Document:

SECURITIES PURCHASE AGREEMENT

 

CHARDAN CAPITAL MARKETS, LLC,

as Administrative and Collateral Agent

 

THE PURCHASERS

Party Hereto

 

and

 

Healthcare
Corporation of America

 

Dated: December 31, 2013 

 

    	 

    	 

    

 

Table
of Contents

 

	 	 	 	Page
	 	 	 	 
	1.	Agreement to Sell and Purchase	1
	 	 	 	 
	2.	Warrant	2
	 	 	 	 
	3.	Closing and Delivery	2
	 	3.1	Closing	2
	 	3.2	Delivery	2
	 	 	 	 
	4.	Representations and Warranties of the Company	3
	 	4.1	Organization, Good Standing and Qualification	4
	 	4.2	Capitalization; Voting Rights	4
	 	4.3	Authorization; Binding Obligations	5
	 	4.4	Title to Properties and Assets; Liens, Etc.	6
	 	4.5	Issuance of Notes, Warrants and Subsidiary Guaranties	8
	 	4.6	Issuance of the Note Shares and Warrant Shares	8
	 	4.7	Compliance with Other Instruments	8
	 	4.8	No Conflicts	9
	 	4.9	Litigation	9
	 	4.10	Compliance with Laws; Permits	10
	 	4.11	Consents	10
	 	4.12	Maintenance of Collateral	11
	 	4.13	Valid Offering	11
	 	4.14	Tax Returns and Payments; Pension Contributions	11
	 	4.15	Books and Records	11
	 	4.16	Off Balance Sheet Arrangements	11
	 	4.17	Acknowledgment Regarding Purchaser’s Purchase of Securities	12
	 	4.18	No General Solicitation; Placement Agent’s Fees	12
	 	4.19	No Integrated Offering	12
	 	4.20	Dilutive Effect	12
	 	4.21	Application of Takeover Protections; Rights Agreement	13
	 	4.22	SEC Documents; Financial Statements	13
	 	4.23	Absence of Certain Changes	14
	 	4.24	No Undisclosed Events, Liabilities, Developments or Circumstances	14
	 	4.25	Foreign Corrupt Practices	14
	 	4.26	Sarbanes-Oxley Act	14
	 	4.27	Transactions With Affiliates	15
	 	4.28	Indebtedness and Other Contracts	15
	 	4.29	Insurance	16
	 	4.30	Employee Relations	16
	 	4.31	Intellectual Property Rights	16
	 	4.32	Environmental Laws	17
	 	4.33	Subsidiary Rights	17
	 	4.34	Investment Company Status	17
	 	4.35	Manipulation of Price	17
	 	4.36	Transfer Taxes	17
	 	4.37	No Additional Agreements	18

 

    	 

    	 

    

 

Table
of Contents continued

 

	 	 	 	Page
	 	 	 	 
	 	4.38	Real Property	18
	 	4.39	Fixtures and Equipment	18
	 	4.40	Ranking of Notes	18
	 	4.41	Full Disclosure	18
	 	 	 	 
	5.	Representations and Warranties of each Purchaser	19
	 	5.1	Requisite Power and Authority	19
	 	5.2	Investment Representations	19
	 	5.3	The Purchaser Bears Economic Risk	20
	 	5.4	Acquisition for Own Account	21
	 	5.5	The Purchaser Can Protect Its Interest	21
	 	5.6	Legends	21
	 	 	 	 
	6.	Covenants of the Company	22
	 	6.1	Reporting Requirements	22
	 	6.2	Use of Proceeds	23
	 	6.3	Taxes	23
	 	6.4	Insurance	25
	 	6.5	Form D and Blue Sky	25
	 	6.6	Reporting Status	25
	 	6.7	Listing or Quotation	25
	 	6.8	Fees	26
	 	6.9	Pledge of Securities	26
	 	6.10	Disclosure of Transactions and Other Material Information	27
	 	6.11	Reservation of Shares	27
	 	6.12	Conduct of Business	28
	 	6.13	Variable Rate Transaction	28
	 	6.14	Passive Foreign Investment Company	28
	 	6.15	Corporate Existence	28
	 	6.16	Issuance of Equity Other Than for Cash	28
	 	6.17	Required Approvals	29
	 	6.18	Prohibition on Transactions with Affiliates and Other Related Parties	32
	 	6.19	Legal Existence; Maintenance of Properties	32
	 	6.20	Further Assurances	32
	 	6.21	Minimum Cash and Accounts Receivable	33
	 	6.22	Authorization and Reservation of Shares	33
	 	6.23	Allocations	33
	 	6.24	Additional Registration of Securities	33
	 	6.25	Fees	33
	 	 	 	 
	7.	Covenants of the Purchasers	33
	 	7.1	Confidentiality	33
	 	7.2	Non-Public Information	34
	 	 	 	 
	8.	Covenants of the Company and the Purchasers Regarding Indemnification	34
	 	8.1	Company Indemnification	34

 

    	ii

    	 

    

 

Table
of Contents continued

 

	 	 	 	Page
	 	 	 	 
	 	8.2	Purchaser Indemnification	34
	 	 	 	 
	9.	Register; Transfer Agent Instructions; Legend	34
	 	9.1	Register	34
	 	9.2	Transfer Agent Instructions	35
	 	9.3	Removal of Legends	35
	 	9.4	Failure to Timely Deliver; Buy-In	36
	 	 	 	 
	10.	Miscellaneous	36
	 	10.1	Governing Law, Jurisdiction and Waiver of Jury Trial	36
	 	10.2	Severability	38
	 	10.3	Survival	38
	 	10.4	Successors	38
	 	10.5	Entire Agreement; Maximum Interest	39
	 	10.6	Amendment and Waiver	39
	 	10.7	Delays or Omissions	40
	 	10.8	Notices	40
	 	10.9	Titles and Subtitles	41
	 	10.10	Signatures; Counterparts	41
	 	10.11	Construction	41
	 	10.12	Independent Nature of Purchasers’ Obligations and Rights	42
	 	10.13	Agency	42

 

    	iii

    	 

    

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE
AGREEMENT (as amended, restated, modified or otherwise supplemented from time to time, this “Agreement”) is
made and entered into as of December 31, 2013, among HEALTHCARE CORPORATION OF AMERICA, a Delaware corporation (the “Company”),
the purchasers set forth on Exhibit A hereto (each a “Purchaser” and collectively, the “Purchasers”),
and Chardan Capital Markets, LLC, as administrative and collateral agent for each Purchaser (the “Agent” and
together with the Purchasers, the “Creditor Parties”).

 

RECITALS

 

WHEREAS, the Company
has authorized the sale to Purchasers of junior Secured Convertible Term Notes in the form of Exhibit B hereto in the aggregate
principal amount of $6,000,000 (each as amended, restated, modified and/or supplemented from time to time, a “Note”
and, collectively, the “Notes”), which Notes are convertible into shares of the Company’s Common Stock
(the “Common Stock”) at an initial fixed conversion price equal to the Redemption Fixed Conversion Price (as
defined in the Note);

 

WHEREAS, each Purchaser
desires to purchase a Note on the terms and conditions set forth herein;

 

WHEREAS, the Company
wishes to sell to each Purchaser a warrant in the form of Exhibit C hereto (each as amended, restated, modified and/or supplemented
from time to time, a “Warrant” and, collectively the “Warrants”) to purchase shares of Common
Stock in connection with such Purchaser’s purchase of the applicable Note for a number of shares equal to one share of Common
Stock for each one dollar and fifty cents ($1.50) of Notes purchased by such Purchaser;

 

WHEREAS, the allocation
of the purchase price between the Notes and the Warrants shall be determined by the Company as soon as reasonably possible following
the Closing Date; and

 

WHEREAS, the Company
desires to issue and sell the applicable Note and Warrant to each Purchaser on the terms and conditions set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in
consideration of the foregoing recitals and the mutual promises, representations, warranties and covenants hereinafter set forth
and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

1.          Agreement
to Sell and Purchase. Pursuant to the terms and conditions set forth in this Agreement, on the Closing Date (as defined in
Section 3), the Company shall sell to the Purchasers, and the Purchasers shall purchase from the Company, the Notes in the amounts
set forth opposite their names on Exhibit A (the “Schedule of Purchasers”). The sale of the Notes on the Closing
Date shall be known as the “Offering.” The Notes will mature on the Maturity Date (as defined in the Notes).
Collectively, the Notes, Warrants and Common Stock, as applicable, issuable upon conversion of the Notes and upon exercise of the
Warrants are referred to as the “Securities.”

 

    	 

    	 

    

 

2.          Warrant.
On the Closing Date, the Company will sell, issue and deliver to each Purchaser a Warrant to purchase one share of Common Stock
for each one dollar and fifty cents ($1.50) of a Note purchased by such Purchaser, as set forth next to the name of such Purchaser
on the Schedule of Purchasers. All of the representations, covenants, warranties, undertakings, indemnification, and other rights
made or granted to or for the benefit of each Creditor Party by the Company are hereby also made and granted for the benefit of
the holder of the related Warrant and shares of Common Stock issuable upon exercise of such Warrant (the “Warrant Shares”).

 

3.          Closing
and Delivery.

 

3.1           Closing.

 

(i)          The
purchase, sale and issuance of the Securities shall take place at one or more closings (each of which is referred to in this Agreement
as a “Closing”). At the initial Closing (the “Initial Closing”), the Company shall sell and
issue a minimum aggregate principal amount of $2,100,000 (“Minimum Principal”) and up to a maximum aggregate
principal amount of $6,000,000 (the “Maximum Principal”) in Notes, which Initial Closing shall take place remotely
via the exchange of electronic documents on December 31, 2013, or such other date as the parties mutually agree (each such date,
a “Closing Date”).

 

(ii)         If
less than the Maximum Principal is sold and issued at the Initial Closing, then, subject to the terms and conditions of this Agreement,
the Company may sell and issue at one or more subsequent closings (each, a “Subsequent Closing”), within thirty
(30) days after the Initial Closing, up to the Maximum Principal. Any such sale and issuance in a Subsequent Closing shall be on
the same terms and conditions as those contained herein. Each Subsequent Closing shall take place at such date, time and place
as shall be approved by the Company in its discretion.

