dividends or stock splits and none of the terms or conditions
of any such Convertible Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Share
Plan that are covered by clause (A) above which shall also be allowed) are otherwise materially changed in any manner that adversely
affects any of the Buyers; (C) the Warrants; (D) the Warrant Shares; (E) equity to a seller, or in the case of a merger, the shareholders
of the target company in such merger, or the officers or employees thereof, in each case in connection with a bona fide merger,
business combination transaction or acquisition of stock or assets outside of the ordinary course; (F) a stock split or other
subdivision or combination, or a stock dividend made to all holders of any Company equity on a pro rata basis; (G) equity in connection
with bona fide strategic partnership or joint venture transactions; (H) beginning sixty (60) days after the date hereof, shares
of Common Stock and Warrants to individual, institutional or strategic investors in private placement transactions; provided,
(x) such issuances are for a consideration per share of Common Stock of no less than $0.75 and (y) the Company does not grant
or enter into any agreement to grant such investors registration rights whereby the Company would have an obligation to register
the resale of such shares of Common Stock during the Restricted Period; (I) shares of Common Stock or Convertible Securities for
cash to individual, institutional or strategic investors, provided that (x) in the case of any such issuance of any shares of
Common Stock, no share of Common Stock shall be sold for an amount per share in cash less than the Exercise Price (as defined
in the Warrants) in effect at the time of such issuance thereof and (y) in the case of any such issuance of any Convertible Security,
the conversion price of such Convertible Security shall not be less than the Exercise Price in effect at the time of such issuance
thereof or (J) either (i) up to 3,000,000 shares of Common Stock or warrants exercisable for up to 3,000,000 shares of common
stock or (ii) warrants exercisable for up to 6,000,000 shares of Common Stock, in each case, in a private placement transaction
issued in connection with an up to $26 million debt transaction; provided, (x) the
proceeds from such debt transaction will be used to pay off the JGB Convertible Notes, (y) the exercise price of any such warrants
in the event of issuance under J(ii) is no less than market price of the Common Stock at the time of the issuance of such warrants
and (z) the Company does not grant or enter into any agreement to grant such investors registration rights whereby the
Company would have an obligation to register the resale of such shares of Common Stock during the Restricted Period (each of the
foregoing in clauses (A) through (J), collectively the “Excluded Securities”). “Approved Share Plan”
means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the
date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may be issued to any employee,
officer director or consultants for services provided to the Company in their capacity as such.

 

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(k)          Reservation
of Shares. So long as any of the Warrants remain outstanding, the Company shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, the maximum number of shares of Common Stock issuable upon exercise
of all the Warrants (without regard to any limitations on the exercise of the Warrants set forth therein).

 

(l)          Conduct
of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity in any jurisdiction to which the Company is subject, except where such violations would
not result, either individually or in the aggregate, in a Material Adverse Effect.

 

    	23

    	 

    

 

(m)          Variable
Rate Transaction. The Company agrees that for the period commencing on the date hereof
and ending on the date immediately following the one hundred and eighty (180) day anniversary of the date hereof (provided that
such period shall be extended by the number of days during such period and any extension thereof contemplated by this proviso on
which the Registration Statement is not effective or any prospectus contained therein is not available for use), the Company and
each Subsidiary shall be prohibited from effecting, or entering into an agreement to effect, any Subsequent Placement (whether
occurring during the Restricted Period or at any time thereafter ending on the date immediately following the one hundred and eighty
(180) day anniversary of the date hereof (subject to the proviso above)) involving a Variable Rate Transaction. “Variable
Rate Transaction” means a transaction in which the Company or any Subsidiary (i) issues or sells any Convertible Securities
either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of,
or quotations for, the shares of Common Stock at any time after the initial issuance of such Convertible Securities, or (B) with
a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such
Convertible Securities or upon the occurrence of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock, other than pursuant to a customary “weighted average” anti-dilution
provision or (ii) enters into any agreement (including, without limitation, an equity line of credit) whereby the Company or any
Subsidiary may sell securities at a future determined price (other than standard and customary “preemptive” or “participation”
rights). Each Buyer shall be entitled to obtain injunctive relief against the Company and its Subsidiaries to preclude any such
issuance, which remedy shall be in addition to any right to collect damages.

