Document:

Exhibit
10.6

 

SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as of January 27, 2020, between Sigma Labs, Inc.,
a Nevada corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including
its successors and permitted assigns, a “Purchaser” and collectively, the “Purchasers”).

 

PREAMBLE

 

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 each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement (the “Offering”).

 

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

 

ARTICLE
I.

DEFINITIONS

 

1.1
Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following
terms have the meanings set forth in this Section 1.1:

 

“Accredited
Investor” shall have the meaning ascribed to such term in Section 3.2(c).

 

“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.16.

 

“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.

 

“Authorized
Share Failure” shall have the meaning ascribed to such term in Section 4.8.

 

“ATM
Offering” means any continuous at-the-market offering by the Company or any of its Subsidiaries of Common Stock in accordance
with Rule 415 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.

 

“Buy-In”
shall have the meaning ascribed to such term in Section 4.1(h).

 

“Certificate
of Designations” means the Certificate of Designations to be filed prior to the Closing by the Company with the Secretary
of State of Nevada, in the form of Exhibit B attached hereto.

 

    	 	 	 

    	 	 	 

    

 

“Class
A Warrant” means the Common Stock Purchase Warrants in the form annexed hereto as Exhibit A-1.

 

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

 

“Closing
Date” means the Closing Date and is the Business Day on which all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchaser’s obligation to pay the Subscription
Amount at the Closing, and (ii) the Company’s obligations to deliver the Securities to be issued and sold at the Closing,
have been satisfied or waived, but in no event later than the tenth Business Day following the date of this Agreement.

 

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

 

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

 

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

 

“Company
Counsel” means TroyGould PC, 1801 Century Park East, Suite 1600, Los Angeles, CA 90067-2367, Attn: Darren Freedman,
Esq., e-mail: dfreedman@troygould.com.

 

“Conversion
Price” means $0.13 above the consolidated closing bid price of the Common Stock for the Trading Day immediately preceding
the date of the Purchase Agreement.

 

“Conversion
Shares” means the shares of Common Stock issuable upon conversion of the Shares.

 

“Copyrights”
shall have the meaning ascribed to such term in Section 3.1(o)(i)(3).

 

“Disclosure
Letter” means that certain letter delivered by the Company to the Purchasers simultaneously with the execution and delivery
of this Agreement.

 

“Dispute
Submission Deadline” shall have the meaning ascribed to such term in Section 4.21(a)(ii).

 

“Disqualification
Event” shall have the meaning ascribed to such term in Section 3.1(nn).

 

“Equity
Line of Credit” shall have the meaning ascribed to such term in Section 4.22.

 

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

 

“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 and options to officers, employees, directors or consultants
of the Company issued pursuant to any plan approved by a majority of the independent members of a committee of the board of directors
of the Company consistent with past practices, (b) securities upon the exercise or exchange of or conversion of any Securities
issued hereunder (subject to adjustment for forward and reverse stock splits and the like that occur after the date hereof), (c)
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 other securities and any terms thereof have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the issue price, exercise price, exchange price or conversion price of
such securities and which securities and the principal terms thereof are set forth on Section 3.1(g) of the Disclosure
Letter, and described in the SEC Reports filed not later than five (5) Business Days before the date of this Agreement, (d) securities
in connection with a Public Offering, (e) full or partial consideration in connection with a strategic merger (not including a
reverse merger), acquisition, consolidation or purchase of substantially all of the securities or assets of a corporation or other
entity 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, (f) securities in connection with strategic license agreements
and other business purpose partnering arrangements so long as such issuances are not primarily for the purpose of raising capital,
or (g) securities as payment for investment banking services provided to the Company.

 

“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(aa).

 

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

 

“Investor
Questionnaire” shall have the meaning ascribed to such term in Section 3.2(c).

 

“Issuer
Covered Person” shall have the meaning ascribed to such term in Section 3.1(nn).

 

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

 

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

 

“Lockup
Agreement” means the form of Lockup Agreement annexed hereto as Exhibit E.

 

“Marks”
shall have the meaning ascribed to such term in Section 3.1(o)(i)(1).

 

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

 

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

 

“Money
Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(r).

 

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

 

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“Offering”
shall have the meaning ascribed to such term in the Preamble.

 

“Other
Investors” shall have the meaning ascribed to such term in Section 2.3(b)(v)

 

“Other
Written Information” shall have the meaning ascribed to such term in Section 3.2(e).

 

“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.24(a).

 

“Patents”
shall have the meaning ascribed to such term in Section 3.1(o)(i)(2).

 

“Permitted
Indebtedness” means the indebtedness as defined under “Permitted Indebtedness” in the Series D Certificate
of Designations.

 

“Permitted
Lien” means the liens as defined under “Permitted Liens” in the Series D Certificate of Designations.

 

“Per
Share Purchase Price” equals $1,500.

 

“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.

 

“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.24(b).

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Protection
Period” shall mean the period during which any Purchaser holds ten percent (10%) or more of the aggregate number of
Shares initially issued to such Purchaser hereunder, or forty percent (40%) of the Class A Warrants initially issued to such Purchaser.

 

“Pro
Rata Portion” shall have the meaning ascribed to such term in Section 4.24(e).

 

“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.2(b).

 

“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.2(b).

 

“Public
Offering” shall mean a public offering of the Company’s securities resulting in gross proceeds of at least $1,000,000
at an issue price per share of Common Stock not less than $0.90.

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.7.

 

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

 

“Required
Minimum” shall have the meaning ascribed to such term in Section 4.8.

 

“Required
Dispute Documentation” shall have the meaning ascribed to such term in Section 4.21(a)(ii).

 

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“Rights
in Mask Works” shall have the meaning ascribed to such term in Section 3.1(o)(i)(4).

 

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

 

“SEC
Reports” shall mean all reports, schedules, forms, statements and other documents filed by the Company under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof, including
the exhibits thereto and documents incorporated by reference therein.

 

“Securities”
means the Shares, the Conversion Shares, the Warrants and the Warrant Shares.

 

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

 

“Securities
Laws” means the securities laws of the United States or any state thereof and the rules and regulations promulgated
thereunder.

 

“Series
D Certificate of Designations” means the Certificate of Designations for the Series D Preferred Stock.

 

“Series
D Preferred Stock” means the Series D Convertible Preferred Stock, par value $0.001 of the Company.

 

“Series
E Preferred Stock” means the Series E Convertible Preferred Stock, par value $0.001, of the Company, subject to the
terms contained in the Certificate of Designation.

 

“Shareholder
Approval” shall have the meaning ascribed to such term in Section 4.8.

 

“Shares”
means the shares of Series E Preferred Stock issued to the Purchasers pursuant to this Agreement.

 

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

 

“Stock
Option Plans” means the Stock Option Plans of the Company in effect as the date of this Agreement, the principal terms
of which have been disclosed in the SEC Reports.

 

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

 

“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.24(a).

 

“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.24(b).

 

    	 	5	 

    	 	 	 

    

 

“Subsidiary”
means any subsidiary of the Company as set forth on Section 3.1(a) of the Disclosure Letter and shall, where applicable
and with regard to future events, also include any direct or indirect subsidiary of the Company formed or acquired after the date
hereof.

 

“Termination
Date” shall have the meaning ascribed to such term in Section 2.1(a).

 

“Trade
Secrets” shall have the meaning ascribed to such term in Section 3.1(o)(i)(5).

 

“Trading
Day” means a day on which the principal Trading Market is open for trading; provided, that in the event that the Common
Stock is not listed or quoted for trading on a Trading Market on the date in question, then Trading Day shall mean a Business
Day.

 

“Trading
Hour Period” shall have the meaning ascribed to such term in Section 4.24(b).

 

“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 American, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market,
the New York Stock Exchange, the OTC Bulletin Board, the OTCQB or the OTCQX (or any successors to any of the foregoing). As of
the date of this Agreement and the Initial Closing Date, the NASDAQ Capital Market is and will be the Trading Market.

 

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

 

“Transfer
Agent” means Issuer Direct Corporation, 1981 Murray Holladay Road, Suite 100, Salt Lake City, Utah 84117, and any successor
transfer agent of the Company.

 

“Variable
Priced Equity Linked Securities” shall have the meaning ascribed to such term in Section 4.22.

 

“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.22.

 

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

 

“Warrants”
means the Class A Warrants delivered to the Purchasers at the Closings.

 

“Warrant
Shares” means the shares of Common Stock issuable upon exercise of the Warrants, provided that any share of Common Stock
issued upon exercise of the Warrants shall not constitute an issued Warrant Share for purposes of this Agreement after such share
has been irrevocably sold pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 without
further restrictions or conditions to transfer pursuant to Rule 144.

 

    	 	6	 

    	 	 	 

    

 

ARTICLE
II.

PURCHASE
AND SALE

 

2.1
Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with
the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally
and not jointly, agree to purchase, Shares for aggregate Subscription Amounts of $500,000 in the amounts set forth on the respective
signature pages to this Agreement (such purchase and sale being the “Closing”. Each Purchaser shall deliver
to the Company such Purchaser’s Subscription Amount, and the Company shall deliver to each Purchaser its respective Shares
as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section
2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing
shall occur at the offices of Company Counsel or such other location as the parties shall mutually agree. Notwithstanding anything
herein to the contrary, the Closing Date shall occur on or before 2:00 P.M. EST, January 29, 2020 (“Termination Date”).
If the Closing is not held on or before the Termination Date, the Company shall cause all subscription documents and funds to
be returned, without interest or deduction to each prospective Purchaser.