 

(iii)        Immediately
after each Closing, the Schedule of Purchasers shall be amended to list the Purchasers purchasing the Securities hereunder and
the number of Securities issued to each Investor hereunder at each such Closing.

 

3.2           Delivery.

 

(i)          At
the Closing, the Company will deliver to each Purchaser, among other things:

 

(A)         a
Note dated as of the date hereof duly executed by the Company, in the principal amount set forth opposite the name of such Purchaser
on the Schedule of Purchasers;

 

    	2

    	 

    

 

(B)         a
Warrant dated as of the date hereof duly executed by the Company for the initial number of Warrant Shares set forth opposite the
name of such Purchaser on the Schedule of Purchasers;

 

(C)         the
Master Security Agreement dated as of the date hereof among the Company, the subsidiaries of the Company listed on Schedule 3.2(i)(C)
hereto (the “Subsidiaries”) and the Agent in substantially the form of Exhibit D (as amended, modified
and/or supplemented from time to time, the “Master Security Agreement”) duly executed by the Company and such
Subsidiaries. For the purpose of this Agreement, a “subsidiary” of any person or entity means (i) a corporation or
other entity whose shares of stock or other ownership interests having ordinary voting power (other than stock or other ownership
interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation,
or other persons or entities performing similar functions for such person or entity, are owned, directly or indirectly, by such
person or entity or (ii) a corporation or other entity in which such person or entity owns, directly or indirectly, more than 50%
of the equity interests at such time;

 

(D)         the
Cross-Corporate Continuing Guaranty dated as of the date hereof made by the Subsidiaries of the Company in substantially the form
of Exhibit E (as amended, restated, modified and/or supplemented from time to time, the “Subsidiary Guaranty”);

 

(E)         the
Registration Rights Agreement dated as of the date hereof among the Company, the Agent and the Purchasers in substantially the
form of Exhibit F (the “Registration Rights Agreement”) duly executed by the Company; and

 

(F)         all
other documents, instruments and agreements entered into in connection with the transactions contemplated hereby and thereby (the
preceding clauses (A) through (E), plus the Escrow Agreement, as defined below, collectively, the “Related Agreements”).

 

(ii)         At
the Closing, the Purchasers will deliver:

 

(A)         
To Collateral Agents, LLC (the “Escrow Agent”), the amounts set forth in their respective Notes by certified
funds or wire transfer in accordance with and subject to the terms and conditions of the escrow agreement entered into on or before
the date hereof by and among the Escrow Agent, the Company and the Agent (the “Escrow Agreement”); and

 

(B)         To
the Company, the Related Agreements, as applicable, duly executed by the Purchasers.

 

(iii)        At
the Closing, the Agent, on behalf of the Purchasers, will enter into a subordination and intercreditor agreement with Partners
For Growth III, L.P. (“PFG”).

 

4.          Representations
and Warranties of the Company. The Company hereby represents and warrants to each Creditor Party as follows:

 

    	3

    	 

    

 

4.1           Organization,
Good Standing and Qualification. The Company and each of its Subsidiaries is a corporation, partnership or limited liability
company, as the case may be, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.
The Company and each of its Subsidiaries has the corporate, limited liability company or partnership, as the case may be, power
and authority to own and operate its properties and assets and, insofar as it is or shall be a party thereto, to (1) execute and
deliver (i) this Agreement, (ii) the Notes and the Warrants to be issued in connection with this Agreement, (iii) the Master Security
Agreement, (iv) the Subsidiary Guaranty, and (v) the other Related Agreements; (2) issue and sell the Notes and the shares of Common
Stock, as applicable, issuable upon conversion of the Note (the “Note Shares”); (3) issue and sell the Warrants
and the Warrant Shares; (4) grant a security interest in the Collateral to guarantee its Obligations under the Related Agreements
(as each term is defined in the Master Security Agreement); and (5) carry out the provisions of this Agreement and the Related
Agreements and to carry on its business as presently conducted and proposed to be conducted.

 

4.2           Capitalization;
Voting Rights.

 

(a)          Except
as disclosed on Schedule 4.2(a), neither the offer, issuance or sale of any of the Notes or the Warrants, or the issuance
of any of the Note Shares or Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change
in the price or number of any securities of the Company outstanding, under anti-dilution or other similar provisions contained
in or affecting any such securities.

 

(b)          The
rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Company’s Certificate
of Incorporation (the “Charter”).

 

(c)          As
of the date hereof, the authorized capital stock of the Company consists of (i) 30,000,000 shares of Common Stock, of which, 8,498,915
shares are issued and outstanding and 3,000,000 shares are reserved for issuance pursuant to Convertible Securities (as defined
below) (other than relating to the Securities) and (ii) 1,000,000 shares of preferred stock, none of which are issued and outstanding
or have been designated as any particular class or series. No shares of Common Stock are held in treasury.

 

(d)          All
of such outstanding shares are duly authorized and have been, or upon issuance will be, validly issued and are fully paid and non-assessable.
3,558,197 shares of the Company’s issued and outstanding Common Stock on the date hereof are owned by Persons who are “affiliates”
(as defined in Rule 405 of the Securities Act of 1933, as amended (the “Securities Act”) and calculated based
on the assumption that only officers, directors and holders of at least 10% of the Company’s issued and outstanding Common
Stock are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal
securities laws) of the Company or any of its Subsidiaries.

 

    	4

    	 

    

 

(e)          Except
as disclosed in Schedule 4.2(e) or the SEC Documents (as defined below), (i) none of the Company’s or any Subsidiary’s
capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by
the Company or any Subsidiary; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital
stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii)
there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments
evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may
become bound; (iv) there are no financing statements securing obligations in any amounts filed in connection with the Company or
any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated
to register the sale of any of their securities under the Securities Act (except pursuant to the Registration Rights Agreement);
(vi) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption
or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities
or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities; (viii)
neither the Company nor any Subsidiary has any stock appreciation rights, restricted stock units or “phantom stock”
plans or agreements or any similar plan or agreement; and (ix) neither the Company nor any of its Subsidiaries have any liabilities
or obligations required to be disclosed in the Company’s SEC Documents which are not so disclosed in the SEC Documents, other
than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually
or in the aggregate, do not or could not have a Material Adverse Effect (as defined below).

 

(f)          The
Company has furnished to the Purchasers (or filed in the SEC Documents) true, correct and complete copies of the Company’s
Charter and bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all securities
convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders thereof in
respect thereto.

 

4.3           Authorization;
Binding Obligations. The execution and delivery of this Agreement and the Related Agreements by the Company and its Subsidiaries,
and the consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes and the Warrants, the reservation for issuance and issuance of the Note Shares issuable upon
conversion of the Notes and the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable
upon exercise of the Warrants) have been duly authorized by the Company’s board of directors and each of its Subsidiaries’
board of directors or managers, as applicable, or other governing body, as applicable, and (other than the filing with the SEC
of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, a Form D with
the Securities and Exchange Commission (the “SEC”) and any other filings as may be required by any state securities
agencies) no further filing, consent or authorization is required by the Company, its Subsidiaries, their respective boards of
directors or managers, as applicable, or their stockholders or other governing body. This Agreement and the Related Agreements,
when executed and delivered and to the extent it is a party thereto, will be valid and binding obligations of the Company and each
of its Subsidiaries, enforceable against each such person or entity in accordance with their terms, except (subclauses (a) and
(b) are referred to herein together as the “Enforceability Exceptions”):

 

    	5

    	 

    

 

(a)          as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement
of creditors’ rights; and

 

(b)          general
principles of equity that restrict the availability of equitable or legal remedies.

 

4.4           Title
to Properties and Assets; Liens, Etc. The Company and each of its Subsidiaries has good and marketable title to its
properties and assets, subject to no mortgage, pledge, lien, lease, encumbrance or charge (each for the foregoing, a
“Lien”), other than the following (each a “Permitted Encumbrance”):

 

(a)          those
in favor of Partners for Growth III, L.P, a Delaware limited partnership (the “Senior Lender”);

 

(b)          those
in favor of the Agent, for the ratable benefit of the Creditor Parties;

 

(c)          those
in favor of suppliers of inventory, in the ordinary course of business

 

(d)          those
resulting from taxes which have not yet become delinquent;

 

(e)          deposits
or pledges made in connection with, or to secure payment of, workmen’s compensation, unemployment insurance, old age pensions
or other social security obligations or to secure the performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or
other similar bonds in the ordinary course of business;

 

(f)          liens
to lessors under capitalized leases and purchase money security interests in or purchase money mortgages on personal property acquired
after the date hereof to secure purchase money indebtedness, which security interests or mortgages cover only the personal property
so acquired;

 

(g)          liens
arising in the ordinary course of business out of mechanics’, carriers’, laborers, material suppliers, workmen’s,
repairmen’s or other like liens in respect of obligations which are not overdue, or making deposits to obtain the release
of such liens or are being contested in good faith and by appropriate proceedings diligently conducted and for which proper reserve
or other provision has been made in accordance with and to the extent required by generally accepted accounting principles (“GAAP”)
so long as such liens do not gain priority over any of the liens in favor of the Agent;

 

    	6

    	 

    

 

(h)          making
deposits to secure replevin, surety, attachment or appeal bonds relating to legal proceedings to which the Company or any of its
Subsidiaries is a party;

 

(i)          bankers’
liens, rights of set-off or similar rights as to accounts maintained with a financial institution;

 

(j)          liens
in favor of vendors of goods arising as a matter of law securing the payment of the purchase price therefor so long as such liens
attach only to the purchased goods;

 

(k)          liens
arising out of judgments or awards against Company or any of its Subsidiaries with respect to which it is currently engaged in
proceedings for review or appeal and with respect to which it shall have secured a stay of execution pending such proceedings for
review or appeal;

 

(l)          any
interest of title of a licensor, sublicensor, lessor or sublessor, lessee or sublessee, in each case under any license or lease
agreement in the ordinary course of business arising solely under a state statute or common law and liens arising from Uniform
Commercial Code financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) solely evidencing
a lessor’s interest under leases;

 

(m)          liens
on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;

 

(n)          liens
(i) arising by reason of zoning restrictions, easements, licenses, reservations, restrictions, covenants, rights-of-way, encroachments,
minor defects or irregularities in title (including leasehold title) and other similar encumbrances on the use of real property
or (ii) consisting of leases, licenses or subleases granted by a lessor, licensor or sublessor on its property;

 

(o)          liens
and security interests of landlords and mortgagees of landlords (i) arising by statute or under any lease or related contractual
obligation entered into in the ordinary course of business, (ii) on fixtures and movable tangible property located on the real
property leased or subleased from such landlord or (iii) for amounts not yet due or that are being contested in good faith by appropriate
proceedings diligently conducted;

 

(p)          liens
arising solely under a state statute or common law in connection with the purchase, storage or shipping of goods or assets on the
related goods or assets and proceeds thereof in favor of the seller, or shipper of such goods or assets; and

 

    	7

    	 

    

 

(q)          other
minor Liens not described above which do not materially detract from the value of the property subject thereto or materially impair
the operations of the Company or any of its Subsidiaries, so long as in each such case, such Liens have no effect on the Lien priority
of the Agent, for the ratable benefit of the Creditor Parties, in such property.