 

(n)          [Intentionally
Omitted]. 

 

(o)          Passive
Foreign Investment Company. The Company shall conduct its business in such a manner
as will ensure that the Company will not be deemed to constitute a passive foreign investment company within the meaning of Section
1297 of the U.S. Internal Revenue Code of 1986, as amended.

 

(p)          Corporate
Existence. So long as any Buyer owns any Warrants, the Company shall not be party to any Fundamental Transaction (as defined
in the Warrants) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth
in the Warrants.

 

(q)          Reverse
Stock Splits. Until the six (6) month anniversary of the Closing Date, the Company shall not effect any stock combination,
reverse stock split or other similar transaction (or make any public announcement with respect to any of the foregoing) without
the prior written consent of each of the Buyers.

 

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(r)          Certain
Restrictions as to Buyer. For so long as the Buyer or any of its Affiliates holds
any Securities, neither the Buyer nor any Affiliate will:  (i) vote any shares of Common Stock beneficially owned by
it, solicit any proxies, or seek to advise or influence any Person with respect to any voting securities of the Company; (ii) engage
or participate in any actions, plans or proposals which relate to or would result in (a) acquiring additional securities of the
Company, alone or together with any other Person, which would result in Buyer or its Affiliates beneficially owning (within the
meaning of Section 13(d) under the 1934 Act) more than 9.9% of the Common Stock, (b) an extraordinary corporate transaction, such
as a merger, reorganization or liquidation, involving Company or any of its Subsidiaries, (c) a sale or transfer of a material
amount of assets of the Company or any of its Subsidiaries, (d) any change in the present board of directors or management of the
Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board,
(e) any material change in the present capitalization or dividend policy of the Company, (f) any other material change in the Company’s
business or corporate structure, including but not limited to, if the Company is a registered closed-end investment company, any
plans or proposals to make any changes in its investment policy for which a vote is required by Section 13 of the Investment Company
Act of 1940, (g) changes in the Company’s charter, bylaws or instruments corresponding thereto or other actions which may
impede the acquisition of control of the Company by any Person, (h) causing a class of securities of the Company to be delisted
from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered
national securities association, (i) a class of equity securities of the Company becoming eligible for termination of registration
pursuant  to Section 12(g)(4) of the Act, or (j) any action, intention, plan or arrangement similar to any of those enumerated
above; or (iii) request the Company or its directors, officers, employees, agents or representatives to amend or waive any provision
of this paragraph. The restrictions contained in this Section 4(r) shall not limit Buyer’s rights to enforce its rights or
exercise its rights as to the Securities or under the Transaction Documents.

 

(s)          Best
Efforts. Each Buyer shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided
in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the conditions to be satisfied
by it as provided in Section 7 of this Agreement.

 

		5.	REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

(a)          Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to each holder of Securities), a register for the Common Shares and the Warrants in which the Company shall record the
name and address of the Person in whose name the Common Shares and the Warrants have been issued (including the name and
address of each transferee), the number of Common Shares held by such Person and the number of Warrant Shares issuable upon exercise
of the Warrants held by such Person. The Company shall keep the register open and available at all times during business hours
for inspection of any Buyer or its legal representatives.

 

(b)          Transfer
Agent Instructions. The Company shall issue irrevocable instructions to the Transfer Agent in the form previously provided
to the Company (the “Irrevocable Transfer Agent Instructions”) to issue certificates or credit shares to the
applicable balance accounts at DTC, without restriction and registered in the name of each Buyer or its respective nominee(s),
for the Common Shares and the Warrant Shares in such amounts as specified from time to time by each Buyer to the Company upon
delivery of the Common Shares or the exercise of the Warrants (as the case may be). The Company represents and warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b) will be given by the Company
to the Transfer Agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books
and records of the Company. If a Buyer effects a sale, assignment or transfer of the Securities, the Company shall permit the
transfer and shall promptly instruct the Transfer Agent to issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to each Buyer. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that each Buyer shall
be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

 

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(c)          Legends.
Certificates and any other instruments evidencing the Securities shall not bear any restrictive or other legend.