 

2.2
Deliveries.

 

(a)
On or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Purchasers the following:

 

(i)
this Agreement duly executed by the Company;

 

(ii)
written confirmation (including via email) from the Transfer Agent that it has issued book entry positions in Shares of the Series
E Preferred Stock equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price registered in the
name of such Purchaser;

 

(iii)
Class A Warrants registered in the name of such Purchaser to purchase a number of shares of Common Stock equal to one hundred
percent (100%) of such Purchaser’s Conversion Shares (assuming the Shares calculated pursuant to clause (iii) above are
fully converted at the Closing), with an initial exercise price equal to 110% of the Conversion Price, subject to adjustment therein;

 

(iv)
The Company shall have delivered a certificate, executed on behalf of the Company by its Chief Executive Officer or its Chief
Financial Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in Section 2.3(b);

 

(v)
The Company shall have delivered a certificate, executed on behalf of the Company by its Secretary, dated as of the Closing Date,
certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement
and the other Transaction Documents and the issuance of the Securities, certifying the current versions of the Certificate of
Incorporation and Bylaws of the Company and certifying as to the signatures and authority of persons signing the Transaction Documents
and related documents on behalf of the Company;

 

(vi)
The Company shall have delivered Lockup Agreements executed by the individuals and entities identified on Schedule 2.2(a)(vi);

 

    	 	7	 

    	 	 	 

    

 

(b)
Following the delivery by the Company of all items described in Section 2.2(a) above, on or prior to the Closing Date, each Purchaser
shall deliver or cause to be delivered to the Company the following:

 

(i)
this Agreement duly executed by such Purchaser;

 

(ii)
such Purchaser’s completed and duly executed Investor Questionnaire; and

 

(iii)
such Purchaser’s Subscription Amount by wire transfer to the account specified by the Company.

 

2.3
Closing Conditions.

 

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

 

(i)
the accuracy in all material respects on the Closing Date of the representations and warranties of the 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 Purchaser required to be performed at or prior to the Closing Date shall have been
performed; and

 

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

 

(b)
The respective obligations of Purchaser hereunder to effect the Closing, unless waived by Purchaser, are subject to the following
conditions being met:

 

(i)
the accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar
qualifiers therein) on the Closing Date of the representations and warranties of the Company contained herein (unless as of a
specific date therein in which case they shall be accurate as of such date);

 

(ii)
all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been
performed; including but not limited to having obtained the Required Approvals.

 

(iii)
the Company shall have received from Purchasers with respect to $500,000 of aggregate Subscription Amount all of the deliverables
set forth in Section 2.2(b) prior to the Closing;

 

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

 

(v)
the Company shall have irrevocably received proceeds of not less than $1,500,000 from certain outside investors (the “Other
Investors”) on the terms set forth on Schedule 2.3(b)(v) hereto pursuant to executed transaction documents; and

 

(vi)
from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Initial 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 such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the
Closing.

 

    	 	8	 

    	 	 	 

    

 

2.4
Purchaser’s Right To Terminate. Anything in any of the Transaction Documents to the contrary notwithstanding, each
Purchaser has the right to demand and receive back from the Company such Purchaser’s Subscription Amount at any time until
a Closing takes place in connection with such Subscription Amount.

 

ARTICLE
III.

REPRESENTATIONS
AND WARRANTIES

 

3.1
Representations and Warranties of the Company. Except as set forth in the Disclosure Letter, which Disclosure Letter shall
be deemed a part hereof, or disclosed in the SEC Reports, the Company hereby makes the following representations and warranties
to each Purchaser as of each Closing Date:

 

(a)
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Section 3.1(a) of the
Disclosure Letter. The Company owns, directly or indirectly, a majority of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, other than Permitted Liens, subject to restrictions under applicable laws, 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 at any time,
all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded

 

(b)
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite
power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the
Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

    	 	9	 

    	 	 	 

    

 

(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 each of this Agreement and 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, assuming due authorization, execution and delivery by the Purchasers, 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, liquidation and other laws
of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions
may be limited by applicable law.

 

(d)
No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents
to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) by the Company or any Subsidiary 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 Securities Laws), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in
the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(e)
Filings, Consents and Approvals. Except as disclosed on Section 3.1(e) of the Disclosure Letter, 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 provincial or foreign or domestic 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 4.4 of this Agreement, (ii) the filings with the Commission pursuant to the Registration Rights Agreement,
(iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing
of the Conversion Shares and Warrant Shares for trading thereon in the time and manner required thereby, all of which shall have
been effectuated and obtained prior to the Initial Closing Date, (iv) filing of a Form D with the Commission, as applicable, and
(v) the accepted filing of the Certificate of Designation with the Secretary of State of the State of Nevada (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 other than restrictions
on transfer provided for in the Transaction Documents and Liens resulting from the activities of any Purchaser other than Permitted
Liens. The Company has reserved from its duly authorized capital stock the number of Shares, Conversion Shares and Warrant Shares
issuable pursuant to this Agreement and the Warrants as set forth in Section 4.8.

 

    	 	10	 

    	 	 	 

    

 

(g)
Capitalization. The capitalization of the Company is as set forth in Section 3.1(g) of the Disclosure Letter. 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 Stock Option Plans, the issuance of shares of Common Stock to employees pursuant
to the Stock Option Plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date
of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except
as a result of the purchase and sale of the Securities or as disclosed on Section 3.1(g) of the Disclosure Letter, as of
the Closing Date through the Protection Period, there are no and the Company will not have outstanding Equity Lines of Credit,
Variable Priced Equity Linked Instruments, Variable Rate Transactions, 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 material 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 Section 3.1(g) of the Disclosure Letter, 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 material 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 otherwise provided herein, 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 disclosed on Section 3.1(g) of the Disclosure
Letter, 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.

 

(h)
Form 8-K; Financial Statements. Except as disclosed on Section 3.1(h) of the Disclosure Letter, 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 12(b), 13(a) or 15(d) thereof, for the two years preceding the date hereof
on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of
the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The Form 8-K described in Section 4.4,
upon its filing, will comply in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable,
and will 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 the light of the circumstances under which they were made, not misleading.
The latest audited 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 are subject to normal, immaterial, year-end audit adjustments, 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.

 

    	 	11	 

    	 	 	 

    

 

(i)
Material Changes; Undisclosed Events, Liabilities or Developments. Except as disclosed on Section 3.1(i) of the
Disclosure Letter, since the date of the latest financial statements included within the SEC Reports, except as reflected or specifically
disclosed in a subsequent SEC Report filed not later than five Trading Days 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 material liabilities (contingent or otherwise) other than (A) trade payables, and accrued expenses incurred
in the ordinary course of business consistent with past practice, (B) transaction expenses incurred in connection with the Transaction
Documents, and (C) 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 for the issuances set forth on Section 3.1(g) of the Disclosure Letter. The Company does
not have pending before the Commission any request for confidential treatment of information. Except as disclosed on Section
3.1(i) of the Disclosure Letter, except for the issuance of the Securities contemplated by this Agreement, 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 (1) Trading Day prior to the date that this representation is made.

 

(j)
Litigation. Except as set forth in the SEC Reports or disclosed on Section 3.1(j) of the Disclosure Letter, 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”)
that would, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect, nor
to the knowledge of the Company is there any reasonable basis for any such Action that would, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor, to the Company’s
knowledge, any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability
under 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, to the knowledge of the Company, any
current or former director or officer of the Company, nor, to the knowledge of the Company, any current or former officer, director,
control person, principal shareholder, or creditor with respect to the relationship of any of the foregoing to the Company, nor
to the knowledge of the Company is there any reasonable basis for any of the foregoing. 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.

 

    	 	12	 

    	 	 	 

    

 

(k)
Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees
of the Company, which could reasonably be expected to result in a Material Adverse Effect. Except as disclosed on Section 3.1(k)
of the Disclosure Letter, none of the Company’s or its Subsidiaries’ employees is a member of a union that relates
to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries
is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their
employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected
by the Company to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of
any third party, which could reasonably be expected to result in a Material Adverse Effect and the continued employment of each
such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all applicable U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.

 

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

 

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

 

(n)
Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned
by them and good and marketable title in all personal property owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except for Permitted Liens. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the
Company and the Subsidiaries are in compliance, except where the non-compliance would not reasonably be expected to result in
a Material Adverse Effect.

 

(o)
Intellectual Property.

 

(i)
The term “Intellectual Property Rights” includes:

 

1.
the name of the Company, all fictional business names, trading names, registered and unregistered trademarks, service marks, and
applications (collectively, “Marks”);

 

2.
all patents and patent applications (collectively, “Patents”);

 

3.
all copyrights in both published works and unpublished works (collectively, “Copyrights”);

 

    	 	13	 

    	 	 	 

    

 

4.
all rights in mask works (collectively, “Rights in Mask Works”); and

 

5.
all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints (collectively, “Trade Secrets”);

 

owned,
used, or licensed by the Company as licensee or licensor.

 

(ii)
Agreements. The SEC Reports contain a complete and accurate list of all material contracts relating to the Company’s
Intellectual Property Rights to which the Company is a party or by which the Company is bound, except for any license implied
by the sale of a product and perpetual, paid-up licenses for commonly available software programs with a value of less than $10,000
under which the Company is the licensee. There are no outstanding and, to the Company’s knowledge, no threatened disputes
or disagreements with respect to any such agreement.

 

(iii)
Know-How Necessary for the Business. To the Company’s knowledge: the Company’s Intellectual Property Rights
are all those necessary for the operation of the Company’s businesses as it is currently conducted or as represented, in
writing, to the Purchasers to be conducted. To the Company’s knowledge: the Company is the owner of all right, title, and
interest in and to each of the Intellectual Property Rights, free and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims, and has the right to use all of the Intellectual Property Rights, subject in each case to
Permitted Liens. To the Company’s knowledge, no employee of the Company has entered into any contract that restricts or
limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign,
or disclose information concerning his work to anyone other than of the Company.

