Document:

Exhibit 10.4

 

SECURITIES PURCHASE AGREEMENT

 

This Securities
Purchase Agreement (this “Agreement”) is dated as of June 29, 2017, between Precipio, Inc. (formerly Transgenomic,
Inc.), a Delaware corporation (the “Company”) and the investors set forth in Schedule A attached hereto
(each a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, subject
to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchasers,
and the Purchasers, severally and not jointly, desire to purchase from the Company, securities of the Company as more fully described
in this Agreement.

 

NOW, THEREFORE,
IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

 

ARTICLE
I

DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Common
Stock” means the common shares of the Company, par value $0.01 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.

 

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

 

“Diagnostics”
means Precipio Diagnostics, Inc.

 

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

 

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

 

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

 

“Equity Linked Offering”
means any offering of securities convertible, exercisable or exchangeable, directly or indirectly, into Common Stock.

 

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

 

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“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company
pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors
or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise
or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or
conversion price of such securities, (c) securities the issuance of which has been approved by the holders of majority in interest
of the aggregate principal amount of the then outstanding Notes, (d) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person
(or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset
in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in securities, (e) securities issued pursuant to an effective
registration statement, and (f) securities issued in connection with the transactions or arrangements set forth on Schedule 1.1
to this Agreement.

 

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

 

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

 

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

 

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

 

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

 

“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

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

 

“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.16.

 

“Merger”
means the merger between the Company and Precipio Diagnostics, Inc. and the transactions related thereto.

 

“Notes”
means $800,000 principal amount of the 8% Promissory Notes, issued by the Company to the Purchasers hereunder, in the form of Exhibit
A attached hereto.

 

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“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

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

 

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

 

“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares.

 

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

 

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

 

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

 

“Securities”
means the Notes and the Underlying Shares.

 

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

 

“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include any sale of Securities pursuant to Rule 144).

 

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

 

“Subsidiary”
means any subsidiary of the Company as set forth in the SEC Reports and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.

 

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

 

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

 

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

 

“Transaction Offer”
shall have the meaning set forth in Section 4.14.

 

“Transfer
Agent” means Wells Fargo Shareowner Services, the current transfer agent of the Company, with a mailing address of 1110
Centre Pointe Curve, Suite 101, Mendota Heights, MN 55120, and any successor transfer agent of the Company.

 

“Underlying
Shares” means the shares of Common Stock or Preferred Stock issuable upon conversion of the Notes.

 

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

 

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ARTICLE
II

PURCHASE
AND SALE

 

2.1           Closing.
Subject to the satisfaction of the conditions to closing set forth herein, the purchase and sale of Notes, in the amounts and to
the Investors listed on Schedule A attached hereto shall take place at the offices of counsel to the Purchasers, Sichenzia
Ross Ference Kesner LLP at 61 Broadway, New York, NY 10006 or such other location as the parties shall mutually agree, at 10:00
A.M., Eastern Standard Time, on June 29, 2017, or at such other time and place as the Company and the Investors mutually agree
upon orally or in writing (which time and place are designated as the “Closing”). Each Purchaser shall deliver
to the Company, via wire transfer with immediately available funds, an amount equal to the Subscription Amount applicable to the
Closing as set forth on the signature page hereto executed by each such Purchaser and the Company and the Purchasers shall deliver
the other items set forth in Section 2.2 deliverable at the Closing. Upon receipt of the funds, the Company shall deliver
to the respective purchasers the Note, as determined pursuant to Section 2.2.

 

2.2           Deliveries.

 

(a)          On
or prior to the Closing Date pursuant to Section 2.1, the Company shall deliver or cause to be delivered to the Purchasers
this Agreement duly executed by the Company. In addition, on or prior to the Closing Date held pursuant to Section 2.1,
the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i)          a
Note with a principal amount equal to the relevant Subscription Amount, registered in the name of the applicable Purchaser;

 

(ii)         a
certificate evidencing the formation and good standing of the Company in such entity’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; and

 

(iii)        a
certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions as adopted by
the Company’s board of directors in a form reasonably acceptable to the Purchasers, (ii) the Certificate of Incorporation
of the Company, and (iii) the Bylaws of the Company, each as in effect at the Closing.

 

(b)          On
or prior to the Closing Date pursuant to Section 2.1, each Purchaser shall deliver or cause to be delivered to the Company
this Agreement duly executed by the Purchaser.

 

2.3           Closing
Conditions.

 

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

 

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

 

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

 

(iii)        the
delivery by the applicable Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

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

 

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(i)          the
accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties of the Company
contained herein (unless such representation or warranty is made as of a specific date therein);

 

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

 

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

 

(iv)        the
Common Stock shall have been approved for listing on the Nasdaq Capital Market; and

 

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

 

ARTICLE
III

REPRESENTATIONS
AND WARRANTIES

 

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

 

(a)          Subsidiaries.
Except with respect to Diagnostics and its subsidiaries, all of the direct and indirect subsidiaries of the Company are set forth
on Schedule 3.1(a)(i). Except with respect to Diagnostics or as set forth on Schedule 3.1(a)(ii), the Company owns, directly or
indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive
and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries
or any of them in the Transaction Documents shall be disregarded.

 

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(b)          Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted except where the failure
to be in good standing would not have a Material Adverse Effect. Neither the Company nor any Subsidiary is in material violation
nor material default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational
or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as
a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it
makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could
not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or
(iii), a “Material Adverse Effect”).

 

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

 

(d)          No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not, except as will be resolved with the proceeds from this offering: (i) conflict with or violate
any material provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or
any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse
of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as are waived or
could not reasonably be expected to result in a Material Adverse Effect.

 

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(e)          Filings,
Consents and Approvals. Other than as set forth on Schedule 3.1(e), the Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii) the notice and/or
application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Underlying
Shares for trading thereon in the time and manner required thereby, and (iii) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(f)          Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with
the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed
by the Company other than restrictions on transfer provided for in the Transaction Documents.

 

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

 

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(h)          SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) of the Exchange
Act, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates
thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit adjustments.