 

		6.	CONDITIONS TO THE COMPANY’S OBLIGATION TO
SELL

 

(a)          The
obligation of the Company hereunder to issue and sell the Common Shares and the related Warrants to each Buyer 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 Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each
Buyer with prior written notice thereof:

 

(i)          Such
Buyer shall have delivered to the Company the Purchase Price (less, in the case of Crede, the amounts withheld pursuant to Section 4(g))
for the Common Shares and the related Warrants being purchased by such Buyer at the Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Company.

 

(ii)         The
representations and warranties of such 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, which
shall be true and correct as of such specific date), and such 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
such Buyer at or prior to the Closing Date.

 

		7.	CONDITIONS TO EACH BUYER’S OBLIGATION TO
PURCHASE.

 

(a)          The
obligation of each Buyer hereunder to purchase its Common Shares and the related Warrants 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 each Buyer’s sole
benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

 

(i)          The
Company shall have duly executed and delivered to such Buyer its Common Shares (as is set forth across from such Buyer’s
name in column (3) of the Schedule of Buyers) and the related Warrants (for such aggregate number of Warrant Shares as is
set forth across from such Buyer’s name in column (4) of the Schedule of Buyers) being purchased by such Buyer at the Closing
pursuant to this Agreement.

 

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(ii)         Such
Buyer shall have received the opinion of Ellenoff Grossman & Schole LLP,
the Company’s counsel, dated as of the Closing Date, in the form previously provided to the Company.

 

(iii)        The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form previously provided
to the Company, and which have been delivered to and acknowledged in writing by the Transfer Agent.

 

(iv)        The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company in the Company’s
jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of formation as of a date
within ten (10) days of the Closing Date.

 

(v)         The
Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation within ten (10) days of the Closing
Date.

 

(vi)        The
Company shall have delivered to such Buyer a certificate executed by the Secretary of the Company on behalf of the company, and
not in his or her personal capacity, and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as
adopted by the Company’s board of directors and as necessary or appropriate with respect to the issuance of the Securities
and the approval of this Agreement and the other Transaction Documents and the terms and conditions hereof and thereof and otherwise
in order to give effect hereto and thereto, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the
Closing.

 

(vii)       The
Company shall have delivered to such Buyer a letter from the Transfer Agent certifying the number of shares of Common Stock outstanding
on the Closing Date immediately prior to the Closing.

 

(viii)      The
Company shall have delivered to such Buyer a certificate executed by the Chief Executive Officer of the Company, dated as of the
Closing Date, stating on behalf of the company, and not in his or her personal capacity, that as of the Closing (i) each and every
representation and warranty of the Company herein is true and correct in all material respects as of the date when made and as
of the Closing as though originally made at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date) and, (ii) that the Company has performed, satisfied and complied in all
respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or
prior Closing.

 

(ix)         The
Company shall have obtained the approval of the Transaction Documents and the transactions contemplated thereby by the Listing
and Compliance Committee of the NYSE MKT by close of business on June 7, 2013 (“NYSE MKT Approval”).

 

    	27

    	 

    

 

(x)          The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities.

 

(xi)         Since
the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have, or result
in, a Material Adverse Effect.

 

(xii)        The
Company shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions contemplated
by this Agreement as necessary or appropriate to accomplish the purposes or intents of the issuance of the Securities, and the
consummation of the transactions contemplated by this Agreement and the other Transaction Documents.

 

		8.	TERMINATION.

 

(a)          In
the event that the Closing shall not have occurred with respect to a Buyer within five (5) days after the date hereof, then such
Buyer shall have the right to terminate its obligations under this Agreement with respect to itself at any time on or after the
close of business on such date without liability of such Buyer to any other party; provided, however, (i) the right
to terminate this Agreement under this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated
by this Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the
abandonment of the sale and purchase of the Common Shares and the Warrants shall be applicable only to such Buyer providing such
written notice. Nothing contained in this Section 8 shall be deemed to release any party from any liability for any breach by such
party of the terms and provisions of this Agreement or the other Transaction Documents or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement or the other Transaction Documents.