 

4.5           Issuance
of Notes, Warrants and Subsidiary Guaranties. Each of the Notes and Warrants have been duly authorized by the Company, and,
when duly executed and delivered in accordance with their respective terms by each of the parties thereto, will constitute a valid
and legally binding agreement of the Company, enforceable against the Company in accordance with their respective terms, except
as such enforceability may be limited by the Enforceability Exceptions. Each Subsidiary Guarantee has been duly authorized by each
Subsidiary and, when duly executed and delivered in accordance with their terms and the terms of the other Related Agreements by
each of the parties thereto, will constitute a valid and legally binding agreement of each Subsidiary, enforceable against each
Subsidiary in accordance with their terms, except as such enforceability may be limited by the Enforceability Exceptions.

 

4.6           Issuance
of the Note Shares and Warrant Shares. As of the Closing, the Company shall have reserved from its duly authorized capital
stock not less than 125% of the sum of (i) the maximum number of Note Shares issuable upon conversion of the Notes (assuming for
purposes hereof that the Notes are convertible at the initial Conversion Price (as defined in the Notes) and without taking into
account any limitations on the conversion of the Notes set forth therein) and (ii) the maximum number of Warrant Shares issuable
upon exercise of the Warrants (assuming that all Warrants are exercised). Upon conversion in accordance with the Notes or exercise
in accordance with the Warrants (as the case may be), the Note Shares and the Warrant Shares, respectively, when issued, will be
validly issued, fully paid and non-assessable and free from all preemptive or similar rights, taxes, liens, charges and other encumbrances
with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock; provided,
however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws as set
forth herein or as otherwise required by such laws at the time a transfer is proposed.

 

4.7           Compliance
with Other Instruments. Except as disclosed in Schedule 4.7 or the SEC Documents, neither the Company nor any of its
Subsidiaries is in violation or default, and no event has occurred that, with notice or lapse of time or both, would constitute
such a default, of (x) any term of its Charter, bylaws or other organizational documents, (y) the due performance or observance
of any term, covenant or condition contained in any indebtedness, indenture, contract, agreement, note, lease, mortgage, deed or
other instrument to which it or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound
or to which any of the property or assets of the Company or any of its Subsidiaries is subject; or (z) result in a violation of
any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state securities laws
and regulations and the rules and regulations of the trading market on which the Company’s securities trade as of the date
of this Agreement (the “Principal Market”)) applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is bound or affected except, in the case of clause (y) or (z) above,
to the extent such violations that could not reasonably be expected to have, either individually or in the aggregate, a material
adverse effect on the business, assets, liabilities, condition (financial or otherwise), properties, operations or prospects of
the Company and its Subsidiaries, taken individually and as a whole (a “Material Adverse Effect”).

 

    	8

    	 

    

 

4.8           No
Conflicts. The execution, delivery, compliance with, and performance of, this Agreement and the Related Agreements to which
the Company and each of its Subsidiaries is a party (including, without limitation, the issuance of the Notes, the Warrants, the
reservation for issuance and issuance of the Note Shares issuable upon conversion of the Notes and the issuance of the Warrants
and the reservation for issuance and issuance of the Warrant Shares issuable upon exercise of the Warrants), and the consummation
of the transactions contemplated hereby or thereby will not, with or without the passage of time or giving of notice, (i) result
in a violation of their respective Charters or other organizational documents of the Company or any of its Subsidiaries, any capital
stock of the Company or any of its Subsidiaries or Bylaws, (ii) except for the Indebtedness owed to PFG, result in the adjustment
of the exercise, conversion or exchange price and/or ratio in respect of any securities of the Company or any of its Subsidiaries,
result in any such securities exercisable, convertible or exchangeable for a greater number of underlying securities, or require
the approval or the receipt of waivers from any holders of any instrument or class of securities or counterparties to any agreement
or understanding to which the Company or any Subsidiary is a party, (iii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, give to others any rights of termination, amendment, acceleration
or cancellation of, any indenture, agreement, note, lease, mortgage, deed or other instrument to which the Company or any of its
Subsidiaries is a party, unless the consent to the transactions contemplated hereby and thereby has been obtained, (iv) result
in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, foreign, federal and state
securities laws and regulations and the rules and regulations of the Principal Market) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, or (v) result in
the creation of any Lien upon any of the properties or assets of the Company or any of its Subsidiaries or the suspension, revocation,
impairment, forfeiture or non-renewal of any permit, license, authorization or approval applicable to the Company, its business
or operations or any of its assets or properties except, in the case of clause (iii), (iv) or (v) above, to the extent such violations
that would not reasonably be expected to have a Material Adverse Effect.

 

4.9           Litigation.
Except as set forth on Schedule 4.9, there is no action, suit, inquiry, proceeding or investigation before or by the Principal
Market, any court, public board, government agency, self-regulatory organization or body pending against or, to the Company’s
knowledge, threatened against or affecting, the Company or any of its Subsidiaries, the Common Stock or any of the Company’s
or its Subsidiaries’ officers or directors which is outside of the ordinary course of business or individually or in the
aggregate material to the Company or any of its Subsidiaries, nor is the Company aware that there is any basis to assert any of
the foregoing. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation
by the SEC involving the Company, any of its Subsidiaries or any current or former director or officer of the Company or any of
its Subsidiaries, nor is the Company aware that there is any basis to assert any of the foregoing. The SEC has not issued any stop
order or other order suspending the effectiveness of any registration statement filed by the Company under the Securities Act or
the Securities and Exchange Act of 1934 (the “Exchange Act”). Except as disclosed in the SEC Documents, there
is no action, suit, proceeding or investigation by the Company or any of its Subsidiaries currently pending or which the Company
or any of its Subsidiaries intends to initiate. Neither the Company nor any of its Subsidiaries is a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality that could reasonably
be expected to have a Material Adverse Effect. Except as set forth on Schedule 4.9, there is no action, suit, inquiry, proceeding
or investigation before or by the Principal Market, any court, public board, government agency, self-regulatory organization or
body pending against or, to the Company’s knowledge, threatened that prevents the Company or any of its Subsidiaries from
entering into this Agreement or the other Related Agreements, or from consummating the transactions contemplated hereby or thereby,
or which has had, or could reasonably be expected to have any change in the current equity ownership of the Company or any of its
Subsidiaries, nor is the Company aware that there is any basis to assert any of the foregoing.

 

    	9

    	 

    

 

4.10         Compliance
with Laws; Permits. Neither the Company nor any of its Subsidiaries is in violation of any applicable statute, rule, regulation,
order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of
its business or the ownership of its properties which has had, or could reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect. No governmental orders, permissions, consents, approvals or authorizations are required
to be obtained and no registrations or declarations are required to be filed in connection with the execution and delivery of this
Agreement or any other Related Agreement and the issuance of any of the Securities, except such as have been duly and validly obtained
or filed, or with respect to any filings that must be made after the Closing as will be filed in a timely manner. The Company and
its Subsidiaries has all material franchises, permits, licenses and any similar authority necessary for the conduct of its business
as now being conducted by it, the lack of which could, either individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.

 

4.11         Consents.
Other than obtaining the consent of PFG, neither the Company nor any Subsidiary is required to obtain any consent from, authorization
or order of, or make any filing or registration with (other than the filing with the SEC of one or more Registration Statements
in accordance with the requirements of the Registration Rights Agreement, a Form D with the SEC and any other filings as may be
required by any state securities agencies), any court, governmental agency or any regulatory or self-regulatory agency or any other
Person in order for it to execute, deliver or perform any of its respective obligations under, or contemplated by, this Agreement
and the Related Agreements, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders,
filings and registrations which the Company or any Subsidiary is required to obtain have been obtained or effected, and neither
the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or any Subsidiary
from obtaining or effecting any of the registration, application or filings contemplated by this Agreement or the Related Agreements.
The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances
which could reasonably lead to delisting or suspension of quotation of the Common Stock on the Principal Market in the foreseeable
future.

 

    	10

    	 

    

 

4.12         Maintenance
of Collateral. All of the properties of the Company and its Subsidiaries, including its respective Collateral (as defined in
the Master Security Agreement), are (i) in good operating condition and repair, ordinary wear and tear excepted; (ii) suitable
and adequate for continued use in the manner in which they are presently being used; (iii) adequate to meet all present and
reasonably anticipated future requirements of the Company’s business; (iv) free of defects (latent and patent); and
(v) not and have not been used for any unlawful purpose.

 

4.13         Valid
Offering. Assuming the accuracy of the representations and warranties of the Purchasers contained in this Agreement, the offer,
sale and issuance of the Securities will be exempt from the registration requirements of the Securities Act and will have been
registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements
of all applicable state securities laws.