 

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

 

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(j)          Litigation.
Except as set forth on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local
or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect. Except as set forth on Schedule 3.1(j), neither the Company nor
any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of
or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current
or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness
of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

(k)          Compliance.
Except as set forth in the SEC Reports or on Schedule 3.1(l), neither the Company nor any Subsidiary: (i) is in default under or
in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in
a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is
in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has
been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality
and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

 

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

 

    	 	11	 

     

    

 

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

 

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

 

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

 

    	 	12	 

     

    

 

(p)          Sarbanes-Oxley;
Internal Accounting Controls. Except as set forth in the SEC Reports, as of September 30, 2016, the Company and the Subsidiaries
are in compliance with any and all applicable requirements of the Sarbanes- Oxley Act of 2002 that are effective as of the date
hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the
date hereof and as of the Closing Date and that are applicable to the Company. Except as set forth in the SEC Reports, the Company
and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets
is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
Except as set forth in the SEC Reports, the Company and the Subsidiaries have established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls
and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules
and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of
the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange
Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Except as set forth on Schedule 3.1(p), since the Evaluation Date, there have been
no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) that have materially
affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

 

(q)          Certain
Fees. With the exception of the commission payable to Aegis Capital Corp., in its capacity as placement agent in connection
with the transactions contemplated by this Agreement, no brokerage or finder’s fees or commissions are or will be payable
by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(r)           Private
Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section 3.2,
no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as
contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading
Market.

 

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

 

(t)           Registration
Rights. Other than as disclosed in the SEC Reports and in connection with the Merger, no Person has any right to cause the
Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiaries.

 

    	 	13	 

     

    

 

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

 

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

 

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

 

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

 

    	 	14	 

     

    

 

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

 

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

 

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

 

(bb)        Accountants.
The Company’s accounting firm is Marcum. To the knowledge and belief of the Company, such accounting firm: (i) is a registered
public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements
to be included in the Company’s Annual Report for the fiscal year ended December 31, 2017.

 

(cc)         No
Disagreements with Accountants and Lawyers. Except as set forth in the SEC Reports, there are no disagreements of any kind
presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company which could affect the Company’s ability to perform any of its obligations under any
of the Transaction Documents.

 

    	 	15	 

     

    

 

(dd)        Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that the Purchasers are each acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that the Purchasers are not acting as financial advisors or fiduciaries of the Company
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice
given by the Purchasers or any of its representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to each Purchaser’s purchase of the Securities. The Company further represents
to the Purchasers that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. 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 Purchasers have been asked by the Company or any of its Subsidiaries to agree,
nor has any Purchaser 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) any securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold any of the Securities for any specified term; (ii) any Purchaser,
and counterparties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently
may have a “short” position in the Common Stock which was established prior to such Purchaser’s knowledge of
the transactions contemplated by the Transaction Documents; and (iii) each Purchaser 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 Purchasers 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 Conversion Shares deliverable with respect to the Securities are being determined and 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, the Notes or any other Transaction Document or any of the documents executed
in connection herewith or therewith.

 

(ee)        Regulation
M Compliance. The Company has not, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization
or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold,
bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or paid or agreed to pay to any
Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses
(iii) and (iv), compensation paid to the Company’s placement agent in connection with the placement of the Securities.

 

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

 

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

 

    	 	16	 

     

    

 

(hh)         U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended.

 

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

 

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

 

(kk)       Management.
Except as set forth in Schedule 3.1(jj) hereto, during the past five-year period, no current officer or director or,
to the knowledge of the Company, no current ten percent (10%) or greater stockholder of the Company or any of its Subsidiaries
has been the subject of:

 

(i)          a
petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent
or similar officer for such Person, or any partnership in which such person was a general partner at or within two years before
the filing of such petition or such appointment, or any corporation or business association of which such person was an executive
officer at or within two years before the time of the filing of such petition or such appointment;

 

(ii)         a
conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not
relate to driving while intoxicated or driving under the influence);

 

(iii)        any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining any such person from, or otherwise limiting, the following activities:

 

(1)         Acting
as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person
of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;

 

    	 	17	 

     

    

 

(2)         Engaging
in any particular type of business practice; or

 

(3)         Engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities
laws or commodities laws;

 

(iv)        any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting
for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph,
or to be associated with persons engaged in any such activity;

 

(v)         a
finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities
law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently
reversed, suspended or vacated; or

 

(vi)        a
finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or
vacated.

 

(ll)          No
Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933
Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director,
executive officer, other officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20%
or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter
(as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each,
an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject to any of
the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification
Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable
care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided
thereunder.

 

(mm)         Other
Covered Persons. The Company is not aware of any Person (other than the Placement Agent) that has been or will be paid (directly
or indirectly) remuneration for solicitation of Purchasers or potential purchasers in connection with the sale of the Securities.

 

3.2           Representations
and Warranties of each Purchaser. Each Purchaser hereby represents and warrants, severally and not jointly, as of the date
hereof and as of the Closing Date on which such Purchaser is purchasing Securities to the Company as follows (unless as of a specific
date therein):

 

    	 	18	 

     

    

 

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

 

(b)          Own
Account. Each Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law. The Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)          Purchaser
Status. At the time the Purchaser was offered the Securities, it was, and on each date on which it converts any Note it will
be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

 

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

 

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

 

    	 	19	 

     

    

 

(f)           Information.
Each Purchaser and its advisors, if any, have been furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities that have been requested by such Purchaser. Each
Purchaser understands that its investment in the Securities involves a high degree of risk. Such Purchaser has sought such accounting,
legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of
the Securities.

 

(g)          No
Governmental Review. Each Purchaser understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

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

 

(i)           Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser has not directly
or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, executed any purchases
or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that the Purchaser
first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Other than to other Persons
party to this Agreement, the Purchaser has maintained the confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).

 

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

 

ARTICLE
IV

OTHER
AGREEMENTS OF THE PARTIES

 

4.1           Transfer
Restrictions.

 

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

 

    	 	20	 

     

    

 

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

 

[NEITHER] THIS SECURITY [NOR THE
SECURITIES INTO WHICH THIS SECURITY IS [CONVERTIBLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE
SECURITIES ISSUABLE UPON [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER- DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

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

 

    	 	21	 

     

    

 

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

 

(d)          In
addition to the Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities
are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading
Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after
the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit the Purchaser’s
right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required
by the Transaction Documents, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief.

 

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

 

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

 

    	 	22	 

     

    

 

4.3           Furnishing
of Information; Public Information. Until no Purchaser owns Securities, the Company covenants to maintain the registration
of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

 

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

 

4.5           [intentionally
omitted]

 

4.6           Disclosure
of Transactions and Other Material Information.

 

(a)          Disclosure
of Transaction. The Company shall, on or before 9:30 a.m., New York time, on the second (2nd) Business Day
after the date of this Agreement, issue a press release (the “Press Release”) reasonably acceptable to the Purchasers
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 second (2nd ) Business Day after the date of this Agreement, 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) (including all
attachments, the “8-K Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed
all material, non-public information (if any) provided to any of the Purchasers by the Company or any of its Subsidiaries or any
of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction
Documents. In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality
or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their
respective officers, directors, affiliates, employees or agents, on the one hand, and any of the Purchasers or any of their affiliates,
on the other hand, shall terminate.