 

		9.	MISCELLANEOUS.

 

(a)          Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such 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 (i) limit or be deemed to limit in any way any right to serve process in any manner permitted by law or (ii) operate,
or be deemed to operate, to preclude any Buyer from bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling in favor
of such Buyer or (iii) limit, or be deemed to limit, any provision of the Warrants which is contrary to the above. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

    	28

    	 

    

 

(b)          Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which 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. In the event that
any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of
an executed signature page, such signature page 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 signature page were an original thereof.

 

(c)          Headings;
Gender; Certain Meanings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to
include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found. When used herein, the words “law,” “rule,” “regulation”
and the like means all applicable laws, rules and regulations, domestic or foreign, state, provincial, local or self-regulatory,
including without limitation as to all applicable laws, rules and regulations of or related to the United States, applicable states,
the SEC, and the Principal Market.

 

(d)          Severability.
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

    	29

    	 

    

 

(e)          Entire
Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and
thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers,
the Company, their Affiliates and Persons acting on their behalf solely with respect to the matters contained herein and therein,
and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein
and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed
to), (i) have any effect on any agreements any Buyer has entered into with the Company or any of its Subsidiaries prior to the
date hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or amend in any
respect any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person,
in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Buyer
and all such agreements shall continue in full force and effect. Except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For clarification
purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and each of the Buyers. No waiver shall be effective unless it is in writing and signed by an authorized
representative of the waiving party. No consideration shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents unless the same consideration also is offered to all of the
parties to the Transaction Documents, all holders of Common Shares or all holders of the Warrants (as the case may be). The Company
has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated
by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms
that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide
any financing to the Company, any Subsidiary or otherwise. As a material inducement for each Buyer to enter into this Agreement,
the Company expressly acknowledges and agrees that (i) no due diligence investigation conducted by a Buyer or its advisors, if
any, or its representatives shall affect such Buyer’s right to rely on, or modify or qualify any of, the Company’s
representations and warranties contained in this Agreement or any other Transaction Document, (ii) nothing contained in the Registration
Statement, the Prospectus or the Prospectus Supplement shall affect such Buyer’s right to rely on, or modify or qualify
any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document and (iii)
unless a provision of this Agreement or any other Transaction Document is expressly preceded by “except as disclosed in
the SEC Documents,” nothing contained in any of the SEC Documents shall affect such Buyer’s right to rely on, or modify
or qualify any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document.

 

    	30

    	 

    

 

(f)          Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when
sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party); (iii) when sent, if sent by e-mail (provided that such sent e-mail is kept on file (whether electronically or otherwise)
by the sending party and the sending party does not receive an automatically generated message from the recipient’s e-mail
server that such e-mail could not be delivered to such recipient); and (iv) one (1) Business Day after deposit with an overnight
courier service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses
and facsimile numbers and email addresses for such communications shall be:

 

If to the Company:

 

	 	Elephant Talk Communications Corp.	 
	 	c/o Ellenoff Grossman & Schole LLP	 
	 	150 East 42nd Street, 11th Floor	 
	 	New York, NY 10017	 
	 	Telephone: 	31 20 653 5916	 
	 	Facsimile:  	 	 
	 	Email:	steven.vandervelden@elephanttalk.com	 
	 	Attention:  	Steven van der Velden	 

 

With a copy (for informational
purposes only) to:

 

	 	Ellenoff Grossman & Schole LLP	 
	 	150 East 42nd Street, 11th Floor	 
	 	New York, NY 10017	 
	 	Telephone: 	(212)370-1300	 
	 	Facsimile:	  (212)370-7889	 
	 	Email:	bigrossman@egsllp.com	 
	 	Attention:  	Barry I. Grossman, Esq.	 