 

4.14         Tax
Returns and Payments; Pension Contributions. The Company and each of its Subsidiaries has timely filed, and will timely file,
all material required tax returns and reports, and the Company and each of its Subsidiaries has timely paid, and will timely pay,
all material taxes now or in the future owed by Borrower. The Company and each of its Subsidiaries may, however, defer payment
of any of the foregoing which are contested by such party in good faith, provided that such party (i) contests the same by appropriate
proceedings promptly and diligently instituted and (ii) posts bonds or takes any other steps required to keep the same from becoming
a lien upon any of the Collateral. The Company and each of its Subsidiaries is unaware of any claims or adjustments proposed for
any of its prior tax years which could result in additional taxes becoming due and payable. The Company and each of its Subsidiaries
has paid, and shall continue to pay all amounts necessary to fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms.

 

4.15         Books
and Records. The Company and each of its Subsidiaries has maintained and will maintain at its respective addresses complete
and accurate books and records, comprising an accounting system in accordance with GAAP. The books and records accurately and fairly,
in reasonable detail, reflect the transactions and dispositions of assets of and the providing of services by the Company and its
Subsidiaries. The Company and each of its Subsidiaries shall maintain a system of internal accounting controls sufficient to provide
reasonable assurance that: (i) transactions are executed only in accordance with management’s authorization; (ii) all income
and expense items are promptly and properly recorded for the relevant periods in accordance with the revenue recognition and expense
policies maintained by the Company and each of its Subsidiaries as permitted by GAAP; (iii) access to assets is permitted only
in accordance with management’s authorization; and (iv) recorded assets are compared with existing assets at reasonable intervals,
and appropriate action is taken with respect to any differences.

 

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

 

    	11

    	 

    

 

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

 

4.18         No
General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any
Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged by any Purchaser
or its investment advisor) relating to or arising out of the transactions contemplated hereby. Other than Chardan Capital Markets
LLC (the “Placement Agent”), neither the Company nor any of its Subsidiaries has engaged any placement agent
or other agent in connection with the Offering.

 

4.19         No
Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would require registration of the issuance of any of the Securities under the Securities Act, whether through integration
with prior offerings or otherwise, or cause this Offering to require approval of stockholders of the Company under any applicable
stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation
system on which any of the securities of the Company are listed or designated for quotation. None of the Company, its Subsidiaries,
their affiliates nor any Person acting on their behalf will take any action or steps that would require registration of the issuance
of any of the Securities under the Securities Act or cause the offering of any of the Securities to be integrated with other offerings
of securities of the Company.

 

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

 

    	12

    	 

    

 

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

 

4.22         SEC
Documents; Financial Statements. Except as disclosed in the SEC Documents, the Company has delivered to the Purchasers or their
respective representatives true, correct and complete copies of all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (all of the foregoing filed prior to
the date hereof and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated
by reference therein being hereinafter referred to as the “SEC Documents”) not available on the EDGAR system.
Except as disclosed in Schedule 4.22 or in the SEC Documents, as of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to
the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading. Except as disclosed in the SEC Documents, and except
as subsequently amended, superseded, withdrawn or restated, as of their respective dates, the financial statements of the Company
included in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto as in effect as of the time of filing. No other information provided by or on behalf
of the Company to any of the Purchasers which is not included in the SEC Documents contains any untrue statement of a material
fact or omits to state any material fact necessary, in order to make the statements therein not misleading, in light of the circumstances
under which they are or were made.

 

    	13

    	 

    

 

4.23         Absence
of Certain Changes. Except as disclosed in the SEC Documents, since the date of the Company’s most recent unaudited financial
statements contained in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (the “10-Q Date”),
there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties,
operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries.
Except as disclosed in the SEC Documents, since the 10-Q Date, neither the Company nor any of its Subsidiaries has (i) declared
or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business or (iii)
made any material capital expenditures, individually or in the aggregate. Except as disclosed in the SEC Documents, neither the
Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy,
insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge
or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at
the Closing, will not be Insolvent (as defined below). “Insolvent” means, (I) with respect to
the Company and its Subsidiaries, on a consolidated basis, (i) the value of the Company’s and its Subsidiaries’ assets
is less than the amount required to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined below),
(ii) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured or (iii) the Company and its Subsidiaries intend to incur or believe that
they will incur debts that would be beyond their ability to pay as such debts mature; and (II) with respect to the Company and
each Subsidiary, individually, (i) the value of the Company’s or such Subsidiary’s (as the case may be) assets is less
than the amount required to pay its respective total Indebtedness, (ii) the Company or such Subsidiary (as the case may be) is
unable to pay its respective debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured or (iii) the Company or such Subsidiary (as the case may be) intends to incur or believes that it will incur
debts that would be beyond its respective ability to pay as such debts mature. Neither the Company nor any of its Subsidiaries
has engaged in any business or in any transaction, and is not about to engage in any business or in any transaction, for which
the Company’s or such Subsidiary’s remaining assets constitute unreasonably small capital.

 

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

 

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

 

4.26         Sarbanes-Oxley
Act. Except as disclosed in the SEC Documents, the Company and each Subsidiary is in compliance with all applicable requirements
of the Sarbanes-Oxley Act of 2002 and all applicable rules and regulations promulgated by the SEC thereunder.

 

    	14

    	 

    

 

4.27         Transactions
With Affiliates. Except as disclosed in the SEC Documents or in Schedule 4.27, none of the officers, directors, employees
or affiliates of the Company or any of its Subsidiaries is presently a party to any transaction with the Company or any of its
Subsidiaries (other than for ordinary course services as employees, officers or directors), including any contract, agreement or
other arrangement providing for the furnishing of services or products to or by, providing for rental of real or personal property
to or from, or otherwise requiring payments to or from any such officer, director, employee or affiliate or, to the knowledge of
the Company or any of its Subsidiaries, any corporation, partnership, trust or other Person in which any such officer, director,
employee or affiliate has a substantial interest or is an employee, officer, director, trustee or partner.

 

4.28         Indebtedness
and Other Contracts. Except as disclosed in the SEC Documents or in Schedule 4.28, neither the Company nor any of its Subsidiaries
(i) has any outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation
of which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected
to result in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement or instrument
relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in
a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance
of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. The Company has
furnished to the Purchasers (or filed on EDGAR) true, correct and complete copies of all indentures, agreements, notes, leases,
mortgages, deeds or other instruments to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary
is bound or affected that would be required to be filed as an exhibit to the SEC Documents or which is otherwise material to the
Company or any Subsidiary. “Indebtedness” of any Person means, without duplication (A) all indebtedness
for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including,
without limitation, “capital leases” in accordance with generally accepted accounting principles) (other than trade
payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments,
or guarantees thereof, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing,
in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property),
(F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses
(A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole
or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

 

    	15

    	 

    

 

4.29         Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or
applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.

 

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

 

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

 

    	16

    	 

    

 

4.32         Environmental
Laws. The Company and its Subsidiaries (i) are in compliance with all Environmental Laws (as defined below), (ii) have received
all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses
and (iii) are in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing
clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. “Environmental Laws” means all federal, state, local or foreign laws relating
to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand
letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.

 

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

 

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

 

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

 

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

 

    	17

    	 

    

 

4.37         No
Additional Agreements. The Company does not have any agreement or understanding with any Purchaser with respect to the transactions
contemplated by this Agreement and the Related Agreements Transaction Documents other than as specified therein.

 

4.38         Real
Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property, or other
interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”). The
interest of the Company and the Subsidiaries in the Real Property is free and clear of all mortgages, defects, claims, liens, pledges,
charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Encumbrances”)
and is not subject to any rights of way, building use restrictions, exceptions, variances, reservations, or limitations of any
nature except for (a) liens for current taxes not yet due, (b) zoning laws and other land use restrictions that do not impair the
present or anticipated use of the property subject thereto and (c) Permitted Encumbrances.

 

4.39         Fixtures
and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in,
the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used
by the Company or its Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”).
The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which
they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient
for the conduct of the Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior
to the Closing. Each of the Company and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Encumbrances
except for (a) liens for current taxes not yet due, (b) zoning laws and other land use restrictions that do not impair the present
or anticipated use of the property subject thereto and (c) Permitted Encumbrances.

 

4.40         Ranking
of Notes. Except as disclosed in Schedule 4.40, no Indebtedness of the Company will be senior to, or pari passu
with, the Notes in right of payment, whether with respect to payment or redemptions, interest, damages, upon liquidation or dissolution
or otherwise.

 

4.41         Full
Disclosure. The Company and each of its Subsidiaries has provided the Purchasers with all information requested by the Purchasers
in connection with the Purchasers’ decision to purchase the Notes and Warrants and any other information which may be material
to Purchasers’ decision to make such investment. The Company confirms that neither it nor any other Person acting on its
behalf has provided any of the Purchasers or their agents or counsel with any information that constitutes or could reasonably
be expected to constitute material, non-public information concerning the Company or any of its Subsidiaries, other than the existence
of the transactions contemplated by this Agreement and the Related Agreements, except for such information as will be disclosed
pursuant to the Current Report on Form 8-K pursuant to Section 6.10. The Company understands and confirms that each of the Purchasers
will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the
Purchasers regarding the Company and its Subsidiaries, their businesses and the transactions contemplated hereby, including the
schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries is true and correct and does not
contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading. Except as disclosed on Schedule 4.41, each
press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement
did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made,
not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries
or its or their business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or
otherwise), which, under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement
by the Company but which has not been so publicly disclosed. The Company acknowledges and agrees that no Purchaser makes or has
made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth
in Section 5.

 

    	18

    	 

    

 

5.          Representations
and Warranties of each Purchaser. Each Purchaser hereby represents and warrants, severally and not jointly, to the Company
as follows (such representations and warranties do not lessen or obviate the representations and warranties of the Company set
forth in this Agreement):

 

5.1           Requisite
Power and Authority. Such Purchaser has all necessary power and authority under all applicable provisions of law to execute
and deliver this Agreement and the Related Agreements and to carry out their provisions. All corporate action on such Purchaser’s
part required for the lawful execution and delivery of this Agreement and the Related Agreements have been or will be effectively
taken prior to the Closing. Upon their execution and delivery, this Agreement and the Related Agreements will be valid and binding
obligations of such Purchaser, enforceable in accordance with their terms, except for the Enforceability Exceptions.