 

(b)          Limitations
on Disclosure. 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 Purchaser with any material, non-public information regarding the
Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Purchaser (which
may be granted or withheld in such Purchaser’s sole discretion).  Subject to the foregoing,
neither the Company, its Subsidiaries nor any Purchaser 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 Purchaser,
to make the Press Release and 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 Purchaser 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 Purchaser (which may be granted or
withheld in such Purchaser’s sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates
to not) disclose the name of such Purchaser in any filing, announcement, release or otherwise.

 

    	 	23	 

     

    

 

(c)          Other
Confidential Information. Disclosure Failures; Disclosure Delay Payments. In addition to other remedies set forth in this Section
4.6, and without limiting anything set forth in any other Transaction Document, at any time after the Closing Date if the Company,
any of its Subsidiaries, or any of their respective officers, directors, employees or agents, provides any Purchaser with material
non-public information relating to the Company or any of its Subsidiaries (each, the “Confidential Information”),
other than pursuant to a non-disclosure agreement between the Company and the Purchaser, the Company shall, on or prior to the
applicable Required Disclosure Date (as defined below), publicly disclose such Confidential Information on a Current Report on
Form 8-K or otherwise (each, a “Disclosure”). From and after such Disclosure, the Company shall have disclosed
all Confidential Information provided to such Purchaser 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. In addition, effective
upon such Disclosure, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates,
employees or agents, on the one hand, and any of the Purchasers or any of their affiliates, on the other hand, shall terminate.
In the event that the Company fails to effect such Disclosure on or prior to the Required Disclosure Date and such Purchaser shall
have possessed Confidential Information for at least ten (10) consecutive Trading Days (each, a “Disclosure Failure”),
then, as partial relief for the damages to such Purchaser by reason of any such delay in, or reduction of, its ability to buy or
sell shares of Common Stock after such Required Disclosure Date (which remedy shall not be exclusive of any other remedies available
at law or in equity), the Company shall pay to such Purchaser an amount in cash equal to the greater of (I) two percent (2%) of
the aggregate Purchase Price and (II) the applicable Disclosure Restitution Amount, on each of the following dates (each, a “Disclosure
Delay Payment Date”): (i) on the date of such Disclosure Failure and (ii) on every thirty (30) day anniversary such Disclosure
Failure until the earlier of (x) the date such Disclosure Failure is cured and (y) such time as all such non-public information
provided to such Purchaser shall cease to be Confidential Information (as evidenced by a certificate, duly executed by an authorized
officer of the Company to the foregoing effect) (such earlier date, as applicable, a “Disclosure Cure Date”).
Following the initial Disclosure Delay Payment for any particular Disclosure Failure, without limiting the foregoing, if a Disclosure
Cure Date occurs prior to any thirty (30) day anniversary of such Disclosure Failure, then such Disclosure Delay Payment (prorated
for such partial month) shall be made on the third (3rd) Business Day after such Disclosure Cure Date. The payments to which an
Investor shall be entitled pursuant to this Section 4.6 are referred to herein as “Disclosure Delay Payments.”
In the event the Company fails to make Disclosure Delay Payments in a timely manner in accordance with the foregoing, such Disclosure
Delay Payments shall bear interest at the rate of two percent (2%) per month (prorated for partial months) until paid in full.

 

(d)          For
the purpose of this Agreement the following definitions shall apply:

 

    	 	24	 

     

    

 

(i)          “Disclosure
Failure Market Price” means, as of any Disclosure Delay Payment Date, the price computed as the quotient of (I) the sum
of the five (5) highest VWAPs (as defined in the Notes) of the Common Stock during the applicable Disclosure Restitution Period
(as defined below), divided by (II) five (5) (such period, the “Disclosure Failure Measuring Period”). All such
determinations to be appropriately adjusted for any share dividend, share split, share combination, reclassification or similar
transaction that proportionately decreases or increases the Common Stock during such Disclosure Failure Measuring Period.

 

(ii)         “Disclosure
Restitution Amount” means, as of any Disclosure Delay Payment Date, the product of (x) difference of (I) the Disclosure
Failure Market Price less (II) the lowest purchase price, per share of Common Stock, of any Common Stock issued or issuable to
such Purchaser pursuant to this Agreement or any other Transaction Documents, multiplied by (y) 10% of the aggregate daily dollar
trading volume (as reported on Bloomberg (as defined in the Notes)) of the Common Stock on the Principal Market for each Trading
Day either (1) with respect to the initial Disclosure Delay Payment Date, during the period commencing on the applicable Required
Disclosure Date through and including the Trading Day immediately prior to the initial Disclosure Delay Payment Date or (2) with
respect to each other Disclosure Delay Payment Date, during the period commencing the immediately preceding Disclosure Delay Payment
Date through and including the Trading Day immediately prior to such applicable Disclosure Delay Payment Date (such applicable
period, the “Disclosure Restitution Period”).

 

(iii)        “Required
Disclosure Date” means (x) if such Purchaser authorized the delivery of such Confidential Information, either (I) if
the Company and such Purchaser have mutually agreed upon a date (as evidenced by an e-mail or other writing) of Disclosure of such
Confidential Information, such agreed upon date or (II) otherwise, the seventh (7th) calendar day after the date such
Purchaser first received any Confidential Information or (y) if such Purchaser did not authorize the delivery of such Confidential
Information, the first (1st) Business Day after such Purchaser’s receipt of such Confidential Information.

 

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

 

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

 

    	 	25	 

     

    

 

4.9           Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes
and payment of up to $700,000 of Diagnostics debt, and shall not use such proceeds: (a) for the satisfaction of any portion of
the Company’s other debt, (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement
of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.

 

4.10         Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and
its directors, officers, shareholders, members and partners (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, members
or partners (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of
such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and
all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid
in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the Purchaser Party may suffer
or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by
the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties
in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of the
Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based
upon a breach of the Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements
or understandings the Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or
federal securities laws or any conduct by the Purchaser Party which constitutes fraud, gross negligence, willful misconduct or
malfeasance).

 

If any action shall be
brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, the Purchaser Party
shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of
its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of
the Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing,
(ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and
the position of the Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no
more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (x) for any settlement
by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed;
or (y) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made by the Purchaser Party in this Agreement or in the
other Transaction Documents. The indemnification required by this Section 4.10 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity
agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company
or others and any liabilities the Company may be subject to pursuant to law.

 

    	 	26	 

     

    

 

4.11         Listing
of Securities.

 

(a)          The
Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as may then be required to fulfill its obligations in full under the Transaction Documents and shall confirm the
adequacy of such reserve at least monthly.