 

(iv)
Know-How Necessary for the Business. Except as disclosed on Section 3.1(o) of the Disclosure Letter, to the extent
the Company owns any Patents: (A) the SEC Reports contain a complete and accurate list of all of the Company’s Patents;
(B) the Company is the owner of all right, title and interest in and to each of the Patents, free and clear of all Liens and other
adverse claims other than Permitted Liens; (C) all of the issued Patents are currently in compliance with formal legal requirements
(including payment of filing, examination, and maintenance fees and proofs of working or use), are valid and enforceable, and,
except as set forth on Section 3.1(o) of the Disclosure Letter, are not subject to any maintenance fees or taxes or actions
falling due within ninety days after the Closing Date; (D) no Patent has been or is now involved in any interference, reissue,
reexamination, or opposition proceeding; and (E) to the Company’s knowledge: (1) there is no potentially interfering patent
or patent application of any third party, and (2) no Patent is infringed or has been challenged or threatened in any way. To the
Company’s knowledge, none of the products manufactured and sold, nor any process or know-how used, by the Company infringes
or is alleged to infringe any patent or other proprietary right of any other Person.

 

(v)
Trademarks. Except as disclosed on Section 3.1(o), to the extent the Company owns any Marks: (A) the SEC Reports
contain a complete and accurate list and summary description of all Marks; (B) the Company is the owner of all right, title, and
interest in and to each of the Marks, free and clear of all Liens and other adverse claims other than Permitted Liens; (C) all
Marks that have been registered with the United States Patent and Trademark Office are currently in compliance with all formal
legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications),
are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after
the Closing Date; (D) except as set forth in Section 3.1(o) of the Disclosure Letter, no Mark has been or is now involved
in any opposition, invalidation, or cancellation and, to the Company’s knowledge, no such action is threatened with respect
to any of the Marks and (E) to the Company’s knowledge: (1) there is no potentially interfering trademark or trademark application
of any third party, and (2) no Mark is infringed or has been challenged or threatened in any way. To the Company’s knowledge,
none of the Marks used by the Company infringes or is alleged to infringe any trade name, trademark, or service mark of any third
party.

 

    	 	14	 

    	 	 	 

    

 

(vi)
Copyrights. Except as disclosed on Section 3.1(o), to the extent the Company owns any Copyrights: (A) the SEC Reports
contain a complete and accurate list of all Copyrights; (B) the Company is the owner of all right, title, and interest in and
to each of the Copyrights, free and clear of all Liens and other adverse claims other than Permitted Liens; (C) except as set
forth on Section 3.1(o) of the Disclosure Letter, all the Copyrights have been registered and are currently in compliance
with formal requirements, are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due
within ninety days after the date of the Closing; (D) no Copyright is infringed or, to the Company’s knowledge, has been
challenged or threatened in any way; (E) to the Company’s knowledge, none of the subject matter of any of the Copyrights
infringes or is alleged to infringe any copyright of any third party or is a derivative work based on the work of a third party;
and (F) all works encompassed by the Copyrights have been marked with the proper copyright notice, except for any such failure
that would not have or reasonably be expected to result in a Material Adverse Effect.

 

(vii)
Trade Secrets. With respect to each Trade Secret of the Company, the documentation relating to such Trade Secret is current,
accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance
on the knowledge or memory of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality,
and value of its Trade Secrets. The Company has good title and an absolute (but not necessarily exclusive) right to use the Company’s
Trade Secrets subject to Permitted Liens. The Company’s Trade Secrets are not part of the public knowledge or literature,
and, to the Company’s knowledge, have not been used, divulged, or appropriated either for the benefit of any Person (other
than the Company) or to the detriment of the Company. Except as set forth on Section 3.1(o) of the Disclosure Letter, no
Trade Secret of the Company is subject to any adverse claim or has been challenged or threatened in any way.

 

(p)
Insurance. The Company and the Subsidiaries are currently 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. A description of the principal terms of the Company’s directors and officers insurance policy and the name
and contact information for the issuer of such policy are set forth on Section 3.1(p) of the Disclosure Letter. Neither
the Company nor any Subsidiary believes that it will not be able to acquire insurance coverage at reasonable cost as may be necessary
to continue its business.

 

(q)
Transactions With Affiliates and Employees. Except as set forth in the SEC Reports or as set forth on Section 3.1(q)
of the Disclosure Letter, 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 $100,000 other than for: (i) payment
of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
other employee benefits, including stock option agreements under any stock option plan of the Company except as disclosed on Section
3.1(g) of the Disclosure Letter.

 

    	 	15	 

    	 	 	 

    

 

(r)
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, nor is there, to the knowledge of the Company or any Subsidiary, any reasonable
basis for any of the foregoing.

 

(s)
Certain Fees. Except as set forth on Section 3.1(s) of the Disclosure Letter, no brokerage, finder’s fees,
commissions or due diligence fees are or will be payable by the Company or any Subsidiary to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by
the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this Section 3.1(s) that may be due in connection with the
transactions contemplated by the Transaction Documents. Alpha Capital Anstalt will receive a due diligence review fee upon Closing
as set forth on Section 3.1(s) of the Disclosure Letter. The due diligence fee will be deemed an additional Subscription
Amount under this Agreement and accordingly, paid in the form of Shares and Warrants.

 

(t)
Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
registration under the Securities Act is not required for the offer and sale of the Securities by the Company to the Purchasers
as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the
Trading Market.

 

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

 

(v)
Intentionally Omitted.

 

(w)
Listing and Maintenance Requirements. The Common Stock is listed on the NASDAQ Capital Market under the symbol SGLB. Except
as set forth on Section 3.1(w) of the Disclosure Letter, the Company has not, in the twelve (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.

 

(x)
Application of Takeover Protections. The Company’s Board of Directors has approved the Transaction Documents under
Section 78 of the Nevada Revised Statutes of the State of Nevada (the “NRS”) in order to render the restrictions
on “business combinations” (as defined in Section 78 of the NRS) inapplicable to the execution, delivery or performance
of the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.

 

    	 	16	 

    	 	 	 

    

 

(y)
Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor, to the Company’s knowledge, any other Person acting on its behalf has
provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute
material, non-public information. The Company understands and confirms that the Purchasers will rely on the foregoing representation
in effecting transactions in securities of the Company. All of the disclosure furnished by or, to the Company’s knowledge,
on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Disclosure Letter, taken as a whole 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. For the avoidance of doubt, information disclosed
in one section of the Disclosure Letter shall not be deemed disclosed in any other section of the Disclosure Letter unless there
is an explicit cross reference to such other section. The Company acknowledges and agrees that no Purchaser makes or has made
any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth
in Section 3.2 hereof. The Company acknowledges that Purchaser has no duty of confidentiality or non-disclosure of any information
about the Company possessed by or known to Purchaser.

 

(z)
No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section
3.2, neither the Company, nor, to the knowledge of the Company, any of its Affiliates, nor any Person acting on its or, to the
knowledge of the Company, 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 by the Company 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. The offering and issuance of the Securities do not and will not integrate with the offering,
issuance or ownership of any equity or securities of the Company for any purpose or reason pursuant to the rules of any Trading
Market.

 

(aa)
Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the
receipt by the Company of the aggregate Subscription Amount from all the Purchasers and the sale of Securities described on Schedule
2.3(b)(vii): (i) the fair saleable value of the assets of the Company and its Subsidiaries taken as a whole exceeds the amount
that will be required to be paid on or in respect of the existing debts and other liabilities (including known contingent liabilities)
of the Company and its Subsidiaries as they mature, (ii) the assets of the Company and its Subsidiaries do not constitute unreasonably
small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into
account the particular capital requirements of the business conducted by the Company and its Subsidiaries consolidated and projected
capital requirements and capital availability thereof, and (iii) the current cash flow of the Company and its Subsidiaries together
with the proceeds the Company would receive, were they to liquidate all of their assets, after taking into account all anticipated
uses of the cash, would be sufficient to pay all amounts on or in respect of their liabilities when such amounts are required
to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances
which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any
jurisdiction within one year from the Closing Date. The SEC Reports set forth all Liens and outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of
this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $300,000
(other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated
balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $200,000
due under leases required to be capitalized in accordance with GAAP. The Company is not in default with respect to any Indebtedness.

 

    	 	17	 

    	 	 	 

    

 

(bb)
Tax Status. Except as disclosed on Section 3.1(bb) of the Disclosure Letter and 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 required 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. Except as disclosed on Section 3.1(bb) of the Disclosure
Letter, 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 reasonable basis for any such claim.

 

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

 

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

 

(ee)
Accountants. The Company’s accounting firm is set forth on Section 3.1(ee) of the Disclosure Letter. To the
knowledge and belief of the Company, such accounting firm is registered with the Public Company Accounting Oversight Board, and
shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the
fiscal year ending December 31, 2019.

 

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

 

(gg)
Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the
Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby
and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities.
The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company
and its representatives.

 

    	 	18	 

    	 	 	 

    

 

(hh)
Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary
notwithstanding (except for Section 4.18 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may have
in the future a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation
with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands
and acknowledges that (y) one or more Purchasers may engage in hedging activities in accordance with all applicable laws at various
times during the period that the Securities are outstanding, including, without limitation, during the periods that the value
of the Warrant Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could
reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities
are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of
the Transaction Documents.