 

5.2           Investment
Representations. Such Purchaser hereby acknowledges, represents and warrants to, and agrees with, the Company as follows:

 

(a)          The
Purchaser is acquiring the Securities for its own account, for investment purposes only, and not with a view to or for the resale,
distribution or fractionalization thereof, in whole or in part, and no other person has a direct or indirect beneficial interest
in such Securities;

 

(b)          The
Purchaser acknowledges its understanding that the Securities are being offered pursuant to an exemption from registration under
the Securities Act, by virtue of Section 4(2) of the Securities Act and the provisions of Regulation D promulgated thereunder.
In furtherance thereof, the Purchaser represents and warrants to and agrees with the Company as follows: (i) the Purchaser has
the financial ability to bear the economic risk of his investment in the Securities, has adequate means for providing for his current
needs and personal contingencies and has no need for liquidity with respect to his investment in the Company; (ii) the Purchaser
has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment
in the Securities and has obtained, in his judgment, sufficient information from the Company to evaluate the merits and risks of
an investment in the Securities. Such Purchaser has not utilized any person as its purchaser representative in connection with
evaluating such merits and risks; and (iii) the Purchaser hereby confirms that he, she or it is an Accredited Investor, as defined
in Rule 501 of the Securities Act.

 

    	19

    	 

    

 

(c)          The
Purchaser: (i) has evaluated the risks of a purchase of the Securities, and has relied solely (except as indicated in subsections
(ii) through (iv) below) on the information contained herein in making the investment in the Securities; (ii) has been provided
an opportunity to obtain any additional information concerning the Offering, the Company and all other information to the extent
the Company possesses such information or could acquire it without unreasonable effort or expense; (iii) has been given the opportunity
to ask questions of, and receive answers from, the Company concerning the terms and conditions of the Offering and other matters
pertaining to this investment, and has been given the opportunity to obtain such additional information necessary to verify the
accuracy of the information which has been provided in order for it to evaluate the merits and risks of an investment in the Company
to the extent the Company possess such information or could acquire it without unreasonable effort or expense, and has not been
furnished any other offering literature or prospectus except as mentioned herein; (iv) has reviewed copies of the SEC Documents,
including the Company’s Current Reports on Form 8-K, dated September 19, 2013, October 21, 2013, and November 12, 2013 relating
to the restatement of the Company’s financial statements and non-reliance on the Company’s previously filed financial
statements, and acknowledges that the Company is not current with its financial reporting obligations with the SEC; and (v) has
determined that the Securities are a suitable investment for it and that at this time it could bear a complete loss of its investment.

 

(d)          The
Purchaser acknowledges and agrees that (i) the Company has not furnished any legal or tax advice in connection with an investment
in the Company, (ii) the Purchaser has been advised to consult with its own legal and tax advisors relating to the legal and tax
consequences of an investment in the Company, (iii) to the extent desired, the Purchaser has consulted with his own legal and tax
advisors relating to his investment in the Company, and (iv) the Purchaser is not relying on any legal or tax advice from the Company.

 

(e)          The
Purchaser represents, warrants and agrees that it will not sell or otherwise transfer the Securities without registration under
the Securities Act or an exemption therefrom, and fully understands and agrees that it must bear the economic risk of its purchase
for an indefinite period of time because, among other reasons, the Securities have not been registered under the Act or under the
securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently
registered under the Securities Act and under the applicable state securities laws or an exemption from such registration is available.

 

5.3           The
Purchaser Bears Economic Risk. Such Purchaser has substantial experience in evaluating and investing in private placement transactions
of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in
the Company and has the capacity to protect its own interests. Such Purchaser must bear the economic risk of this investment until
the Securities are sold pursuant to: (i) an effective registration statement under the Securities Act; or (ii) an exemption from
registration is available with respect to such sale.

 

    	20

    	 

    

 

5.4           Acquisition
for Own Account. Such Purchaser is acquiring the applicable Note and Warrant and the Note Shares and the Warrant Shares for
such Purchaser’s own account for investment only, and not as a nominee or agent and not with a view towards or for resale
in connection with their distribution.

 

5.5           The
Purchaser Can Protect Its Interest. Such Purchaser represents that by reason of its, or of its management’s, business
and financial experience, such Purchaser has the capacity to evaluate the merits and risks of its investment in the applicable
Note, the Warrant and the Securities and to protect its own interests in connection with the transactions contemplated in this
Agreement and the Related Agreements. Further, such Purchaser is aware of no publication of any advertisement in connection with
the transactions contemplated in the Agreement or the Related Agreements.

 

5.6           Legends.

 

(a)          Each
Note shall bear substantially the following legend:

 

“THIS NOTE AND THE COMMON
STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR (B) AN EXEMPTION FROM SUCH REGISTRATION.

 

(b)          The
applicable Note Shares and Warrant Shares shall bear a legend which shall be in substantially the following form until such shares
are covered by an effective registration statement filed with the SEC:

 

“THE SHARES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH SECURITIES ACT AND APPLICABLE STATE LAWS OR (B) AN EXEMPTION FROM SUCH REGISTRATION.”

 

    	21

    	 

    

 

(c)          Each
Warrant shall bear substantially the following legend:

 

“THIS WARRANT AND THE COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR THE UNDERLYING SHARES OF
COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR (B) AN EXEMPTION FROM SUCH REGISTRATION.”

 

6.          Covenants
of the Company. The Company covenants and agrees with each Creditor Party as follows:

 

6.1           Reporting
Requirements. The Company will deliver, or cause to be delivered, to the Agent each of the following, which shall be in form
and detail acceptable to the Agent:

 

(a)          Quarterly
consolidated Financial Statements, as soon as available, and in any event within 45 days after the end of each fiscal quarter.
If Borrower is current in its filing obligations under the Exchange Act and in fact timely files a Form 10-Q with the SEC that
is available within said period through EDGAR, this requirement will be deemed satisfied;

 

(b)          Quarterly
compliance certificates as soon as Quarterly Financial Statements are available, and in any event within 45 days after the end
of each fiscal quarter, signed by the Chief Financial Officer of Company, certifying that as of the end of such quarter the Company
is in full compliance with all of the terms and conditions of this Agreement;

 

(c)          Annual
consolidated Financial Statements, as soon as available, and in any event within 90 days following the end of Borrower's fiscal
year, certified by, and with an unqualified opinion of, independent certified public accountants acceptable to the Agent. If the
Company is current in its filing obligations under the Exchange Act and in fact timely files a Form 10-K with the SEC that is available
within said period through EDGAR, this requirement will be deemed satisfied; and

 

(d)          such
other information as any Creditor Party shall reasonably request.

 

For purposes of this Agreement, “Financial
Statements” means consolidated financial statements of the Company, including any interim reports or any consolidated
balance sheets, income statements, stockholders’ equity statements and/or cash flow statements and, in the case of quarterly-required
financial statements, showing data for the quarter being reported and a history showing each quarter from the beginning of the
relevant fiscal year.

 

    	22

    	 

    

 

6.2           Use
of Proceeds. The Company shall use the proceeds of the sale of the Notes and the Warrants for general working capital purposes.
Neither the Company nor any Purchaser is purchasing or carrying any “margin stock” (as defined in Regulation U of the
Board of Governors of the Federal Reserve System) and no part of the proceeds of the sale of the Notes and the Warrants will be
used to purchase or carry any “margin stock” or to extend credit to others for the purpose of purchasing or carrying
any “margin stock.”

 

6.3           Taxes.

 

(a)          The
Company and each of its Subsidiaries will promptly pay and discharge, or cause to be paid and discharged, when due and payable,
all taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of the Company
and its Subsidiaries; provided, however, that any such tax, assessment, charge or levy need not be paid currently
if (i) the validity thereof shall currently and diligently be contested in good faith by appropriate proceedings, (ii) such tax,
assessment, charge or levy shall have no effect on the lien priority of the Agent in any property of the Company or any of its
Subsidiaries and (iii) if the Company and/or such Subsidiary shall have set aside on its books adequate reserves with respect thereto
in accordance with GAAP; and provided, further, that the Company and its Subsidiaries will pay all such taxes, assessments, charges
or levies forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefor.

 

(b)          All
payments made by the Company under this Agreement or any Note shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future Taxes (as defined below) now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, other than Excluded Taxes (as defined below). If any Non-Excluded Taxes (as defined below) or Other
Taxes (as defined below) are required to be withheld from any amounts payable to any Creditor Party under this Agreement or any
Note, the amounts so payable to such Creditor Party shall be increased to the extent necessary to yield to such Creditor Party
(after payment of all Non-Excluded Taxes and Other Taxes, including those imposed on payments made pursuant to this paragraph (b)
of this Section 6.3 or any such other amounts payable in this Agreement or any Note at the rates or in the amounts specified
herein or therein), an amount equal to the sum it would have received had no such withholding or deductions been made provided,
however, that no Company shall be required to increase any such amounts payable to any Creditor Party with respect to any Non-Excluded
Taxes that are directly attributable to such Creditor Party’s failure to comply with the requirements of paragraph (e) of
this Section 6.3.

 

(c)          In
addition, the Company shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

    	23

    	 

    

 

(d)          Whenever
any Non-Excluded Taxes or Other Taxes are payable by the Company, as promptly as possible thereafter the Company shall send to
the Agent for its own account or for the account of the relevant Purchaser, as the case may be, a certified copy of an original
official receipt received by the Company showing payment thereof (or such other evidence reasonably satisfactory to the Agent).
If the Company fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit
to the Agent the required receipts or other required documentary evidence, the Company shall indemnify the Creditor Parties for
any incremental taxes, interest or penalties that may become payable by any Creditor Party as a result of any such failure.