 

(b)          If,
on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required
Minimum on such date, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s certificate
or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required
Minimum at such time, as soon as possible and in any event not later than the 90th day after such date.

 

(c)          The
Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of Common Stock covering the Securities, (ii) take
all steps necessary to cause the Underlying Shares to be approved for listing or quotation on such Trading Market as soon as possible
thereafter, (iii) provide to the Purchaser evidence of such listing or quotation and (iv) maintain the listing or quotation of
such Common Stock on such date on such Trading Market or another Trading Market.

 

4.12         Certain
Transactions and Confidentiality.

 

(a)          Each
Purchaser covenants, severally and not jointly, that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding
with it will execute any Short Sales of any of the Company’s securities during the period commencing with the execution of
this Agreement and ending on the earlier of (i) the Maturity Date of the Notes and (ii) the date such Purchaser’s Notes are
no longer outstanding.

 

(b)          Each
Purchaser covenants, severally and not jointly, that until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company, the Purchaser will maintain the confidentiality of the existence and terms of this transaction and the
information included in the Transaction Documents and the Disclosure Schedules.

 

(c)          Except
as set forth in Sections 4.12(a) and 4.12(b) above, the Company expressly acknowledges and agrees that (i) the Purchasers
shall not be restricted from effecting transactions in any securities of the Company in accordance with applicable securities laws
after the time that the transactions contemplated by this Agreement are first publicly announced, and (ii) the Purchaser shall
not have any duty of confidentiality to the Company or its Subsidiaries after the transactions contemplated by this Agreement are
first publicly announced.

 

4.13         Form
D; Blue Sky Filings. The Company shall file a Form D with respect to the Securities as required under Rule 506 of Regulation
D and to provide a copy thereof to each Purchaser promptly after such filing. 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 foreign, federal, state and local laws, statutes,
rules, regulations and the like relating to the offering and sale of the Securities to the Purchasers and shall provide evidence
of any such action so taken to the Purchasers and the placement agent.

 

    	 	27	 

     

    

 

4.14         Offerings
of New Debt Securities; Registration.

 

(a)          During
any period when the Notes remain outstanding, other than in connection with an Exempt Issuance, the Company shall not offer or
sell any new debt securities without the prior written consent of the Purchasers, except for debt incurred for working capital
which is expressly subordinate in a form acceptable to the Purchasers to the rights of the Purchasers and for which no payments
may be made at any time when the Notes remain outstanding.

 

(b)          The
Company shall not engage in an offering of equity securities or any securities convertible or exchangeable into equity securities
without the prior written consent of the Purchasers until the earlier of (i) 90 days after the Closing Date, or (ii) after completion
of a financing which provides at least $5,000,000 of net proceeds to the Company after deduction of commissions, other than in
connection with an Exempt Issuance or the issuance of [Series A] Preferred Stock.

 

(c)          For
a period of six months after the Closing Date, if at any time the Company shall determine to file with the SEC a Registration statement
relating to an offering for the account of others under the Securities Act of any of its equity securities (other than on Form
S-4 or Form S-8 or their then equivalents relating to equity securities to be issued solely in connection with any acquisition
of any entity or business or equity securities issuable in connection with stock option or other bona fide, employee benefit plans),
the Company shall send to each Purchaser, written notice of such determination and, if within ten (10) days after the delivery
date of such notice, such Purchaser shall so request in writing, the Company shall include in such Registration Statement all or
any part of the Underlying Shares such Purchaser requests to be registered, except that if, in connection with any underwritten
public offering for the account of the Company the managing underwriter(s) thereof shall impose a limitation on the number of shares
of Common Stock which may be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing
or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to
include in such Registration Statement only such limited portion of the Shares with respect to which such Purchaser has requested
inclusion hereunder as the underwriter shall permit. Any exclusion of Underlying Shares shall be made pro rata among the Purchasers
seeking to include Underlying Shares in proportion to the number of Underlying Shares sought to be included by such Purchaser;
provided, however, that the Company shall not exclude any Underlying Shares unless the Company has first excluded all outstanding
securities, the holders of which are not entitled to inclusion of such securities in such Registration Statement or are not entitled
to pro rata inclusion with the Underlying Shares; and provided, further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Underlying Shares shall be made pro rata with holders of other securities having the right
to include such securities in the Registration Statement other than holders of securities entitled to inclusion of their securities
in such Registration Statement by reason of demand registration rights.

 

    	 	28	 

     

    

 

4.15         Reporting
Status. Until the date on which the Purchasers shall have sold all of the Underlying Securities (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.

 

ARTICLE
V

MISCELLANEOUS

 

5.1           Termination.
This Agreement may be terminated by Purchasers purchasing a majority in interest of the Notes at the Closing as to the Purchasers’
obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchaser, by
written notice to the other parties, if the Closing has not been consummated on or before April [ ], 2017; provided, however, that
such termination will not affect the right of any party to sue for any breach by any other party (or parties).

 

5.2           Fees
and Expenses. The Company shall reimburse Purchasers or their counsel for attorney’s fees and expenses for the transactions
contemplated by this Agreement, in an amount of $15,000 in the aggregate. The Company shall deliver to the Purchasers, prior to
the Closing, a completed and executed copy of the Closing Statement, attached hereto as Annex A. The Company shall pay all Transfer
Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the
Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchaser. The Company shall also be directly responsible for the payment any fees or commissions
payable to the placement agent for the offering, Aegis Capital Corp.

 

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

 

5.4           Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 4:00 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 4:00 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

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

 

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

 

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

 

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

 

5.9           Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding
is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence
an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the
Company under Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.

 

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

 

    	 	30	 

     

    

 

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

 

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

 

5.13         Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then the Purchaser
may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and rights.

 

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

 

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

 

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

 

    	 	31	 

     

    

 

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

 

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

 

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

 

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

 

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

 

5.22         Exculpation
Among Purchasers. Each Purchaser acknowledges that it is not relying upon any person or entity, other than the Company and
its representatives, in making its investment or decision to invest in the Company. Each Purchaser agrees that no Purchaser nor
the respective controlling persons, officers, directors, partners, members, agents, or employees of any Purchaser shall be liable
to any other Purchaser for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Securities.

 

(Signature Pages Follow)

 

    	 	32	 

     

    

 

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

 

	PRECIPIO INC.	 	Address for Notice:
	 	 	 	 
	By:  	/s/ Ilan Danieli	 	Fax:
	 	Name: Ilan Danieli	 	 
	 	Title: President and Chief Executive Officer	 	 

 

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

 

Troutman Sanders LLP

1001 Haxall Point, Richmond, VA 23219

Attn.: John Owen Gwathmey, Esq.