 

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

 

(jj)
Stock Option Plans. Except as set forth on Section 3.1(jj) of the Disclosure Letter or set forth in the SEC Reports,
as of the date hereof, no stock options have been granted, nor any commitments made to grant stock options, under the Stock Option
Plans, and neither the Company nor any Subsidiary has ever had an option plan, other than the Stock Option Plans and other stock
option plans which were described in the SEC Reports and are no longer in effect. The Company has not knowingly granted, and there
is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate
the grant of stock options with, the release or other public announcement of material information regarding the Company or its
Subsidiaries or their financial results or prospects.

 

(kk)
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”).

 

(ll)
Reporting Company/Shell Company. The Company is a publicly-held company subject to reporting obligations pursuant to Section
12(b) of the Exchange Act. Pursuant to the provisions of the Exchange Act, except as disclosed on Section 3.1(ll) of the
Disclosure Letter, the Company has timely filed all reports and other materials required to be filed by the Company thereunder
with the SEC during the preceding twelve months. As of the Closing Date, the Company is not a “shell company” as such
term is employed in Rule 144 under the Securities Act.

 

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

 

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

 

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

 

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

 

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(b)
Understandings or Arrangements. Such Purchaser understands that the Securities are “restricted securities”
and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as
principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation
of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities
in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any
applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities
pursuant to a registration statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser
is acquiring the Securities hereunder in the ordinary course of its business.

 

(c) Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date
on which it exercises any Warrants or converts any Preferred Stock, 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. Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange Act. Such Purchaser has the authority and is
duly and legally qualified to purchase and own the Securities. Such Purchaser is able to bear the risk of such investment for
an indefinite period and to afford a complete loss thereof. Such Purchaser has provided the information in the Accredited
Investor Questionnaire attached hereto as Exhibit D (the “Investor Questionnaire”). The information
set forth on the signature pages hereto and the Investor Questionnaire regarding such Purchaser is true and complete in all
respects. Except as disclosed in the Investor Questionnaire, such Purchaser has had no position, office or other material
relationship within the past three years with the Company or Persons (as defined below) known to such Purchaser to be
affiliates of the Company, and is not a member of the Financial Industry Regulatory Authority or an “associated
person” (as such term is defined under the FINRA Membership and Registration Rules Section 1011).

 

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

 

(e)
Information on Company. Such Purchaser has been furnished with or has had access to the EDGAR Website of the Commission
to the Company’s filings made with the Commission during the period from the date that is two years preceding the date hereof
through the tenth business day preceding the Closing Date in which such Purchaser purchases Securities hereunder, including but
not limited to the Risk Factors section of the Company’s Annual Report on Form 10-K filed with the Commission for the fiscal
year ended December 31, 2018 (hereinafter referred to collectively as the “SEC Reports”). Purchasers are not
deemed to have any knowledge of any information not included in the Reports unless such information is delivered in the manner
described in the next sentence. In addition, such Purchaser may have received in writing from the Company such other information
concerning its operations, financial condition and other matters as such Purchaser has requested, identified thereon as OTHER
WRITTEN INFORMATION (such other information is collectively, the “Other Written Information”), and considered
all factors such Purchaser deems material in deciding on the advisability of investing in the Securities. Such Purchaser was afforded
(i) the opportunity to ask such questions as such Purchaser deemed necessary of, and to receive answers from, representatives
of the Company concerning the merits and risks of acquiring the Securities; (ii) the right of access to information about the
Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable
such Purchaser to evaluate the Securities; and (iii) the opportunity to obtain such additional information that the Company possesses
or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to
acquiring the Securities.

 

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(f)
Reliance on Exemption. Such Purchaser understands and agrees that the Securities have not been registered under the Securities
Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require registration under
the Securities Act, and that such Securities must be held indefinitely unless a subsequent disposition is registered under the
Securities Act or any applicable state securities laws or is exempt from such registration. Such Purchaser understands and agrees
that the Securities are being offered and sold to such Purchaser in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and regulations 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.

 

(g)
Communication of Offer. Such Purchaser is not purchasing the Securities as a result of any “general solicitation”
or “general advertising,” as such terms are defined in Regulation D, which includes, but is not limited to, any advertisement,
article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or on the
internet or broadcast over television, radio or the internet or presented at any seminar or any other general solicitation or
general advertisement.

 

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

 

(i)
No Conflicts. The execution, delivery and performance of this Agreement and performance under the other Transaction Documents
and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto or thereto do not
and will not (i) result in a violation of such Purchaser’s charter documents, bylaws or other organizational documents,
if applicable, (ii) conflict with nor constitute a default (or an event which with notice or lapse of time or both would become
a default) under any agreement to which such Purchaser is a party, nor (iii) result in a violation of any law, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such
Purchaser). Such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement
or perform under the other Transaction Documents nor to purchase the Securities in accordance with the terms hereof, provided
that for purposes of the representation made in this sentence, such Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.

 

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

 

(k)
Survival. The foregoing representations and warranties shall survive the Closing Date.

 

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

 

ARTICLE
IV.

OTHER
AGREEMENTS OF THE PARTIES

 

4.1
Transfer Restrictions.

 

(a)
Securities Laws. 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(c), 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 such 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 and the other Transaction Documents.

 

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

 

[NEITHER]
THIS SECURITY [NOR THE SECURITIES [FOR] WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE] HAS [NOT] BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND APPLICABLE STATE SECURITIES LAWS, 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. TO THE EXTENT PERMITTED BY APPLICABLE SECURITIES LAWS, THIS SECURITY [AND
THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED
IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

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(c)
Pledge. The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin
agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution
that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by
the provisions of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, such
Purchaser may transfer pledge or secure 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 such Purchaser’s expense, the Company will
execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection
with a pledge or transfer of the Securities including, if the Securities are subject to registration pursuant to the Registration
Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act
or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.

 

(d)
Intentionally Omitted.

 

(e)
Legend Removal Default. In addition to Purchaser’s other available remedies, provided the conditions for legend removal
set forth in Section 4.1(d) exist, the Company shall pay to Purchaser, in cash, as partial liquidated damages and not as a penalty,
for each $1,000 of Underlying Shares (based on the higher of the actual purchase price or 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(d),
$10 per Trading Day for each Trading Day after the Legend Removal Date (increasing to $20 per Trading Day after the third Trading
Day) until such certificate is delivered without a legend. Nothing herein shall limit 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 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.

 

(f)
DWAC. In lieu of delivering physical certificates representing the unlegended shares, upon request of a Purchaser, so long
as the certificates therefor do not bear a legend and the Purchaser is not obligated to return such certificate for the placement
of a legend thereon, the Company shall cause its transfer agent to electronically transmit the unlegended shares by crediting
the account of Purchaser’s prime broker with the Depository Trust Company through its Deposit Withdrawal At Custodian system,
provided that the Company’s Common Stock is DTC eligible and the Company’s transfer agent participates in the Deposit
Withdrawal at Custodian system. Such delivery must be made on or before the Legend Removal Date.

 

    	 	24	 

    	 	 	 

    

 

(g)
Injunction. In the event a Purchaser shall request delivery of Conversion Shares or Warrant Shares as described in this
Section 4.1 and the Company is required to deliver such Securities, the Company may not refuse to deliver such Securities based
on any claim that such Purchaser or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s
obligations under the Transaction Documents, or for any other reason, unless, an injunction or temporary restraining order from
a court, on notice, restraining and or enjoining delivery of such unlegended Securities shall have been sought and obtained by
the Company.

 

(h)
Buy-In. In addition to any other rights available to Purchaser, if the Company fails to deliver to a Purchaser Shares as
required pursuant to this Agreement and after the Legend Removal Date, the Purchaser, or a broker on the Purchaser’s behalf,
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser
of the shares of Common Stock which the Purchaser was entitled to receive in unlegended form from the Company (a “Buy-In”),
then the Company shall promptly pay in cash to the Purchaser (in addition to any remedies available to or elected by the Purchaser)
the amount, if any, by which (A) the Purchaser’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (B) the aggregate purchase price of the shares of Common Stock delivered to the Company
for reissuance as unlegended Shares, together with a payment in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Shares (based on the VWAP of the Common Stock on the date such Shares are submitted to the Transfer Agent) delivered
for removal of the restrictive legend and subject to Section 4.1(d), $5 per Trading Day (increasing to $10 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. The Purchaser shall provide the Company written notice indicating the amounts payable to the Purchaser
in respect of the Buy-In.

 

4.2
Furnishing of Information; Public Information.

 

(a)
Until the earliest of the time that (i) no Purchaser owns any Securities, (ii) the Warrants have expired, or (iii) five (5) years
after the Subsequent Closing Date, 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.

 

4.3
Integration and Registration. 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 by the Company 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.

 

4.4
Securities Laws Disclosure; Publicity. The Company shall, by 9:00 a.m. (New York City time) on the third (3rd)
Trading Day immediately following each Closing Date, issue a press release disclosing the material terms of the transactions contemplated
hereby, and shall file a Current Report on Form 8-K including the Transaction Documents as exhibits thereto within the time period
required by the Exchange Act. From and after the issuance of such press release and Form 8-K, the Company represents to the Purchasers
that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or
any of its Subsidiaries, or any of their respective officers, directors, employees, agents or brokers in connection with the transactions
contemplated by the Transaction Documents. The Company and each Purchaser shall consult with each other in issuing any other press
releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such
press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press
release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which
consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing
party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing
with the Commission or any regulatory agency or Trading Market unless the name of such Purchaser is already included in the body
of the Transaction Documents, without the prior written consent of such Purchaser, except: (a) as required by federal securities
law in connection with the filing of final Transaction Documents with the Commission, and (b) to the extent such disclosure is
required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such
disclosure permitted under this clause (b).

 

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4.5
Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the
Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide
any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information,
unless prior thereto such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality
and use of such information and the Purchaser, its agents or counsel, shall have agreed in writing to receive such information.
The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions
in securities of the Company.