 

(e)          Each
Purchaser (or its assignee) that is not a “United States Person” as defined in Section 7701(a)(30) of the Code (a “Non-U.S.
Purchaser”) shall deliver to the Company and the Agent two completed originals of an appropriate U.S. Internal Revenue
Service Form W-8, as applicable, or any subsequent versions thereof or successors thereto, properly completed and duly executed
by such Non-U.S. Purchaser. Such forms shall be delivered by each Non-U.S. Purchaser on or before the date it becomes a party to
this Agreement. In addition, each Non-U.S. Purchaser shall deliver such forms promptly upon the obsolescence or invalidity of any
form previously delivered by such Non-U.S. Purchaser. Each Non-U.S. Purchaser shall promptly notify the Company at any time it
determines that it is no longer in a position to provide any previously delivered certificate to the Company (or any other form
of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph
(e), a Non-U.S. Purchaser shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Purchaser is
not legally able to deliver.

 

(f)          The
agreements in the preceding paragraphs (b), (c), (d), (e) and this paragraph (f) shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder or thereunder or under any other Related Agreement.

 

As used in this Section
6.3, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

 

“Excluded
Taxes” means, with respect to any Creditor Party, taxes imposed on or measured by its overall net income and franchise
taxes imposed on it in lieu of net income taxes, by the jurisdiction (or any political subdivision thereof) under the laws of which
such Creditor Party is incorporated or organized or by the jurisdiction (or any political subdivision thereof) in which the principal
place of management or applicable lending office of such Creditor Party is located.

 

“Non-Excluded
Taxes” means all Taxes other than (i) Excluded Taxes and (ii) Other Taxes.

 

“Other Taxes”
means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement
or any other Related Agreement.

 

    	24

    	 

    

 

“Taxes”
means any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and all liabilities with respect thereto.

 

6.4           Insurance.
The Company shall bear the full risk of loss from any loss of any nature whatsoever with respect to the Collateral and the Company
and each of its Subsidiaries will, jointly and severally, bear the full risk of loss from any loss of any nature whatsoever with
respect to the assets pledged to the Agent, for the ratable benefit of the Creditor Parties, as security for the Obligations (as
defined in the Master Security Agreement). Furthermore, the Company will insure or cause the Collateral to be insured against loss
or damage by fire, flood, sprinkler leakage, theft, burglary, pilferage, loss in transit and other risks customarily insured against
by companies in similar business similarly situated as the Company and its Subsidiaries including but not limited to workers compensation,
public and product liability and business interruption, and such other hazards as the Agent shall specify in amounts and under
insurance policies and bonds by insurers acceptable to the Agent and all premiums thereon shall be paid by the Company and the
policies delivered to the Agent.

 

6.5           Form
D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof to each Purchaser promptly after such filing. Without limiting any other obligation of the Company under this Agreement,
the Company shall timely make all filings and reports relating to the offer and sale of the Securities required under all applicable
securities laws (including, without limitation, all applicable federal securities laws and all applicable “Blue Sky”
laws), and the Company shall comply with all applicable federal, foreign, state and local laws, statutes, rules, regulations and
the like relating to the offering and sale of the Securities to the Purchasers.

 

6.6           Reporting
Status. From the date of this Agreement until the earlier to occur of (i) the date on which the Purchasers shall have sold
all of the Registrable Securities or (ii) the three (3) year anniversary of the date of this Agreement (such period is referred
to herein as the “Reporting Period”), the Company shall timely file all reports required to be filed
with the SEC pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would no longer require or otherwise permit
such termination.

 

6.7           Listing
or Quotation. The Common Stock is currently traded only on the Principal Market and the Company shall take all necessary actions
to maintain the trading of the Common Stock on the Principal Market. If the Common Stock becomes listed or designated for quotation
on any other Eligible Market (as defined below), then the Company shall promptly secure the listing or designation for quotation
(as the case may be) of all of the Registrable Securities upon each national securities exchange and automated quotation system,
if any, upon which the Common Stock is then listed or designated for quotation (as the case may be) (subject to official notice
of issuance) and shall maintain such listing or designation for quotation (as the case may be) of all Registrable Securities from
time to time issuable under the terms of this Agreement and other Related Agreements on such then applicable national securities
exchange or automated quotation system. The Company shall take all necessary actions to maintain the Common Stock’s trading
on the Principal Market. If in the future, the Common Stock becomes listed or designated for quotation on any of The New York Stock
Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or the OTC Bulletin
Board (each, together with the Principal Market, an “Eligible Market”), the Company shall maintain the Common
Stock’s listing or designation for quotation (as the case may be) on such market or another Eligible Market. Except in connection
with a change of Eligible Market, neither the Company nor any of its Subsidiaries shall take any action which could be reasonably
expected to result in the delisting or suspension of the Common Stock on an Eligible Market on which the Common Stock is then traded,
listed or designated for quotation. The Company shall pay all fees and expenses in connection with satisfying its obligations under
this Section.

 

    	25

    	 

    

 

6.8           Fees.
The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or broker’s
commissions (other than for Persons engaged by any Purchaser) claimed by any Person as a result of commitments made by the Company
and relating to or arising out of the transactions contemplated hereby (including, without limitation, any fees payable to the
Placement Agent, who is the Company’s sole placement agent in connection with the transactions contemplated by this Agreement).
The Company shall pay, and hold each Purchaser harmless against, any liability, loss or expense (including, without limitation,
reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment,
except for payments that are determined to be due to such third parties as a result of commitments made by the Purchasers. Except
as otherwise set forth in this Agreement or the other Related Agreements, each party to this Agreement shall bear its own expenses
in connection with the sale of the Securities to the Purchasers.

 

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

 

    	26

    	 

    

 

6.10         Disclosure
of Transactions and Other Material Information. The Company shall, on or before 8:30 a.m. New York time, on the first (1st)
Business day after the date of this Agreement, file a Current Report on Form 8-K disclosing all of the material terms of the transactions
contemplated by this Agreement and the other Related Agreements in the form required by the Exchange Act and attaching all the
material definitive agreements (including, without limitation, this Agreement (and all exhibits and schedules to this Agreement,
other than the Disclosure Schedules), the form of Subsidiary Guaranties, the Master Security Agreement, the form of the Notes,
the form of the Warrants and the form of the Registration Rights Agreement) (including all attachments, the “8-K Filing”);
provided, however, that if the Company issues a press release on or before 8:30 a.m., New York time, on the first
(1st) Business Day after the date of this Agreement, which press release contains a description of all material terms
of the transactions contemplated by this Agreement and the other Related Agreements, the Company shall be permitted to make the
8-K Filing on or before 5:30 p.m., New York time, on the fourth (4th) Business Day after the date of this Agreement.
From and after the issuance of the press release or 8-K Filing, whichever is earlier, the Company shall have disclosed all material,
non-public information (if any) delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions contemplated by this Agreement and the other Related
Agreements. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective officers,
directors, employees and agents not to, provide any Purchaser with any material, non-public information regarding the Company or
any of its Subsidiaries from and after the issuance of the press release or 8-K Filing, as the case may be, without the express
prior written consent of such Purchaser. In the event of a breach of any of the foregoing covenants or any of the covenants contained
in this Section by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents
(as determined in the reasonable good faith judgment of such Purchaser), in addition to any other remedy provided herein or in
the other Related Agreements, such Purchaser shall have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such material, non-public information without the prior approval by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Purchaser shall have any liability
to the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents,
for any such disclosure. Subject to the foregoing, neither the Company, its Subsidiaries nor any Purchaser shall issue any press
releases or any other public statements with respect to the transactions contemplated hereby; provided, however,
the Company shall be entitled, without the prior approval of any Purchaser, to make any press release or other public disclosure
with respect to such transactions (i) in substantial conformity with the press release or the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Purchaser shall
be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without
the prior written consent of the applicable Purchaser, the Company shall not (and shall cause each of its Subsidiaries and affiliates
to not) disclose the name of such Purchaser in any filing (other than the 8-K Filing), announcement, release or otherwise. Notwithstanding
anything contained in this Agreement to the contrary and without implication that the contrary would otherwise be true, the Company
expressly acknowledges and agrees that no Purchaser has had, and no Purchaser shall have (unless expressly agreed to by a particular
Purchaser after the date hereof in a written definitive and binding agreement executed by the Company and such particular Purchaser
(it being understood and agreed that no Purchaser may bind any other Purchaser with respect thereto)), any duty of confidentiality
with respect to, or a duty not to trade on the basis of, any information regarding the Company or any of its Subsidiaries.

 

6.11         Reservation
of Shares. So long as any of the Notes or Warrants remain outstanding or unexpired and unexercised, the Company shall
take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 125% of the aggregate
of (i) the maximum number of Note Shares issuable upon conversion of the Notes (assuming for purposes hereof that the Notes are
convertible at the initial Conversion Price (as defined in the Notes) and without taking into account any limitations on the conversion
of the Notes set forth therein) and (ii) the maximum number of Warrant Shares issuable upon exercise of the Warrants (assuming
that all Warrants are exercised and without taking into account any limitations on the exercise of the Warrants set forth therein).

 

    	27

    	 

    

 

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

 

6.13         Variable
Rate Transaction. Until none of the Notes and Warrants remain outstanding or unexpired and unexercised, the Company and each
Subsidiary shall be prohibited from effecting or entering into an agreement to effect any Subsequent Placement (as defined below)
involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company
or any Subsidiary (i) issues or sells any Convertible Securities (as defined below) either (A) at a conversion, exercise or exchange
rate or other price that is based upon and/or varies with the trading prices of, or quotations for, the shares of Common Stock
at any time after the initial issuance of such Convertible Securities, or (B) with a conversion, exercise or exchange price that
is subject to being adjusted or reset at some future date after the initial issuance of such Convertible Securities or upon the
occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the
Common Stock, other than pursuant to a customary “weighted average” anti-dilution provision or (ii) enters into any
agreement (including, without limitation, an “equity line of credit” or an “at the market offering”) whereby
the Company or any Subsidiary may sell securities at a future determined price (other than standard and customary “preemptive”
or “participation” rights). Each Purchaser shall be entitled to obtain injunctive relief against the Company and its
Subsidiaries to preclude any such issuance, which remedy shall be in addition to any right to collect damages.