Facsimile: (804) [        ]

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

    	 	33	 

     

    

 

PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT

 

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

 

Name of Purchaser:

 

Signature of Authorized Signatory of Purchaser:_____________________________________________

 

Name of Authorized Signatory: ________________________________________________________________

Title of Authorized Signatory: _________________________________________________________________

Email Address of Authorized Signatory: _________________________________________________________

Facsimile Number of Authorized Signatory: _______________________________________________________

Address for Notice to Purchaser: 

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

Subscription Amount: __________________________

EIN Number: _________________________________

Wire Instructions: _____________________________

 

[SIGNATURE PAGES CONTINUE]

 

    	 	34	 

     

    

 

Annex A

 

CLOSING STATEMENT

 

Pursuant to the attached Securities
Purchase Agreement, dated as of June 29, 2017, the Purchasers shall purchase $800,000 principal amount of Notes from Precipio,
Inc., a Delaware corporation (the “Company”).. All funds will be wired into an account maintained by the Company.
All funds will be disbursed in accordance with this Closing Statement.

 

Disbursement Date: June 29,
2017

 

 

 

		I.	PURCHASE PRICE

 

	Gross Proceeds to be Received	 	$	800,000.00	 

 

		II.	DISBURSEMENTS

 

	Transgenomic, Inc.	 	$	785,000	 
	Aegis Capital Corp. (8% x $800,000)	 	$	[to be deferred]	 
	Sichenzia Ross Ference Kesner LLP	 	$	15,000	 
	Total Amount Disbursed:	 	$	800,000.00	 

 

WIRE INSTRUCTIONS:

 

*********

 

     

     

    

 

SCHEDULE A

SCHEDULE OF INVESTORSExhibit 10.5

 

EXHIBIT A

 

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

 

	Principal Amount: $	Original Issue Date: June 29, 2017

 

PRECIPIO, INC.

 

8% CONVERTIBLE PROMISSORY NOTE

DUE OCTOBER 1, 2017

 

THIS 8%
CONVERTIBLE PROMISSORY NOTE is a duly authorized and validly issued 8% Convertible Promissory Notes of Precipio, Inc. (formerly
Transgenomic, Inc.), a Delaware corporation, (the “Company”), having its principal place of business at 8813
F Street, Omaha, NE 68127, designated as its 8% Convertible Promissory Notes due 2017 (the “Note”).

 

FOR VALUE
RECEIVED, the Company promises to pay to                             or its registered assigns (the “Holder”), or shall have paid pursuant
to the terms hereunder, the principal sum of                       Thousand dollars ($                 ,000) on the earlier of (i) October 1, 2017, as the same may be
extended as set forth herein, or (ii) the five Business Days after the closing of a Qualified Offering, provided that the Note
has not been previously converted as set forth herein (the “Maturity Date”), or such earlier date as this Note
is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate unconverted and
then outstanding principal amount of this Note in accordance with the provisions hereof. Any cash payment of this Note shall be
deemed to be an Optional Redemption and the Redemption Amount shall be paid in accordance with the terms and conditions of Section
6(b) herein. The Redemption Amount and interest earned on this Note shall be due and payable regardless of any conversion of the
principal amount of this Note into shares of Common Stock or Preferred Stock; provided that such amounts will be converted to shares
upon any such conversion of the principal of the Note. This Note is subject to the following additional provisions:

 

    	 	1	 

     

    

 

Section 1. Definitions. For
the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein
shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:

 

“Alternate Consideration” shall
have the meaning set forth in Section 5(e).

 

“Authorized Failure Shares” shall
have the meaning set forth in Section 4(c)(vi).

 

“Authorized Share Failure” shall
have the meaning set forth in Section 4(c)(vi).

 

“Bankruptcy
Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule
1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or
any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case
or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is
adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the
Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part
of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant
Subsidiary thereof makes a general assignment for the benefit of creditors, or (f) the Company expressly indicates its consent
to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any
of the foregoing.

 

“Base Conversion Price” shall have
the meaning set forth in Section 5(b).

 

“Beneficial
Ownership Limitation” shall have the meaning set forth in Section 4(d).

 

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

 

“Buy-In” shall have the meaning
set forth in Section 4(c)(v).

 

    	 	2	 

     

    

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition by an individual or legal
entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 50% of the voting
securities of the Company (other than by means of conversion or exercise of the Notes and the Securities issued together with the
Notes), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company
and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than
50% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers
all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction
own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at
one time or within a one year period of more than one-half of the members of the Board of Directors which is not approved by a
majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who
are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority
of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement
to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above
provided that the consummation of the Proposed Transactions (as such term is defined in the Purchase Agreement) shall not be deemed
to be “Change of Control Transaction”.

 

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

 

“Conversion” shall have the meaning
ascribed to such term in Section 4.

 

“Conversion Date” shall have
the meaning set forth in Section 4(a).

 

“Conversion Price” shall have
the meaning set forth in Section 4(b).

 

“Conversion Shares”
means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.

 

“Event of Default” shall have
the meaning set forth in Section 8(a).

 

    	 	3	 

     

    

 

“Exempt
Securities” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company
pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors
or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise
or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of this Note, provided that such securities have not been amended
since the date of this Note to increase the number of such securities or to decrease the exercise price, exchange price or conversion
price of such securities, (c) securities the issuance of which has been approved by the holders of majority in interest of the
aggregate principal amount of the then outstanding Notes, (d) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person
(or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset
in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in securities, (e) securities issued pursuant to
an effective registration statement, and (f) securities issued in connection with the transactions
or arrangements included in the Proposed Transactions.

 

“Fundamental Transaction” shall
have the meaning set forth in Section 5(e).

 

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

 

“Indebtedness”
shall have the meaning ascribed to such term in the Purchase Agreement.

 

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

 

“New York Courts” shall have
the meaning set forth in Section 9(d).

 

“Note Register” shall have the meaning
set forth in Section 2(c).

 

“Notice of Conversion” shall
have the meaning set forth in Section 4(a).

 

“Optional Redemption” shall have
the meaning set forth in Section 6(a).

 

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

 

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

 

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

 

“Optional Redemption Period”
shall have the meaning set forth in Section 6(a).

 

    	 	4	 

     

    

 

“Original
Issue Date” means the date of the first issuance of the Notes, regardless of any transfers of any Note and regardless
of the number of instruments which may be issued to evidence such Notes.

 

“Purchase
Agreement” means the Securities Purchase Agreement, dated as of June 29, 2017, among the Company and the Holder and the
other persons signatory thereto, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Purchase Rights” shall have
the meaning set forth in Section 5(c).