 

4.6
Use of Proceeds. The Company will use the net proceeds to the Company from the sale of the Shares and Warrants hereunder
for general corporate purposes and working capital. The Company shall not use such proceeds: (a) for the redemption of any Common
Stock or Common Stock Equivalents, (b) for the settlement of any outstanding litigation (except for payments pursuant to settlement
agreements entered into prior to the date hereof and disclosed in the SEC Reports or in the Disclosure Letter), or (c) in violation
of the law, including FCPA or OFAC.

 

4.7
Indemnification of Purchasers. Subject to the provisions of this Section 4.7, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls
such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser
Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation
that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action
instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction
Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants
under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or
any violations by such Purchaser Party of Securities Laws or any conduct by such Purchaser Party which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time
to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such Purchaser Party’s
counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party,
in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel
for all Purchaser Parties. The Company will not be liable to any Purchaser Party under this Agreement (iv) for any settlement
by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld, conditioned
or delayed; or (v) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to (A) any Purchaser
Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement
or in the other Transaction Documents or (B) any conduct by such Purchaser Party which constitutes gross negligence or willful
misconduct. The indemnification required by this Section 4.7 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.

 

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4.8
Reservation of Common Stock. Upon shareholder approval of an increase in the Company’s authorized shares, (“Shareholder
Approval”) the Company shall reserve and continue to reserve and keep available at all times for each Purchaser free of
preemptive rights, not less than the number of shares of Common Stock for each Purchaser for the purpose of enabling the Company
to issue the Conversion Shares issuable upon complete conversion of the Shares issued pursuant to this Agreement, not less than
dividends that will accrue on such Shares assuming none of such Shares will have been converted sooner than three years from the
Closing Date with respect to such Shares, and Warrant Shares issuable upon complete exercise of the Warrants (such amount being
the “Required Minimum”). If, following Shareholder Approval, the number of authorized but unissued (and otherwise
unreserved) shares of Common Stock is less than the Required Minimum on such date (an “Authorized Share Failure”),
then the Company shall use commercially reasonable efforts to amend the Company’s certificate 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 60th day after such date. 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 sixty (60)
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 commercially reasonable 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. Notwithstanding the foregoing, if any such time of an Authorized Share Failure, the Company is able
to obtain the written consent of a majority of the shares of its issued and outstanding Common Stock to approve the increase in
the number of authorized shares of Common Stock without soliciting its stockholders, the Company may satisfy this obligation by
obtaining such consent and submitting for filing with the SEC an Information Statement on Schedule 14C. Calculations hereunder
as of the date of this Agreement shall assume a Conversion Price of not more than $1.00, and as of the Closing Date, the actual
Share Purchase Price. Calculations hereunder with reference to Warrant Shares will be made assuming exercise of the Warrants on
a cash basis.

 

4.9
Listing of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation
of the Common Stock on the Trading Market on which it is currently listed (i.e. the NASDAQ Capital Market), and prior to each
Closing, the Company shall apply to list or quote all of the Conversion Shares and Warrant Shares on such Trading Market and use
commercially reasonable efforts to secure the listing of all of the Conversion Shares and Warrant Shares on such Trading Market.
The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include
in such application all of the Conversion Shares and Warrant Shares, and will take such other action as is necessary to cause
all of the Conversion Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible. The
Company will then use commercially reasonable efforts to continue the listing or quotation and trading of its Common Stock on
a Trading Market until the later of (i) the five year anniversary of the Initial Closing Date, and (ii) the date no Shares or
Warrants are outstanding, and will comply in all material respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market until such later date.

 

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4.10
Reimbursement. If any Purchaser becomes involved in any capacity in any Proceeding by or against any Person who is a stockholder
of the Company (except as a result of sales, pledges, margin sales and similar transactions by such Purchaser to or with any current
stockholder), solely as a result of such Purchaser’s acquisition of the Securities under this Agreement, the Company will
reimburse such Purchaser for its reasonable legal and other expenses (including the cost of any investigation preparation and
travel in connection therewith) incurred in connection therewith, as such expenses are incurred. The reimbursement obligations
of the Company under this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon
the same terms and conditions to any Affiliates of the Purchasers who are actually named in such action, proceeding or investigation,
and partners, directors, agents, employees and controlling persons (if any), as the case may be, of the Purchasers and any such
Affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of
the Company, the Purchasers and any such Affiliate and any such Person. The Company also agrees that neither the Purchasers nor
any such Affiliates, partners, directors, agents, employees or controlling persons shall have any liability to the Company or
any Person asserting claims on behalf of or in right of the Company solely as a result of acquiring the Securities under this
Agreement.

 

4.11
Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered
or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless
the same consideration is also offered, provided and given to all of the Purchasers that are parties to such Transaction Document.
For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated
separately by each Purchaser, and is intended for the Company to treat the Purchasers equally and shall not in any way be construed
as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

4.12
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 Shares and Warrant
Shares pursuant to the Transaction Documents, are unconditional and absolute, but subject to the terms and conditions of the Transaction
Documents, and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution
or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the
ownership of the other stockholders of the Company.

 

4.13
Preservation of Corporate Existence. The Company shall preserve and maintain its corporate existence, rights, privileges
and franchises in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction
in which such qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified
might reasonably have a Material Adverse Effect upon the financial condition, business or operations of the Company taken as a
whole.

 

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4.14
DTC Program. At all times that the Shares or Warrants are outstanding, the Company will employ as the transfer agent for
the Common Stock and Warrant Shares a participant in the Depository Trust Company Automated Securities Transfer Program and cause
the Common Stock to be transferable pursuant to such program.

 

4.15
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the sale of the Securities by the
Company under this Agreement as required under Regulation D. The Company shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing
under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such
actions promptly upon request of any Purchaser.

 

4.16
Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other
Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue
of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

4.17
Conversion and Exercise Procedure. The form of Notice of Conversion included in the Certificate of Designation and the
form of Notice of Exercise included in the Warrants sets forth the totality of the procedures required of the Purchasers in order
to convert the Shares and exercise the Warrants. No additional legal opinion, other information or instructions shall be required
of the Purchasers to convert the Shares nor exercise their Warrants. The Company shall honor conversions of Shares and exercises
of the Warrants and shall deliver Warrant Shares in accordance with the terms, conditions and time periods set forth in the Transaction
Documents.

 

4.18
Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants
that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or
sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of this
Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly disclosed or required
to be disclosed, whichever occurs first, in the Form 8-K described in Section 4.4. Notwithstanding anything contained in this
Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the
transactions contemplated by this Agreement are required to be disclosed in the Form 8-K described in Section 4.4, (ii) no Purchaser
shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable
Securities Laws from and after the time that the transactions contemplated by this Agreement are first disclosed or required to
be disclosed, whichever occurs first, in the Form 8-K described in Section 4.4, and (iii) no Purchaser shall have any duty of
confidentiality to the Company or its Subsidiaries after the filing of such Form 8-K or after the date such Form 8-K is required
to have been filed, whichever occurs first. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s
assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that
made the investment decision to purchase the Securities covered by this Agreement.

 

4.19
Intentionally Omitted.

 

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4.20
Maintenance of Property. The Company shall keep all of its property, which is necessary or useful to the conduct of its
business, in good working order and condition, ordinary wear and tear excepted.

 

4.21
Dispute Resolution under the Certificate of Designation. Capitalized terms used in this Section 4.21 but not otherwise
defined shall have the meanings given to them in the Certificate of Designation.

 

(a)
Submission to Dispute Resolution.

 

(i)
In the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price or a fair market value or the
arithmetic calculation of a Conversion Rate (as the case may be) (including, without limitation, a dispute relating to the determination
of any of the foregoing), the Company or the applicable Purchaser (as the case may be) shall submit the dispute to the other party
via facsimile (A) if by the Company, within two (2) Business Days after the occurrence of the circumstances giving rise to such
dispute or (B) if by such Purchaser at any time after such Purchaser learned of the circumstances giving rise to such dispute.
If such Purchaser and the Company are unable to promptly resolve such dispute relating to such Bid Price, such Closing Bid Price,
such Closing Sale Price, such Conversion Price, such fair market value, or the arithmetic calculation of such Conversion Rate
(as the case may be), at any time after the second (2nd) Business Day following such initial notice by the Company or such Purchaser
(as the case may be) of such dispute to the Company or such Purchaser (as the case may be), then such Purchaser may, at its sole
option, select an independent, reputable investment bank to resolve such dispute.

 

(ii)
Such Purchaser and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered
in accordance with the first sentence of this Section 4.21 and (B) written documentation supporting its position with respect
to such dispute, in each case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the
date on which such Purchaser selected such investment bank (the “Dispute Submission Deadline”) (the documents
referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute
Documentation”) (it being understood and agreed that if either such Purchaser or the Company fails to so deliver all
of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required
Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation
or other support to such investment bank with respect to such dispute and such investment bank shall resolve such dispute based
solely on the Required Dispute Documentation that was delivered to such investment bank prior to the Dispute Submission Deadline).
Unless otherwise agreed to in writing by both the Company and such Purchaser or otherwise requested by such investment bank, neither
the Company nor such Purchaser shall be entitled to deliver or submit any written documentation or other support to such investment
bank in connection with such dispute (other than the Required Dispute Documentation) .

 

(iii)
The Company and such Purchaser shall cause such investment bank to determine the resolution of such dispute and notify the Company
and such Purchaser of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline.
The fees and expenses of such investment bank shall be borne solely by the Company, and such investment bank’s resolution
of such dispute shall be final and binding upon all parties absent manifest error.