 

If to the Transfer Agent:

 

	 	Continental Stock Transfer & Trust Company	 
	 	17 Battery Park Place	 
	 	New York, NY 10004	 
	 	Telephone: 	212.509.4000	 
	 	Facsimile: 	212.509.5150	 
	 	Email:	dzesare@continentalstock.com	 
	 	Attention:  	Delores Zesare	 

 

If to a Buyer, to its address and facsimile
number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,

 

    	31

    	 

    

 

with a copy (for informational
purposes only) to:

 

	 	Greenberg Traurig, LLP	 
	 	77 W. Wacker Drive, Suite 3100	 
	 	Chicago, Illinois 60601	 
	 	Telephone:	(312) 456-8400	 
	 	Facsimile:	(312) 456-8435	 
	 	Email:	liebermanp@gtlaw.com	 
	 	 	mazure@gtlaw.com	 
	 	Attention:	Peter H. Lieberman, Esq.	 
	 	 	Eric Mazur, Esq.	 

 

or to such other address and/or facsimile
number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other
party five (5) days prior to the effectiveness of such change, provided that Greenberg Traurig, LLP shall only be provided copies
of notices sent to Crede. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i),
(ii) or (iii) above, respectively. A copy of the e-mail transmission containing the time, date and recipient e-mail address shall
be rebuttable evidence of receipt by e-mail in accordance with clause (iii) above.

 

(g)          Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors
and assigns, including, as contemplated below, any assignee of any of the Securities. The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written consent of each of the Buyers, including, without limitation,
by way of a Fundamental Transaction (as defined in the Warrants) (unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Warrants). A Buyer may assign some or all of its rights hereunder in connection
with any transfer of any of its Securities without the consent of the Company, in which event such assignee shall be deemed to
be a Buyer hereunder with respect to such assigned rights.

 

(h)          No
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, other than
the Indemnitees referred to in Section 9(k).

 

(i)          Survival.
The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.

 

(j)          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 any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

    	32

    	 

    

 

(k)          Indemnification.

 

(i)          In
consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including,
without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in any of the Transaction Documents, (b) any breach of any covenant, agreement or obligation of
the Company contained in any of the Transaction Documents, (c) any cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out
of or resulting from (i) the execution, delivery, performance or enforcement of any of the Transaction Documents, (ii) any transaction
financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii)
any disclosure properly made by such Buyer pursuant to Section 4(i), or (iv) the status of such Buyer or holder of the Securities
as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

 

    	33

    	 

    

 

(ii)         Promptly
after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is
to be made against the Company under this Section 9(k), deliver to the Company a written notice of the commencement thereof, and
the Company shall have the right to participate in, and, to the extent the Company so desires, to assume control of the defense
thereof with counsel mutually satisfactory to the Company and the Indemnitee; provided, however, that an Indemnitee shall have
the right to retain its own counsel with the fees and expenses of such counsel to be paid by the Company if: (i) the Company has
agreed in writing to pay such fees and expenses; (ii) the Company shall have failed promptly to assume the defense of such Indemnified
Liability and to employ counsel reasonably satisfactory to such Indemnitee in any such Indemnified Liability; or (iii) the named
parties to any such Indemnified Liability (including any impleaded parties) include both such Indemnitee and the Company, and such
Indemnitee shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent
such Indemnitee and the Company (in which case, if such Indemnitee notifies the Company in writing that it elects to employ separate
counsel at the expense of the Company, then the Company shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the Company), provided further, that in the case of clause (iii) above the Company shall not be responsible
for the reasonable fees and expenses of more than one (1) separate legal counsel for such Indemnitee. The Indemnitee shall reasonably
cooperate with the Company in connection with any negotiation or defense of any such action or Indemnified Liability by the Company
and shall furnish to the Company all information reasonably available to the Indemnitee which relates to such action or Indemnified
Liability. The Company shall keep the Indemnitee reasonably apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. The Company shall not be liable for any settlement of any action, claim or proceeding effected
without its prior written consent, provided, however, that the Company shall not unreasonably withhold, delay or condition its
consent. The Company shall not, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter
into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all liability in respect to such Indemnified Liability or litigation, and such settlement
shall not include any admission as to fault on the part of the Indemnitee. Following indemnification as provided for hereunder,
the Company shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating
to the matter for which indemnification has been made. The failure to deliver written notice to the Company within a reasonable
time of the commencement of any such action shall not relieve the Company of any liability to the Indemnitee under this Section
9(k), except to the extent that the Company is materially and adversely prejudiced in its ability to defend such action.