 

“Qualified
Offering” means a public offering of the Company’s equity securities with gross proceeds of at least $5,500,000.

 

“Redemption
Amount” means the sum of 120% of (a) the then outstanding principal amount of the Note, (b) accrued but unpaid interest,
and (c) all liquidated damages and other amounts due in respect of the Note.

 

“Registration
Statement” means a registration statement meeting the requirements of the Securities Act and covering the resale of the
Underlying Shares by each Holder.

 

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

 

“Share Delivery Date” shall have
the meaning set forth in Section 4(c)(ii).

 

“Successor Entity” shall have
the meaning set forth in Section 5(e).

 

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

 

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

 

    	 	5	 

     

    

 

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

 

Section 2. Interest.
The Company shall pay interest to the Holder on the aggregate principal amount of this Note at the rate of 8% per annum.

 

Section 3. Registration of Transfers
and Exchanges.

 

(a)          Different
Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.

 

(b)          Investment
Representations. This Note has been issued subject to certain investment representations of the original Holder set forth
in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal
and state securities laws and regulations.

 

(c)          Reliance
on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company
may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such
agent shall be affected by notice to the contrary.

 

Section 4. Conversion.

 

(a)          Voluntary
Conversion. At any time after the Maturity Date, this Note together with any accrued interest shall be convertible, in whole
or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion
limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion,
the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the principal
amount and accrued interest of this Note to be converted and the date on which such conversion shall be effected (such date, the
“Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the
date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall not be required
to physically surrender this Note to the Company unless the entire principal amount of this Note, plus all accrued and unpaid
interest thereon, has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount
of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal
amount(s) converted and the date of such conversion(s).

 

    	 	6	 

     

    

 

(b)          Conversion
Price. The conversion price in effect on any Conversion Date shall be equal to $3.736329 (the “Conversion Price”).

 

(c)          Mechanics
of Conversion.

 

(i)          Conversion
Shares Issuable. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient
obtained by dividing (x) the outstanding principal amount of this Note, plus accrued interest by (y) the Conversion Price.

 

(ii)         Delivery
of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery
Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing Conversion
Shares which, on or after the Effective Date, shall be free of restrictive legends and trading restrictions (other than those
which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion
of this Note. On or after the Effective Date, the Company shall use its best efforts to deliver any certificate or certificates
required to be delivered by the Company under this Section 4(c) electronically through the Depository Trust Company or another
established clearing corporation performing similar functions.

 

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

 

    	 	7	 

     

    

 

(iv)        Obligation
Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion
of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or
alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law
by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not
operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder of this
Note shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based
on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement
or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all
or part of this Note shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in
the amount of 100% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable
to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares
or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such
certificate or certificates pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in cash,
as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing
to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading
Day after such Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall
limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for the Company’s
failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies
available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section
hereof or under applicable law.

 

    	 	8	 

     

    

 

(v)         Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder,
if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant
to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in
addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total
purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate
number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual
sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions)
and (B) at the option of the Holder, either reissue (if surrendered) this Note in a principal amount equal to the principal amount
of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares
of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(c)(ii).
For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted conversion of this Note with respect to which the actual sale price of the Conversion Shares (including any brokerage
commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence,
the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver certificates representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

 

(vi)        Reservation
of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its
authorized and unissued shares of Common Stock and Series A Preferred Stock for the sole purpose of issuance upon conversion of
this Note and payment of interest on this Note, each as herein provided, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holder (and the other Holder of the Notes), not less than such aggregate number of shares
equal to two times the number of shares of the Common Stock and the actual number of shares of Series A Preferred Stock as shall
(subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and
restrictions of Section 5) upon the conversion of the then outstanding principal amount of this Note and accrued interest hereunder.
The Company covenants that all shares of Common Stock and Series A Preferred Stock that shall be so issuable shall, upon issue,
be duly authorized, validly issued, fully paid and nonassessable, and, if the Registration Statement is then effective under the
Securities Act shall be registered for public resale in accordance with such Registration Statement (subject to such Holder’s
compliance with its obligations under with respect to such the Registration Statement).

 

    	 	9	 

     

    

 

(vii)       Insufficient
Authorized Shares. If, notwithstanding Section 4(c)(v), and not in limitation thereof, at any time while any of the Notes
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 conversion of the Notes at least a number of shares of Common Stock equal to the amount
specified in Section 4(c)(v) (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
applicable amount for the Notes 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 best efforts to solicit its stockholders’ approval of such increase in authorized shares
of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

 

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

 

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

 

    	 	10	 

     

    

 

(d)          Holder’s
Conversion Limitations. 

 

(i)          The
Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note,
to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together
with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates)
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of
Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the
number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this
Note beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained
herein (including, without limitation, any other Notes or the Warrants) beneficially owned by the Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation
contained in this Section 4(d) applies, the determination of whether this Note is convertible (in relation to other securities
owned by the Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole
discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of
whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which
principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance
with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that
such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation
to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the
number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company,
or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of
Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally
and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares
of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this
Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.
The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The Holder,
upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions
of this Section 4(d). Any such increase or decrease will not be effective until the 61st day after such notice is delivered
to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall not be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements
necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Note.

 

    	 	11	 

     

    

 

Section 5. Certain Adjustments.

 

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

 

(b)          Subsequent
Rights Offerings. If the Company, at any time while the Note is outstanding, shall issue rights, options or warrants to all
holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase warrants, securities or other property
pro rata to all or substantially all of the record holders of any class 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 conversion
of this Note (without taking into account any limitations or restrictions on the convertibility of this Note) immediately before
the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the
Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right
to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and
such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would
not result in the Holder exceeding the Beneficial Ownership Limitation).

 

    	 	12	 

     

    

 

(c)          Pro
Rata Distributions. If the Company, at any time while this Note is outstanding, shall distribute to all holders of Common
Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants
to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 5(b)), then in each such
case the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be
the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less
the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness or rights or
warrants so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good
faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences
of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

    	 	13	 

     

    

 

(d)          Fundamental
Transaction. Except as contemplated in the Proposed Transactions (as such term is defined in the Purchase Agreement), if,
at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects
any merger or consolidation of the Company with or into another Person and the Company is not the surviving entity, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holder of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holder of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one
or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion
of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion
immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion
of this Note), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of
such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Note is convertible immediately
prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Note). For purposes
of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Note following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this Note and the other Transaction Documents (as defined in the
Purchase Agreement) in accordance with the provisions of this Section 5(e) and shall, at the option of the holder of this Note,
deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Note which is convertible for a corresponding number of shares of capital stock of such
Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of
this Note (without regard to any limitations on the conversion of this Note) at the closing of such Fundamental Transaction, and
with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account
the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital
stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value
of this Note immediately prior to the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental
Transaction, the Successor Entity shall succeed to, and be substituted for the Company (so that from and after the date of such
Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor Entity
had been named as the Company herein.