 

(b)
Miscellaneous. The Company expressly acknowledges and agrees that the terms of the Certificate of Designations and each
other applicable Transaction Document shall serve as the basis for the selected investment bank’s resolution of the applicable
dispute, such investment bank shall be entitled (and is hereby expressly authorized) to make all findings, determinations and
the like that such investment bank determines are required to be made by such investment bank in connection with its resolution
of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations and the like to the
terms of the Certificate of Designations and any other applicable Transaction Documents, (iii) such Purchaser (and only such Purchaser),
in its sole discretion, shall have the right to submit any dispute described in this Section 4.21 to any state or federal court
sitting in New York, New York in lieu of utilizing the procedures set forth in this Section 4.21 and (iv) nothing in this Section
4.21 shall limit such Purchaser from obtaining any injunctive relief or other equitable remedies (including, without limitation,
with respect to any matters described in this Section 4.21).

 

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4.23
Intentionally Omitted.

 

4.24
Intentionally Omitted.

 

4.25
Intentionally Omitted.

 

4.26
Intentionally Omitted.

 

4.27
Notice of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date of (i)
any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become
a Disqualification Event relating to any Issuer Covered Person not otherwise disclosed herein or in the SEC Reports.

 

4.28
Duration of Undertakings. Unless otherwise stated in this Article IV, all of the Company’s undertakings, obligations
and responsibilities set forth in Article IV of this Agreement shall remain in effect for so long as any Securities remain outstanding.

 

ARTICLE
V.

MISCELLANEOUS

 

5.1
Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only
and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice given at
any time to the Company, if the Initial Closing has not been consummated on or before the Termination Date; provided, however, that such termination will not affect the right of any party to sue for any breach by any other party (or parties). In the event
of any termination by a Purchaser under this Section 5.1, the Company shall promptly (and in any event within two (2) Business
Days of such termination) refund all of such Purchaser’s subscription amount.

 

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

 

5.3
Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, and including the Disclosure
Letter, 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.

 

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5.4
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
(iv) transmitted by hand delivery, telegram, or facsimile, or (v) transmitted via electronic mail, in each case addressed as set
forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is to be received), (b) on the second business day
following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of
such mailing, whichever shall first occur or (c) on the date sent by e-mail of a PDF document (with confirmation of transmission)
if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the
recipient. The addresses for such communications shall be: (i) if to the Company, to: Sigma Labs, Inc., 3900 Paseo del Sol, Santa
Fe, New Mexico 87507, Attn: John Rice, President and CEO, e-mail: rice@sigmalabsinc.com, with a copy by electronic mail only to
(which shall not constitute notice) Company Counsel, and (ii) if to the Purchasers, to: the addresses and fax numbers indicated
on the signature pages hereto, with an additional copy by electronic mail only to (which shall not constitute notice) Purchaser
Counsel.

 

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 the Company and the Purchasers holding at least a majority of the component
of the affected Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived
provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise
of any such right. As employed herein, “consent” shall mean consent of the holders of the majority of the then outstanding
effected component of the Securities on the date such consent is requested or required.

 

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

 

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

 

5.8
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.7.

 

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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 or proceeding to enforce any provisions of the Transaction Documents, then in addition to the obligations
of the Company under Section 4.7, 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
at the Closings for the applicable statute of limitations.

 

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

 

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

 

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

 

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5.14
Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon surrender and 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, destruction, or mutilation, and of the ownership of such Security.
The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including
customary indemnity and bonds) associated with the issuance of such replacement Securities.

 

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

 

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

 

5.17
Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction
Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way
for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained
herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereof or thereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated
by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented
by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience
only, each Purchaser and its respective counsel have chosen to communicate with the Company through Purchaser Counsel. Purchaser
Counsel does not represent all of the Purchasers. The Company has elected to provide all Purchasers with the same terms and Transaction
Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers. It
is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between
the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the
Purchasers. No Purchaser shall act in concert, as a group, or together with any other Purchaser with regard to any vote of the
stockholders of the Company.

 

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 due thereunder 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.

 

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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
Equitable Adjustment. Trading volume amounts, price/volume amounts and similar figures in the Transaction Documents shall
be equitably adjusted (but without duplication) to offset the effect of stock splits, similar events and as otherwise described
in this Agreement and Warrants.

 

5.23
No Cash Payments. Notwithstanding anything herein to the contrary, until all of the shares of the Series D Preferred Stock
are no longer outstanding, the Company shall not make any cash payments otherwise payable hereunder, but shall accrue such payments
until the date that such shares are no longer outstanding (the “Payment Date”). All such accrued amounts shall
be paid within ten business days of the Payment Date.

 

(Signature
Pages Follow)

 

    	 	35	 

    	 	 	 

    

 

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.

 

	SIGMA
    LABS, INC.	 	Address
    for Notice:
	 	 	 
	 	 	3900
        Paseo del Sol

        Santa
        Fe, New Mexico 87507

        E-mail:
        rice@sigmalabsinc.com

	By:	/s/
    John Rice	 	 
	Name:	John
    Rice	 	 
	Title:	President
    and Chief Executive Officer	 	 

 

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

 

TroyGould
PC

1801
Century Park East, Suite 1600

Los
Angeles, CA 90067-2367

Attn:
Darren Freedman, Esq.

E-mail:
dfreedman@troygould.com

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

    	 	36	 

    	 	 	 

    

 

[PURCHASER
SIGNATURE PAGES TO SIGMA LABS, INC.

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:      Mark K. Ruport

 

Address
of Purchaser:                                                                                                                                                      

 

Signature
of Authorized Signatory of Purchaser:      /s/ Mark K. Ruport

 

Name
of Authorized Signatory:                                                                                                                                      

 

Title
of Authorized Signatory:                                                                                                                                      

 

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

 

Aggregate
Initial Closing Subscription Amount:      US$50,000

 

Closing
Shares:      33.33

 

Closing
Class A Warrants:      47,259

 

EIN
Number, if applicable, will be provided under separate cover.

 

Date:
     January 27, 2020

 

[SIGNATURE
PAGES CONTINUE]

 

    	 	37	 

    	 	 	 

    

 

[PURCHASER
SIGNATURE PAGES TO SIGMA LABS, INC.

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:     Frank Garofalo

 

Address
of Purchaser:                                                                                                                                                      

 

Signature
of Authorized Signatory of Purchaser:     /s/ Frank Garofalo

 

Name
of Authorized Signatory:                                                                                                                                      

 

Title
of Authorized Signatory:                                                                                                                                      

 

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

 

Aggregate
Initial Closing Subscription Amount:      US$25,000

 

Closing
Shares:      16.67

 

Closing
Class A Warrants:      23,630

 

EIN
Number, if applicable, will be provided under separate cover.

 

Date:
     January 27, 2020

 

[SIGNATURE
PAGES CONTINUE]

 

    	 	38	 

    	 	 	 

    

 

[PURCHASER
SIGNATURE PAGES TO SIGMA LABS, INC.

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:      Salvatore Battinelli

 

Address
of Purchaser:                                                                                                                                                    

 

Signature
of Authorized Signatory of Purchaser:      /s/ Salvatore Battinelli

 

Name
of Authorized Signatory:                                                                                                                                      

 

Title
of Authorized Signatory:                                                                                                                                        

 

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

 

Aggregate
Initial Closing Subscription Amount:      US$25,000

 

Closing
Shares:      16.67

 

Closing
Class A Warrants:      23,630

 

EIN
Number, if applicable, will be provided under separate cover.

 

Date:
     January 27, 2020

 

[SIGNATURE
PAGES CONTINUE]

 

    	 	39	 

    	 	 	 

    

 

[PURCHASER
SIGNATURE PAGES TO SIGMA LABS, INC.

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:      Carl & Shirley Schwartz Trust

 

Address
of Purchaser:                                                                                                                                               

 

Signature
of Authorized Signatory of Purchaser:      /s/ Carl I Schwartz

 

Name
of Authorized Signatory:      Carl I Schwartz

 

Title
of Authorized Signatory:      Owner/Trustee

 

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

 

Aggregate
Initial Closing Subscription Amount:      US$400,000

 

Closing
Shares:      266.67

 

Closing
Class A Warrants:      378,072

 

EIN
Number, if applicable, will be provided under separate cover.

 

Date:
     January 27, 2020

 

[SIGNATURE
PAGES CONTINUE]

 

    	 	40	 

    	 	 	 

    

 

EXHIBITS

 

	Exhibit
    A-1	Form
    of Class A Warrant
	Exhibit
    B	Certificate
    of Designations
	Exhibit
    D	Form
    of Investor Questionnaire
	Exhibit
    E	Lockup
    Agreement

 

    	 	41Exhibit
10.7

 

Sigma
Labs, Inc.

 

FORM
OF CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS
AND LIMITATIONS

OF

SERIES
E CONVERTIBLE PREFERRED STOCK

 

PURSUANT
TO SECTION 78 OF THE Nevada REVISED STATUTES

 

The
undersigned, John Rice, Chief Executive Officer, does hereby certify that:

 

1.
He is the Chief Executive Officer of Sigma Labs, Inc., a Nevada corporation (the “Corporation”).

 

2.
The Corporation is authorized to issue up to ten million (10,000,000) shares of preferred stock, of which (a) shares of Series
A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock were authorized, none of which are presently issued
and outstanding, nor will be outstanding, and (b) up to 7,796 shares of Series D Convertible Preferred Stock have been authorized.

 

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

 

WHEREAS,
the certificate of incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, consisting
of 10,000,000 shares, $0.001 par value per share, issuable from time to time in one or more series;

 

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

 

WHEREAS,
it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions
and other matters relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Purchase
Agreement, up to 500 shares of Series E Preferred Stock (the “Preferred Stock”) which the Corporation has the
authority to issue, as follows:

 

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

 

TERMS
OF PREFERRED STOCK

 

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

 

“Additional
Amount” means, as of the applicable date of determination, with respect to each Preferred Share, all declared and unpaid
dividends on such Share and any other unpaid amounts then due and payable hereunder with respect to said Share.