 

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

 

6.15         Corporate
Existence. For so long as any of the Notes or Warrants remain outstanding or unexpired and unexercised, the Company shall not
be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Notes and the Warrants.

 

6.16         Issuance
of Equity Other Than for Cash. For so long as any of the Notes or Warrants remain outstanding or unexpired and unexercised,
the Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, issue shares of capital
stock of the Company or any Subsidiary or securities convertible or exercisable into or exchangeable for shares of capital stock
of the Company or any Subsidiary (collectively, “Equity Securities”), except (i) in a transaction where all
such shares of capital stock are issued solely for cash or (ii) the issuance of shares of Common Stock or standard options to purchase
Common Stock to directors, officers or employees of the Company in their capacities as such pursuant to an Approved Share Plan
(as defined below). For the avoidance of doubt, so long as any of the Notes or Warrants remain outstanding or unexpired and unexercised,
the Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, issue shares of such
capital stock in exchange for the satisfaction or cancellation, in whole or in part, of any other securities or instruments, or
any receivables, claims, judgments or other liabilities of the Company or any Subsidiary. “Approved Share Plan” means
the Company’s an equity incentive plan which has been approved by the board of directors of the Company prior to or subsequent
to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may be issued to any
employee, officer or director for services provided to the Company in their capacity as such. “Convertible Securities”
means any capital stock or other security of the Company or any of its Subsidiaries that is at any time and under any circumstances
directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire,
any capital stock or other security of the Company (including, without limitation, Common Stock) or any of its Subsidiaries. Notwithstanding
the foregoing and during the term of the Notes, an Approved Share Plan shall not: (i) authorize the issuance of options to acquire
shares of Common Stock in excess of an aggregate of 2,000,000 shares, with vesting provisions of less than 3 years from the date
of issuance, or with an exercise price below the then current Conversion Price (as defined in the Notes), and (ii) shall not include
any options the exercise price of which is lowered.

 

    	28

    	 

    

 

6.17         Required
Approvals. (I) The Company, without the prior written consent of the Purchasers holding, in the aggregate, at least a
majority of the then-outstanding principal amount of the Notes, shall not, and shall not permit any of its Subsidiaries to:

 

(a)          (i)
directly or indirectly declare or pay any cash dividend or distribution on, any securities of the Company, other than dividends
paid to the Company or any of its wholly-owned Subsidiaries, (ii) issue any preferred stock that is mandatorily redeemable prior
to the one year anniversary of the Maturity Date (as defined in each Note) or (iii) directly or indirectly redeem redeem any of
its preferred stock or other equity interests;

 

(b)          liquidate,
dissolve or effect a material reorganization (it being understood that in no event shall the Company or any of its Subsidiaries
dissolve, liquidate become a party to any merger or consolidation, or agree to or effect any asset acquisition or stock, membership
interest or membership unit or partnership interest acquisition other than (i) a merger of a Subsidiary of the Company into the
Company provided that the Company survives as the sole remaining entity or (ii) a Permitted Acquisition;

 

(c)          become
subject to (including, without limitation, by way of amendment to or modification of) any agreement or instrument which by its
terms would (under any circumstances) restrict the Company’s or any of its Subsidiaries, right to perform the provisions
of this Agreement, any Related Agreement or any of the agreements contemplated hereby or thereby;

 

(d)          (i)
create, incur, assume or suffer to exist any Indebtedness whether secured or unsecured other than (1) the Company’s obligations
owed to each Purchaser, (2) Indebtedness set forth on Schedule 6.5(e) attached hereto and made a part hereof and any refinancings
or replacements thereof on terms no less favorable to the Purchasers than the Indebtedness being refinanced or replaced, (3) other
Indebtedness secured by Permitted Encumbrances; (4) Indebtedness to trade creditors incurred in the ordinary course of business;
(5) Indebtedness owed to the holders of “Stockholder Notes” and “Management Incentive Notes,” as defined
in the those certain Subordinated Unsecured Promissory Notes issued under and in connection with The Agreement and Plan of Merger,
dated January 31, 2013, by and among Selway Capital Corporation, Selway Merger Sub, Inc., Healthcare Corporation of America, Prescription
Corporation of America and the Stockholder Representative in a maximum aggregate principal amount of $10,000,000; and (6) Indebtedness
consisting of financing of insurance premiums, subject to the limitations specified therein;

 

    	29

    	 

    

 

(e)          acquire
any assets, except in the ordinary course of business, or make any Investments other than Permitted Investments;

 

(f)          enter
into any material transaction outside the ordinary course of business that is not otherwise expressly permitted in this Agreement;

 

(g)          make
any loans of any money or other assets, other than Permitted Investments; or

 

(h)          engage,
directly or indirectly, in any business other than the businesses currently engaged in by it and those reasonably related thereto
(it being understood and agreed that any consulting business related to the procurement of insurance benefits is reasonably related
to the business currently engaged in by the Company’s and its Subsidiaries).

 

(II) The Company, without
the prior written consent of the Agent, shall not, and shall not permit any of its Subsidiaries to, create or acquire any Subsidiary
after the date hereof unless (i) such Subsidiary is a wholly-owned Subsidiary of the Company, (ii) such Subsidiary becomes a party
to (A) the Master Security Agreement (either by executing a counterpart thereof or an assumption or joinder agreement in respect
thereof) and (B) the Subsidiary Guaranty and (iii) to the extent required by the Agent, satisfies each condition of this Agreement
and the Related Agreements as if such Subsidiary were a Subsidiary on the Closing Date.

 

(III) As used in this
Section 6.20, the following terms shall have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):

 

“Investment”
means any beneficial ownership interest in any Person (including any stock, partnership interest or other equity or debt securities
issued by any Person), and any loan, advance or capital contribution to any Person.

 

“Permitted
Acquisitions” means any acquisition by the Company or any of its Subsidiaries of all or substantially all of the assets
of another Person, or of a division or line of business of another Person, or any equity interests of another Person which satisfies
and/or is conducted in accordance with the following requirements:

 

(i) Such acquisition
is of a business or the Company or any of its Subsidiaries engaged in a line of business which is compatible with, or complementary
to, the business of a Borrower;

 

    	30

    	 

    

 

(ii) If such acquisition
is structured as an acquisition of the equity interests of any Person, then the Person so acquired shall either (A) become a wholly-owned
(direct or indirect) Subsidiary of a Borrower or (B) be merged with and into the Company or any of its Subsidiaries (with the Company
or any of its Subsidiaries being the surviving entity);

 

(iii) If such acquisition
is structured as the acquisition of assets, such assets shall be acquired by the Company or any of its Subsidiaries;

 

(iv) The Company shall
have delivered to Agent not less than fifteen (15) days (or such shorter period of time agreed to by Agent) advance notice of such
acquisition together with (A) pro forma combined projected financial information for the Company and the acquisition target (if
applicable) consisting of projected balance sheets as of the proposed effective date of the acquisition or the closing date thereof
and as of the end of the next fiscal year following the acquisition and projected statements of income and cash flows for such
fiscal year, (B) copies of all material documents relating to such acquisition (including the acquisition agreement and any related
document) and (C) historical financial information (including income statements, balance sheets and cash flows) covering at least
three (3) complete fiscal years of the acquisition target, if available, prior to the effective date of the acquisition, in each
case in form and substance reasonably satisfactory to Agent;

 

(v) Both immediately
before and after the consummation of such acquisition no Event of Default (as defined in each Note) shall have occurred and be
continuing and, after giving effect to the pro forma projections referred to in clause (iv) above, no Event of Default shall have
occurred and be continuing; and

 

(vi) The board of directors
(or other Person(s) exercising similar functions) of the seller of the assets or issuer of the equity interests being acquired
shall not have disapproved such transaction or recommended that such transaction be disapproved.

 

“Permitted
Investments” are:

 

(i) Investments existing
on the Closing Date;

 

(ii) marketable direct
obligations issued or unconditionally guaranteed by the United States or its agency or any State maturing within 1 year from its
acquisition;

 

(iii) commercial
paper maturing no more than 1 year after its creation and having the highest rating from either Standard & Poor's Corporation
or Moody's Investors Service, Inc.;

 

(iv) bank certificates
of deposit issued maturing no more than 1 year after issue;

 

(v) trade credit in
the ordinary course of business;

 

(vi) advances to employees
for travel and other ordinary course advances to employees;

 

(vii) deposits to landlords;
and

 

    	31

    	 

    

 

(viii) loans among
the Company and/or its Subsidiaries in the ordinary course of business so long as the proceeds of such loans are used for purposes
permitted by this Agreement.

 

6.18         Prohibition
on Transactions with Affiliates and Other Related Parties. So long as any Notes are outstanding, none of the officers, directors,
employees or affiliates of the Company or any of its Subsidiaries, or any of their respective family members, shall be a party
to any transaction with the Company or any of its Subsidiaries (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing for the furnishing of products or services to or
by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any such officer,
director, employee or affiliate or family member of any of the foregoing or, to the knowledge of the Company or any of its Subsidiaries,
any corporation, partnership, trust or other Person in which any such officer, director, employee or affiliate or family members
of any of the foregoing has a substantial interest or is an employee, officer, director, trustee or partner. Notwithstanding the
foregoing, the Company may be a party to any such transactions with such parties described in the previous sentence with respect
to the distribution of products or services provided that the pricing terms for which such products or services are sold shall
not be more favorable than those provided to unrelated parties. As used in this Agreement, “Affiliate” means,
as applied to any entity, any other person or entity who, directly or indirectly, controls, is controlled by, or is under common
control with, such entity. For purposes of this definition, “control” means the possession, directly or indirectly,
of the power to direct the management and policies of an entity, whether through the ownership of equity interests, by contract,
or otherwise.

 

6.19         Legal
Existence; Maintenance of Properties. The Company will do and will cause each of its Subsidiaries to do or cause to be done
all things necessary to preserve and keep in full force and effect its legal existence, rights, and franchises. The Company: (a)
will cause all of its properties used or useful in the conduct of its business or the business of its Subsidiaries to be maintained
and kept in good condition, repair and working order, consistent with past practice, in all material respects, ordinary wear and
tear excepted, and supplied with all necessary equipment, (b) will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all time consistent with past practices, and (c) will, and
will cause each of its Subsidiaries to, continue to engage primarily in the businesses now conducted by them and in related businesses.
Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance
or regulation of any governmental entity, except where such violations would not result, either individually or in the aggregate,
in a Material Adverse Effect.