 

(e)          Calculations.
All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may
be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

 

    	 	14	 

     

    

 

(f)          Notice
to the Holder.

 

(i)          Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall
promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.

 

(ii)         Notice
to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C)
the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholder of the Company shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address
as it shall appear upon the Note Register, at least fifteen (15) calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the Holder of the Common Stock of record
to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date
as of which it is expected that holder of the Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect
the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled
to convert this Note during the 15-day period commencing on the date of such notice through the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.

 

    	 	15	 

     

    

 

Section 6. Redemption.

 

(a)          Optional
Redemption at Election of Company. Subject to the provisions of this Section 6(a), at any time prior to the Maturity Date,
the Company may deliver a notice to the Holder (an “Optional Redemption Notice” and the date such notice is deemed
delivered hereunder, the “Optional Redemption Notice Date”) of its irrevocable election to redeem some or all of the
then outstanding principal amount of this Note for cash in an amount equal to the Redemption Amount on the 3rd Trading
Day following the Optional Redemption Notice Date (such date, the “Optional Redemption Date”, such three-Trading Day
period, the “Optional Redemption Period” and such redemption, the “Optional Redemption”).

 

(b)          Optional
Redemption Procedure. The payment of cash pursuant to an Optional Redemption shall be payable on the Optional Redemption Date.
If any portion of the payment pursuant to an Optional Redemption shall not be paid by the Company by the applicable due date,
interest shall accrue thereon at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable
law until such amount is paid in full. Notwithstanding anything herein contained to the contrary, if any portion of the Optional
Redemption Amount remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter,
to invalidate such Optional Redemption, ab initio with respect to any amount of the Optional Redemption Amount that remains unpaid.
The Holder may elect to convert the outstanding principal amount and accrued interest of the Note pursuant to Section 4 prior
to actual payment in cash for any redemption under this Section 6 by the delivery of a Notice of Conversion to the Company.

 

Section 7.  Conversion to
Preferred Stock. In the event the Company does not complete a Qualified Offering by October 1, 2017, the Holder shall have
the right to convert any portion of the outstanding principal and interest of this Note, together with the redemption premium
(the “Conversion Amount”), into shares of the Company’s Series A preferred stock, $.001 par value per share
(the “Preferred Stock”). Upon the closing of a Qualified Offering, the Conversion Amount in its entirety shall automatically
be converted into Preferred Stock, without any action on the part of the Holder. The number of shares of Preferred Stock to be
issued upon any such conversion shall equal the Conversion Amount, divided by $3.736329(subject to adjustment for any splits or
combination of the Preferred Stock after the date hereof), upon notice in writing to the Company.

 

Section 8.  Subordination.
In the event the Qualified Offering shall not have occurred on or before October 1, 2017 (a “Financing Condition Failure”),
then until such time as at least 100% of the Preferred Stock shall be redeemed, converted or otherwise retired, (i) no payments
of any kind or nature shall be made to the Holder of this Note, and (ii) the Note shall be expressly subordinate to the Preferred
Stock in all aspects, including without limitation, (1) as to right to payment, (2) rights upon sale or liquidation of the Company
and (3) priority on distributions. Without limitation on the foregoing, following a Financing Condition Failure, the Holder shall
not take any action to enforce its rights without the prior consent of the holders of a majority of the Preferred Stock then outstanding
(“Majority Preferred Holders”), and with providing assurances to the holders of the Preferred Stock as to application
of any proceeds from such enforcement actions. Any payment received by the Holder in contravention of the foregoing will be deemed
to have been made in trust for the holders of the Preferred Stock and promptly paid over as directed by the Majority Preferred
Holders.

 

    	 	16	 

     

    

 

Section 9.  Negative Covenants.
Except with respect to the transaction contemplated by the Proposed Transactions, as long as any portion of this Note remains
outstanding and Notes with an aggregate principal amount of $100,000, remain outstanding, unless the Holder of at least 66% in
principal amount of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and shall
not permit any of the Subsidiaries to, directly or indirectly:

 

(a)          amend
its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially
and adversely affects any rights of the Holder; 

 

(b)          pay
cash dividends or distributions on any equity securities of the Company, other than the Preferred Stock;

 

(c)          enter
into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission,
unless such transaction is expressly approved by a majority of the disinterested directors of the Company (even if less than a
quorum otherwise required for board approval); 

 

(d)          incur,
guarantee or assume any Indebtedness, other than the Indebtedness evidenced by this Note and the other Notes, except for up to
$600,000 of additional indebtedness for accounts receivable financing, trade payables or expenses in the ordinary course of business
with debt incurred for working capital, which is expressly subordinate in a form acceptable to the Purchasers to the rights of
the Purchasers and for which no payments may be made at any time when Notes remain outstanding;

 

(e)          redeem,
repurchase or declare or pay any cash dividend or distribution on any of its capital stock;

 

(f)           sell,
lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the Company
or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other than (i)
sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and
its Subsidiaries in the ordinary course of business consistent with its past practice for fair consideration, (ii) sales of inventory
and product in the ordinary course of business consistent with past practice for fair consideration, and (iii) a sale or disposition
of assets to a third party that has been approved by the independent members of the Board of Directors;

 

(g)          fail
to take all action necessary or advisable to maintain all of the Intellectual Property Rights (as defined in the Purchase Agreement)
of the Company and/or any of its Subsidiaries that are necessary or material to the conduct of the business of the Company in full
force and effect except in connection with the sale or disposition of assets to a third party that has been approved by the independent
members of the Board of Directors; or

 

    	 	17	 

     

    

 

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

 

Section 10. Events of Default.