 

    	1

    	 

    

 

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

 

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

 

“Bankruptcy
Event” means any of the following events: (a) the Corporation 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
Corporation or any Significant Subsidiary thereof, (b) there is commenced against the Corporation or any Significant Subsidiary
thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Corporation 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 Corporation 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 Corporation or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Corporation
or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring
of its debts, or (g) the Corporation or any Significant Subsidiary thereof, by any act or failure to act, 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.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Common
Stock Equivalents” means any securities of the Corporation or the Subsidiaries including without limitation the Corporation’s
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Convertible Preferred Stock, and any other
class of preferred stock or other equity other than the Preferred Stock which would entitle the holder thereof to acquire at any
time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

    	2

    	 

    

 

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

 

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

 

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

 

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

 

“Disclosure
Letter” shall have the meaning set forth in the Purchase Agreement.

 

“Dividend
Date” means the first Trading Day of each calendar month, but with the first Dividend Date commencing on March 1, 2020.

 

“Dividend
Rate” means nine percent per annum.

 

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

 

“Effective
Date” means the date that all of the Conversion Shares and Dividend Conversion Shares have been sold pursuant to Rule
144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information
requirement under Rule 144 and without volume or manner-of-sale restrictions and Company counsel has delivered to the Transfer
Agent and Holders a standing written unqualified opinion that resales may then be made by Holders of the Conversion Shares and
Dividend Conversion Shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such
holders.

 

“Equity
Conditions” means, during the period in question, (a) the Corporation shall have duly honored all conversions scheduled
to occur or occurring by virtue of one or more Notices of Conversion of the applicable Holder on or prior to the dates so requested
or required, if any, (b) the Corporation shall have paid all liquidated damages and other amounts owing to the applicable Holder
in respect of the Preferred Stock, (c) all of the Conversion Shares issuable pursuant to the Transaction Documents (and shares
issuable in lieu of cash payments of dividends) may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions
or current public information requirements as determined by the counsel to the Corporation as set forth in a written opinion letter
to such effect, addressed and acceptable to the Transfer Agent and the affected Holders, (d) the Common Stock is trading on a
Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed or quoted for trading on such Trading
Market (and the Corporation believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted
for the foreseeable future), (e) there is a sufficient number of authorized, but unissued and otherwise unreserved, shares of
Common Stock for the issuance of all of the shares then issuable pursuant to the Transaction Documents, (f) Shareholder Approval
has been obtained, (g) there has been no public announcement of a pending or proposed Fundamental Transaction that has not been
consummated, (h) the applicable Holder is not in possession of any information provided by the Corporation that constitutes, or
may constitute, material non-public information, (i) the Corporation is not in material default of any of its obligations pursuant
to the Purchase Agreement, and (j) a Material Adverse Effect (as defined in the Purchase Agreement) has not occurred

 

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

 

    	3

    	 

    

 

“Fundamental
Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual
or legal entity or “group” (as described in Rule 13d 5(b)(1) promulgated under the Exchange Act), other than a legal
entity majority owned by, or a group wholly consisting of, officers and directors of the Corporation and their Affiliates, of
effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise)
of in excess of 50% of the voting securities of the Corporation (other than by means of conversion or exercise of Preferred Stock
and the Securities issued together with the Preferred Stock), (b) the Corporation merges into or consolidates with any other Person,
or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction, the stockholders
of the Corporation immediately prior to such transaction own less than 50% of the aggregate voting power of the Corporation or
the successor entity of such transaction, (c) the Corporation, directly or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions,
(d) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is
completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities,
cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (e) to the extent not covered
by clauses (a) – (d) above, the Corporation, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, or (f) the execution by the Corporation of an
agreement to which the Corporation is a party or by which it is bound, providing for any of the events set forth in clauses (a)
through (f) above.

 

“GAAP”
means United States generally accepted accounting principles.

 

“Holder”
shall have the meaning given such term in Section 2.

 

“Indebtedness”
means (a) any liabilities for borrowed money or amounts owed in excess of $300,000 (other than trade accounts payable incurred
in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Corporation’s balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of business, but in all cases excluding trade accounts payable incurred by the Corporation and its Subsidiaries in the ordinary
course of business.

 

“Junior
Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation, at any time outstanding
or issuable, including the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock of the Corporation
but not the Company’s Series D Convertible Preferred Stock.

 

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

 

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

 

“Make-Whole
Amount” means as of any given date, the amount of any dividend that, but for any conversion on such date, would have
accrued with respect to the Conversion Amount being redeemed hereunder at the Dividend Rate then in effect for the period from
such date through the third anniversary of the Initial Issuance Date.

 

    	4

    	 

    

 

“New
York Courts” shall have the meaning set forth in Section 10(d).

 

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

 

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

 

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

 

“Preferred
Shares” shall have the meaning set forth in Section 2.

 

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

 

“Purchase
Agreement” means with respect to the Series E Preferred Stock, the Securities Purchase Agreement entered into by the
Corporation and the initial issuees of Preferred Stock, at or about January ___, 2020, as amended, modified or supplemented from
time to time in accordance with its terms.

 

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

 

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

 

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

 

“Senior
Securities” means the Series D Preferred Stock and any series of preferred stock which by its terms is expressly senior
in rank to the Series E Preferred Stock.

 

“Series
D. Preferred Stock” means the Series D Convertible Preferred Stock, par value $0.001.

 

“Series
E Preferred Stock” means the Series E Preferred Stock, par value $0.001, issued at or about January __, 2020.

 

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

 

“Shareholder
Approval” shall have the meaning attributed to such term in the Purchase Agreement.

 

“Stated
Value” shall have the meaning set forth in Section 2.

 

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

 

    	5

    	 

    

 

“Subsidiary”
means any subsidiary of the Corporation as set forth on Schedule 3.1(a) of the Disclosure Letter (as defined in the Purchase Agreement)
and shall, where applicable and with regard to future events, also include any direct or indirect subsidiary of the Corporation
identified on the SEC Reports and formed or acquired after the date hereof.

 

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

 

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

 

“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 American, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market,
the New York Stock Exchange, the OTC Bulletin Board, the OTCQB or the OTCQX (or any successors to any of the foregoing). As of
the date of the Purchase Agreement and the Initial Closing Date, the NASDAQ Capital Market is and will be the Trading Market.

 

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

 

“Transfer
Agent” means Issuer Direct Corporation, 1981 Murray Holladay Road, Suite 100, Salt Lake City, Utah 84117, and any successor
transfer agent of the Company.

 

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

 

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

 

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

 

“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Holder at the Closing in accordance with the Purchase
Agreement.

 

    	6

    	 

    

 

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

 

Section
2. Designation, Amount and Par Value; Ranking The series of preferred stock shall be designated as its Series E Convertible
Preferred Stock (the “Preferred Stock”) and the number of shares (the “Preferred Shares”)
so designated shall be 500 (which shall not be subject to increase without the written consent of the holders of a majority of
the then outstanding shares of Preferred Stock (each, a “Holder” and collectively, the “Holders”)).
Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value equal to $1,500 (the “Stated
Value”). The Preferred Stock shall be junior in rank to the Series D Preferred Stock in respect of the preferences as
to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company.

 

Section
3. Dividends.

 

a)
From and after January       , 2020 (the “Initial Issuance Date”),
each holder of a Preferred Share (each, a “Holder” and collectively, the “Holders”) shall
be entitled to receive dividends (“Dividends”), which Dividends shall be computed on the basis of a 360-day
year and twelve 30-day months and shall increase the Stated Value of the Preferred Shares on each Dividend Date (each, a “Capitalized
Dividend”).

 

b)
Prior to the capitalization of Dividends on a Dividend Date, Dividends on the Preferred Shares shall accrue at the Dividend Rate
and be payable by way of inclusion of the Dividends in the Conversion Amount on each Conversion Date in accordance with Section
6.

 

c)
Other Securities. So long as any of the Preferred Stock issued pursuant to the Purchase Agreement or Dividends shall remain
outstanding, neither the Corporation nor any Subsidiary thereof shall redeem, purchase or otherwise acquire directly or indirectly
any Junior Securities. So long as any of the Preferred Stock issued pursuant to the Purchase Agreement or Dividends shall remain
outstanding, neither the Corporation nor any Subsidiary thereof shall directly or indirectly pay or declare any dividend or make
any distribution upon, nor shall any distribution be made in respect of, any Junior Securities, nor shall any monies be set aside
for or applied to the purchase or redemption (through a sinking fund or otherwise) of any Junior Securities or shares pari
passu with the Preferred Stock. So long as any of the Preferred Stock issued pursuant to the Purchase Agreement or Dividends
shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall issue any security or Common Stock Equivalent
which shall be pari passu or senior to the Preferred Stock in terms of rights upon Liquidation, Dividends or redemption
except for the Series D Convertible Preferred Stock.

 

Section
4. Voting Rights. Except as otherwise provided herein or as otherwise required by law, the Preferred Stock shall have
no voting rights. In any event, and notwithstanding the foregoing limitation, as long as any shares of Preferred Stock are outstanding,
the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Preferred
Stock, (a) alter or amend this Certificate of Designation, or (b) increase the number of authorized shares of Preferred Stock,
or (c) enter into any agreement with respect to any of the foregoing.