 

(iii)        The
indemnification required by this Section 9(k) shall be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Liabilities are incurred.

 

(iv)        The
indemnity agreement contained herein shall be in addition to (A) any cause of action or similar right of the Indemnitee against
the Company or others, and (B) any liabilities the Company may be subject to pursuant to the law.

 

(l)          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. No specific representation or warranty shall limit the generality
or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock
and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for stock splits, stock
combinations and other similar transactions that occur with respect to the Common Stock after the date of this Agreement.

 

    	34

    	 

    

 

(m)          Remedies.
Each Buyer and each holder of any Securities shall have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event
that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law
may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek specific
performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction
in any such case without the necessity of proving actual damages and without posting a bond or other security.

 

(n)          Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any 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.

 

(o)          Independent
Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several
and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the
obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges
that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or
create a presumption that the Buyers are in any way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Buyers are
not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the
transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted
as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as
agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under
the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated with the Company
in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be
entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement
or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party
in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated
hereby was solely in the control of the Company, not the action or decision of any Buyer, and was done solely for the convenience
of the Company and not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that
each provision contained in this Agreement and in each other Transaction Document is between the Company and a Buyer, solely,
and not between the Company and the Buyers collectively and not between and among the Buyers.

 

    	35

    	 

    

 

(p)          Payment
Set Aside; Currency. To the extent that the Company makes
a payment or payments to any Buyer hereunder or pursuant to any of the other Transaction Documents or any of the Buyers enforce
or exercise their rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under
any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. Unless
otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United
States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction Documents
shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted in the U.S. Dollar equivalent
amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation
to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published
in the Wall Street Journal on the relevant date of calculation.

 

[signature
pages follow]

 

    	36

    	 

    

 

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

 

	 	COMPANY:
	 	 
	 	ELEPHANT TALK COMMUNICATIONS CORP.
	 	 
	 	 	 
	 	By:	Steven van der Velden
	 	Its:	Chief Executive Officer

 

    	 

    	 

    

 

 

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

 

	 	BUYER:
	 	 	 
	 	CREDE CG II, LTD.
	 	 
	 	 	 
	 	By: 	Terren S. Peizer
	 	Its: 	Managing Director

 

    	 

    	 

    

 

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

 

 

	 	BUYER:
	 	 
	 	[OTHER BUYERS]
	 	 
	 	 
	 	By:
	 	Its:

 

    	 

    	 

    

 

SCHEDULE OF BUYERS

 

	(1)	 	(2)	 	(3)		 	(4)		 	(5)		 	(6)
	Buyer	 	Address and

    Facsimile Number	 	Number of

    Common
 Shares	 	 	Number of

    Warrant Shares	 	 	Purchase

    Price	 	 	Legal Representative’s

    Address and Facsimile Number
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Crede CG III,
    Ltd.	 	11150 Santa Monica Boulevard, Suite
    1500 Los Angeles, California 90025 
Facsimile: (310) 444-5300	 	 	6,666,667	 	 	 	3,000,000	 	 	$	5,000,000	 	 	Greenberg Traurig, LLP
 77 W. Wacker Drive, Suite 3100
 Chicago,
    Illinois 60601
 Attention: Peter H. Lieberman 
                 Eric
    Mazur
 Facsimile: (312) 456-8435
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[OTHER BUYERS]	 	[______________]	 	 	[________]	 	 	 	[________]	 	 	$	[________]	 	 	[________________________]

 

The Company represents
and warrants to Crede that based upon the above and the number of outstanding shares of Common Stock as set forth in Section 3(r)
hereof, upon execution of this Agreement, Crede will beneficially own (within the meaning of Section 13(d) of the 1934 Act and
the rules and regulations thereunder) no more than 9.9% of the Company’s Common Stock.

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