 

(a)          “Event
of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether
such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental body) occurring after the date of this Note:

 

(i)          any
default in the payment of (A) the principal amount of any Note or (B) interest, liquidated damages and other amounts owing to the
Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by
acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above, is
not cured within five Trading Days;

 

(ii)         the
Company shall fail to observe or perform in any material respect any other covenant or agreement contained in the Notes (other
than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is
addressed in clause (xi) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) five Trading
Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company
has become aware of such failure;

 

(iii)        a
default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument)
shall have been declared under any of the Transaction Documents;

 

(iv)        any
representation or warranty made in this Note, any other Transaction Documents, or certificate made or delivered to the Holder pursuant
to the Transaction Documents shall be untrue or incorrect as of the date when made or deemed made except where such untrue or incorrect
statement could not reasonably be expected to have a Material Adverse Effect (as defined in the Securities Purchase Agreement);

 

(v)         the
Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy
Event;

 

(vi)        the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other credit facility,
indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured
or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves
an obligation greater than $350,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such
indebtedness being declared due and payable prior to the date on which it would otherwise become due and payable;

 

    	 	18	 

     

    

 

(vii)       the
Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume
listing or quotation for trading thereon within five Trading Days;

 

(viii)      the
Company does not meet the current public information requirements under Rule 144 in respect of the Registrable Securities, subject
to a cure period of 10 days;

 

(ix)         the
Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all
or in excess of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute
a Change of Control Transaction);

 

(x)          the
Company shall fail for any reason to deliver certificates to a Holder prior to the fifth Trading Day after a Conversion Date pursuant
to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the
Company’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof; or

 

(xi)         any
monetary judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their
respective property or other assets for more than $500,000, and such judgment, writ or similar final process shall remain unvacated,
unbonded or unstayed for a period of 60 calendar days.

 

(b)          Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus accrued but unpaid
interest, plus all interest that would have been earned through the Maturity Date if such interest has not yet accrued, liquidated
damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election,
immediately due and payable in cash at the Redemption Amount. Commencing five days after the occurrence of any Event of Default
that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal
to the lesser of 18% per annum or the maximum rate permitted under applicable law. Upon the payment in full of the Redemption
Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described
herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind,
and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder
and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder
receives full payment pursuant to this Section 8(b). No such rescission or annulment shall affect any subsequent Event of Default
or impair any right consequent thereon.

 

    	 	19	 

     

    

 

Section 11. Miscellaneous.

 

(i)          Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company
may specify for such purposes by notice to the Holder delivered in accordance with this Section 11(a). Any and all notices or
other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile,
or sent by a nationally recognized overnight courier service addressed to the Holder at the facsimile number or address of the
Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of the Company, at
the principal place of business of the Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 4:00 p.m. (New York
City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 4:00 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required
to be given.

 

    	 	20	 

     

    

 

(ii)         Nasdaq.
The Company shall not be obligated to issue any shares of Common Stock upon conversion of this Note, and the Holder of this
Note shall not have the right to receive upon conversion of this Note any shares of Common Stock, if the issuance of such shares
of Common Stock (taken together with any prior issuance of such shares upon the conversion of the Notes or otherwise pursuant
to the terms of the Notes and the Shares issued upon exercise of the Warrants or otherwise pursuant to the Securities Purchase
Agreement) would exceed the aggregate number of shares of Common Stock which the Company may issue upon conversion of the Notes
without breaching the Company’s obligations under the rules or regulations of the Nasdaq Capital Market, regardless of whether
the Company is at any time subject to such rules and regulations (the “Exchange Cap”), 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 Nasdaq Capital Market for issuances of Common Stock in excess of such amount or (B) 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. Until
such approval or written opinion is obtained, no purchaser of the Notes pursuant to the Purchase Agreement (the “Purchasers”)
shall be issued in the aggregate, upon conversion of Notes, shares of Common Stock in an amount greater than the product of the
Exchange Cap multiplied by a fraction, the numerator of which is the principal amount of Notes issued to such Purchaser pursuant
to the Purchase Agreement and the denominator of which is the aggregate principal amount of all Notes issued to the Purchasers
as of the last Closing pursuant to the Purchase Agreement (with respect to each Purchaser, the “Exchange Cap Allocation”).
In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser's Notes, the transferee shall be allocated
a pro rata portion of such Purchaser's Exchange Cap Allocation with respect to the portion of this Note so transferred, and the
restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated
to such transferee. Upon conversion in full of a holder’s Notes, 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 conversion in full of
such Notes shall be allocated to the respective Exchange Cap Allocations of the remaining holders of Notes on a pro rata basis
in proportion to the shares of Common Stock underlying the Notes then held by each such holder.

 

(iii)        Absolute
Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable, on this
Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the
Company. This Note ranks pari passu with all other Notes now or hereafter issued under the terms set forth herein.

 

(iv)        Lost
or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange
and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.

 

    	 	21	 

     

    

 

(v)         Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by
and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholder, employees or agents) shall be commenced in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits
to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this
Note or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of
this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney’s
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

(vi)        Amendments;
Waiver. No provision of this Note may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by each of the Company and the Holder or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought. Any waiver by the Company or the Holder of a breach of any provision of this Note shall
not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of
this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions
shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or
any other term of this Note on any other occasion.

 

    	 	22	 

     

    

 

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

 

(viii)      Successors
and Assigns. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors
and assigns of the parties. The Company may not assign this note or delegate any of its obligations hereunder without the written
consent of the Holder. Until the earlier of (i) completion of a Qualified Offering, and (ii) October 1, 2017, this Note is only
assignable by the Holder with the prior consent of the Company, which shall not be unreasonably withheld or delayed. At any time
after October 1, 2017, the Holder may assign this Note and its rights hereunder at any time without consent of Company.

 

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

 

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

 

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

 

(Signature Pages Follow)

 

    	 	23	 

     

    

 

IN WITNESS WHEREOF, the Company
has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.

 

	 	PRECIPIO, INC.
	 	 	 
	 	By:	/s/ Ilan Danieli
	 	 	Name: Ilan Danieli
	 	 	Title: President and Chief Executive Officer

 

	 	Facsimile No. for delivery of Notices:  	 

 

    	 	24	 

     

    

 

ANNEX A

 

NOTICE OF CONVERSION

 

The undersigned
hereby elects to convert principal under the 8% Convertible Promissory Note due 2017 of Precipio, Inc., a Delaware corporation
(the “Company”), into shares of common stock (the “Common Stock”), of the Company according
to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder
for any conversion, except for such transfer taxes, if any.

 

By the delivery
of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does
not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.

 

The undersigned
agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer
of the aforesaid shares of Common Stock.

 

Conversion calculations:

 

	 	Date to Effect

Conversion: 	 
	 	 	 
	 	Principal Amount of Note to be Converted:
	 	 	 
	 	 
	 	 	 
	 	Number of shares of Common Stock to be issued:
	 	 	 
	 	 
	 	 	 
	 	Signature:	 
	 	 	 
	 	Name:	 
	 	 	 
	 	Address for Delivery of Common Stock Certificates: 
	 	 
	 	Or
	 	 	 
	 	DWAC Instructions:
	 	 	 
	 	Broker No:	 
	 	Account No:	 

 

    	 	25

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