 

Section
5. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary
(a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus,
of the Corporation an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated
damages then due and owing thereon under this Certificate of Designation, for each share of Preferred Stock before any distribution
or payment shall be made to the holders of any Junior Securities, but after distribution or payment to holders of the Series D
Preferred Stock and any other Senior Securities, and if the assets of the Corporation shall be insufficient to pay in full such
amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance
with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. Upon occurrence
of a Liquidation which is also a Fundamental Transaction, the Holder may elect to receive the rights and benefits of this section
5 and/or the rights and benefits set forth in Section 7(e) or any other rights set forth in the Transaction Documents. The Corporation
shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.

 

    	7

    	 

    

 

Section
6. Conversion. At any time after the Initial Issuance Date, each Preferred Share shall be convertible into validly
issued, fully paid and non-assessable shares of Common Stock (as defined below), on the terms and conditions set forth in this
Section 6.

 

a)
Holder’s Conversion Right. At any time or times on or after date of Shareholder Approval, each Holder shall be entitled
to convert any portion of the outstanding Preferred Shares held by such Holder into validly issued, fully paid and non-assessable
shares of Common Stock in accordance with Section 6(c) at the Conversion Rate(as defined below). The Company shall not issue any
fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share
of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall
pay any and all transfer, stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses
of the Transfer Agent (as defined below)) that may be payable with respect to the issuance and delivery of Common Stock upon conversion
of any Preferred Shares.

 

b)
Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Preferred Share pursuant to section
6(a) shall be determined by dividing (x) the Conversion Amount of such Preferred Share by (y) the Conversion Price (the “Conversion
Rate”):

 

	 	i.	“Conversion
    Amount” means, with respect to each Preferred Share, as of the applicable date of determination, the sum of (A)
    the Stated Value thereof plus (B) the Additional Amount thereon, plus (C) the Make-Whole amount.
	 	 	 
	 	ii.	“Conversion
    Price” means, with respect to each Preferred Share, as of any Conversion Date or other date of determination, $0.13
    above the consolidated closing bid price of the Common Stock for the Trading Day immediately preceding the date of the Purchase
    Agreement, subject to adjustment as provided herein.

 

c)
Mechanics of Conversion

 

i.
Delivery of Certificate Upon Conversion. To convert a Preferred Share into shares of Common Stock on any date (a “Conversion
Date”), a Holder shall deliver a copy of an executed notice of conversion to the Company with the form of said notice
attached hereto as Annex A (a “Notice of Conversion”). Not later than two (2) Trading Days after each Conversion
Date (the “Share Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the converting
Holder (A) a certificate or certificates representing the Conversion Shares, which, on or after the Effective Date, shall be free
of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement), provided
that the Conversion Shares meet the requirements of the Securities Act for removing such restrictive legends, representing the
number of Conversion Shares being acquired upon the conversion of the Preferred Stock (including, if the Corporation has given
notice pursuant to Section 3(c) for payment of dividends in shares of Common Stock at least 20 Trading Days prior to the date
on which the Notice of Conversion is delivered to the Corporation, shares of Common Stock representing the payment of accrued
dividends otherwise determined pursuant to Section 3(a) but assuming that the Dividend Notice Period is the 20 Trading Days period
immediately prior to the date on which the Notice of Conversion is delivered to the Corporation and excluding for such issuance
the condition that the Corporation deliver the Dividend Share Amount as to such dividend payment prior to the commencement of
the Dividend Notice Period), and (B) a bank check in the amount of accrued and unpaid dividends (if the Corporation has elected
or is required to pay accrued dividends in cash). On or after the Effective Date, the Corporation shall deliver any certificate
or certificates required to be delivered by the Corporation under this Section 6 electronically through the Depository Trust Company
or another established clearing corporation performing similar functions.

 

    	8

    	 

    

 

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

 

iii.
Obligation Absolute; Partial Liquidated Damages. The Corporation’s obligation to issue and deliver the Conversion
Shares upon conversion of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by a Holder to enforce the same, 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 such Holder or any other Person of any obligation to the Corporation or any violation or alleged
violation of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such
obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however,
that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such
Holder. In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Stock, the Corporation may
not refuse conversion based on any claim that such Holder or anyone associated or affiliated with such Holder has been engaged
in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining
and/or enjoining conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and the
Corporation posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of Preferred Stock and
Dividends which are subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation
of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the
absence of such injunction, the Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion.
If the Corporation fails to deliver to a Holder such certificate or certificates pursuant to Section 6(c)(i) on the second Trading
Day after the Share Delivery Date applicable to such conversion, the Corporation shall pay to such Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of Stated Value of Preferred Stock being converted, $10 per Trading Day (increasing
to $20 per Trading Day on the fifth Trading Day after such damages begin to accrue) for each Trading Day after such second Trading
Day after the Share Delivery Date until such certificates are delivered or Holder rescinds such conversion. Nothing herein shall
limit a Holder’s right to pursue actual damages for the Corporation’s failure to deliver Conversion Shares within
the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights
shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

    	9

    	 

    

 

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

 

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

 

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

 

    	10

    	 

    

 

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

 

Section
7. Certain Adjustments.

 

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

 

b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 7(a) above, if at any time the Corporation
grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata
to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder of will
be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could
have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s
Preferred Stock immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights.

 

c)
Pro Rata Distributions. The Corporation, at any time while this Preferred Stock is outstanding, shall include Holders,
on an as-if-converted-to-Common-Stock basis, in all distributions of any kind (including cash and cash dividends) issued to all
holders of Common Stock.

 

    	11

    	 

    

 

d)
Fundamental Transaction. If, at any time while this Preferred Stock is outstanding, a Fundamental Transaction occurs, then,
upon any subsequent conversion of this Preferred Stock, the Holder shall have the right to receive, for each Conversion Share
that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the number
of shares of Common Stock of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this Preferred Stock is convertible immediately prior
to such Fundamental Transaction. For purposes of any such conversion, the determination of the Conversion Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Preferred
Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to
the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation with the same
terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the
Holders’ right to convert such preferred stock into Alternate Consideration. The Corporation shall cause any successor entity
in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”) to assume
in writing all of the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents
(as defined in the Purchase Agreement) in accordance with the provisions of this Section 7(d) pursuant to written agreements in
form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the holder of this Preferred Stock, deliver to the Holder in exchange for
this Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance
to this Preferred Stock which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or
its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Preferred Stock
(without regard to any limitations on the conversion of this Preferred Stock) prior to such Fundamental Transaction, and with
a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Preferred
Stock immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designation
and the other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity), and
may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate
of Designation and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation
herein. Notwithstanding the foregoing or anything contained herein to the contrary, in the event of a Fundamental Transaction
in which the Corporation’s stockholders receive consideration consisting primarily of cash and in which the Corporation
ceases to be listed or quoted on a Trading Market, the Holder shall only have the right to receive the Alternate Consideration
upon consummation of such Fundamental Transaction.

 

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

 

f)
Notice to the Holders.

 

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

 

    	12

    	 

    

 

ii.
Notice to Allow Conversion by Holder. If (A) the Corporation shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation
shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation
is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange
whereby the Common Stock is converted into other securities, cash or property or (E) the Corporation shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall
cause to be filed at each office or agency maintained for the purpose of conversion of this Preferred Stock, and shall cause to
be delivered to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least twenty (20)
calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer
or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common
Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such
notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Corporation or any of the Subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant
to a Current Report on Form 8-K. The Holder shall remain entitled to convert the Conversion Amount of this Preferred Stock (or
any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.

 

Section
8. Redemption. The Corporation shall have no right to require Holders to surrender Preferred Stock for redemption.

 

Section
9. Intentionally Omitted.

 

Section
10. Miscellaneous.

 

a)
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized
overnight courier service, addressed to the Corporation, at: 3900 Paseo del Sol, Santa Fe, New Mexico 87507, Attn: John Rice,
President and CEO, e-mail: rice@sigmalabsinc.com, or such other facsimile number or address as the Corporation may specify for
such purposes by notice to the Holders delivered in accordance with this Section 11. Any and all notices or other communications
or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, or sent
by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder
appearing on the books of the Corporation, or if no such facsimile number or address appears on the books of the Corporation,
at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date,
(ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile
number set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the 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.

 

    	13

    	 

    

 

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

 

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

 

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

 

    	14

    	 

    

 

e)
Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall
not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of
this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict
adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive
that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this
Certificate of Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.

 

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

 

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

 

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

 

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

 

j)
No Cash Payments. Notwithstanding any provision of this Certificate of Designations to the contrary, during the period
that any shares of Series D Preferred Stock are outstanding, the Company shall not make any cash payments otherwise required to
be paid hereunder but in lieu thereof shall increase the Stated Value by the amount of such payment.

 

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

 

    	15

    	 

    

 

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

 

IN
WITNESS WHEREOF, the undersigned has executed this Certificate this ___th day of January, 2020.

 

	 	 
	 	Name:	John
    Rice
	 	Title:	President
    and Chief Executive Officer

 

    	16

    	 

    

 

ANNEX
A

 

NOTICE
OF CONVERSION

 

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

 

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

 

Conversion
calculations:

 

	Date
        to Effect Conversion: _____________________________________________

         

	Number
        of shares of Preferred Stock owned prior to Conversion: _______________

         

	Number
        of shares of Preferred Stock to be Converted: ________________________

         

	Accrued
        Dividends Being Converted: _________________________________

         

	Conversion
        Price: $____________________

         

	Aggregate
        Conversion Amount to be Converted:____________________________

         

	Number
        of shares of Common Stock to be Issued: ________________

         

	Address
        for Delivery: ______________________

        or

        DWAC
        Instructions:

        Broker
        no: _________

        Account
        no: ___________

 

	 	[HOLDER]
	 	 
	 	By:	                     
	 	Name:	 
	 	Title:	 

 

    	17

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