 

6.20         Further
Assurances. The Company agrees, at its expense, on reasonable request by the Agent, to execute all documents and take all actions,
and to procure that each other Subsidiary controlled by such Subsidiary execute all documents and take all actions as Agent may
in its good faith business judgment deem necessary or useful in order to perfect and maintain Agent's security interest in the
Collateral (as defined in the Master Security Agreement), and in order to fully consummate the transactions contemplated by this
Agreement.

 

    	32

    	 

    

 

6.21         Minimum
Cash and Accounts Receivable. The Company and its Subsidiaries shall: (1) from the Closing Date through January 31, 2014, at
all times (but reported quarterly in the Compliance Certificate) maintain the sum of (a) unrestricted and unencumbered cash of
cash equivalents plus (b) all accounts receivable of the Company and its Subsidiaries Cash of not less than $6,250,000;
and (2) from February 1, 2014 through the Maturity Date, maintain the sum of (a) unrestricted and unencumbered cash of cash equivalents
plus (b) all accounts receivable of the Company and its Subsidiaries, of not less than $7,500,000.

 

6.22         Authorization
and Reservation of Shares. So long as any of the Notes or Warrants remain outstanding or unexpired and unexercised, the Company
shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 125% of
the aggregate of (i) the maximum number of Note Shares issuable upon conversion of the Notes (assuming for purposes hereof that
the Notes are convertible at the initial Conversion Price (as defined in the Notes) and without taking into account any limitations
on the conversion of the Notes set forth therein) and (ii) the maximum number of Warrant Shares issuable upon exercise of the Warrants
(assuming that the Warrants are exercisable at the initial exercise Price and that all Warrants are exercised and without taking
into account any limitations on the exercise of the Warrants set forth therein).

 

6.23         Allocations.
As soon as reasonably possible following the Closing Date, the Company shall make an allocation of the purchase price between the
Notes and the Warrants and shall provide each Purchaser with such allocation.

 

6.24         Additional
Registration of Securities. The Company agrees that for the period commencing on the date hereof and ending on the date immediately
following the thirty (30) Trading Day (as defined in the Warrant) anniversary of the Applicable Date (provided that such period
shall be extended by the number of days during such period and any extension thereof contemplated by this proviso on which the
Registration Statement is not effective or any prospectus contained therein is not available for use) (the “Restricted
Period”), neither the Company nor any of its Subsidiaries shall directly or indirectly register for resale any securities
issued after the date hereof. “Applicable Date” means the first date on which the resale by the Purchasers of all Registrable
Securities is covered by one or more effective Registration Statements (as defined in the Registration Rights Agreement) (and each
prospectus contained therein is available for use on such date).

 

6.25         Fees.
The Company shall pay to Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., counsel for Chardan Capital Markets, LLC up to
$50,000 in legal fees ($20,000 of which has already been paid) actually and accountably incurred in connection with the Offering.
Except as otherwise set forth in this Agreement and the Related Agreements Documents, each party to this Agreement shall bear its
own expenses in connection with the sale of the Securities to the Purchasers.

 

7.          Covenants
of the Purchasers. Each Purchaser covenants and agrees with the Company as follows:

 

7.1           Confidentiality.
Subject to Section 6.10, no Purchaser will disclose, nor will it include in any public announcement, the name of the Company, unless
expressly agreed to by the Company or unless and until such disclosure is required by law or applicable regulation, and then only
to the extent of such requirement.

 

    	33

    	 

    

 

7.2           Non-Public
Information. No Purchaser will affect any sales in the shares of the Common Stock while in possession of material, non-public
information regarding the Company if such sales would violate applicable securities law.

 

8.          Covenants
of the Company and the Purchasers Regarding Indemnification.

 

8.1           Company
Indemnification. The Company agrees to indemnify, hold harmless, reimburse and defend each Creditor Party, each of such Creditor
Party’s officers, directors, agents, affiliates, control persons, and shareholders, against all claims, costs, expenses,
liabilities, obligations, losses or damages (including reasonable legal fees) of any nature, incurred by or imposed upon such Creditor
Party which result, arise out of or are based upon: (i) any misrepresentation by the Company or any of its Subsidiaries or breach
of any warranty by the Company or any of its Subsidiaries in this Agreement, any other Related Agreement or in any exhibits or
schedules attached hereto or thereto; or (ii) any breach or default in performance by Company or any of its Subsidiaries of any
covenant or undertaking to be performed by Company or any of its Subsidiaries hereunder, under any other Related Agreement or any
other agreement entered into by the Company and/or any of its Subsidiaries and such Creditor Party relating hereto or thereto.

 

8.2           Purchaser
Indemnification. Each Purchaser agrees to indemnify, hold harmless, reimburse and defend the Company and each of the Company’s
officers, directors, agents, affiliates, control persons and shareholders, at all times against any claims, costs, expenses, liabilities,
obligations, losses or damages (including reasonable legal fees) of any nature, incurred by or imposed upon the Company which result,
arise out of or are based upon: (i) any misrepresentation by such Purchaser or breach of any warranty by such Purchaser in this
Agreement or in any exhibits or schedules attached hereto or any Related Agreement; or (ii) any breach or default in performance
by such Purchaser of any covenant or undertaking to be performed by such Purchaser hereunder, or any other agreement entered into
by the Company and such Purchaser relating hereto.

 

9.          Register;
Transfer Agent Instructions; Legend.

 

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

 

    	34

    	 

    

 

9.2           Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent transfer
agent in a form acceptable to each of the Purchasers (the “Irrevocable Transfer Agent Instructions”) to issue
certificates, registered in the name of each Purchaser or its respective nominee(s), for the Note Shares and the Warrant Shares
in such amounts as specified from time to time by each Purchaser to the Company upon conversion of the Notes or the exercise of
the Warrants (as the case may be). The Company represents and warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 9.2 will be given by the Company to its transfer agent with respect to the Securities,
and that the Securities shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent
provided in this Agreement and the other Transaction Documents. If a Purchaser effects a sale, assignment or transfer of the Securities,
the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by such Purchaser to effect such sale, transfer or assignment. In the event that such
sale, assignment or transfer involves Note Shares or Warrant Shares sold, assigned or transferred pursuant to an effective registration
statement or in compliance with Rule 144, the transfer agent shall issue such shares to such Purchaser, assignee or transferee
(as the case may be) without any restrictive legend in accordance with Section 9.3 below. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to each Purchaser. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 9.2 will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 9.2, that each Purchaser shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security being required. The Company shall cause its counsel
to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Company’s transfer agent on
each Effective Date (as defined in the Registration Rights Agreement). If a Purchaser or any subsequent holder of the Securities
proposes to transfer the Securities held by such Person pursuant to Rule 144, the Company shall provide necessary opinions to its
transfer agent, if requested, provided that such Purchaser or such subsequent holder, as the case may be, provides the necessary
representations as requested by the Company’s counsel. Any fees (with respect to the transfer agent, counsel to the Company
or otherwise) associated with the issuance of such opinion or the removal of any legends on any of the Securities shall be borne
by the Company.

 

9.3           Removal
of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section 9.2
above or any other legend (i) following any sale of such Securities pursuant to a registration statement (including a Registration
Statement) covering the resale of such Securities is effective under the Securities Act, (ii) following any sale of such Securities
pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) in connection with a sale, assignment
or other transfer (other than under Rule 144), provided that such Buyer provides the Company with an opinion of counsel to such
Buyer, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without
registration under the applicable requirements of the 1933 Act or (iv) if such legend is not required under applicable requirements
of the Securities Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC).
If a legend is not required pursuant to the foregoing, the Company shall no later than two (2) Trading Days following the delivery
by a Purchaser to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities
(endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or
transfer, if applicable), together with any other deliveries from such Purchaser as may be required above in this Section 9.3,
as directed by such Purchaser, issue and deliver (via reputable overnight courier) to such Purchaser, a certificate representing
such Securities that is free from all restrictive and other legends, registered in the name of such Purchaser or its designee (the
date by which such certificate is required to be delivered to such Purchaser pursuant to the foregoing is referred to herein as
the “Required Delivery Date”).

 

    	35

    	 

    

 

9.4           Failure
to Timely Deliver; Buy-In. If the Company fails to issue and deliver (or cause to be delivered) to a Purchaser by the Required
Delivery Date a certificate representing the Securities so delivered to the Company by such Purchaser that is free from all restrictive
and other legends, then, in addition to all other remedies available to such Purchaser, the Company shall pay in cash to such Purchaser
on each Trading Day after the Required Delivery Date that the issuance or credit of such shares is not timely effected an amount
equal to 1% of the product of (A) the number of shares of Common Stock not so delivered or credited (as the case may be) to such
Purchaser or such Purchaser’s nominee multiplied by (B) the Closing Sale Price of the Common Stock on the Trading Day immediately
preceding the Required Delivery Date. In addition to the foregoing, if the Company fails to so properly deliver such unlegended
certificates by the Required Delivery Date, and if on or after the Required Delivery Date such Purchaser (or any other Person in
respect, or on behalf, of such Purchaser) purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by such Purchaser of all or any portion of the number of shares of Common Stock, or a sale of a number
of shares of Common Stock equal to all or any portion of the number of shares of Common Stock, that such Purchaser so anticipated
receiving from the Company without any restrictive legend, then, in addition to all other remedies available to such Purchaser,
the Company shall, within three (3) Trading Days after such Purchaser’s request and in such Purchaser’s sole discretion,
either (i) pay cash to such Purchaser in an amount equal to such Purchaser’s total purchase price (including brokerage commissions
and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including brokerage commissions and other
out-of-pocket expenses, if any) (the “Buy-In Price”), at which point the Company’s obligation to so deliver
such certificate or credit such Purchaser’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly
honor its obligation to so deliver to such Purchaser a certificate representing such number of shares of Common Stock that would
have been so delivered if the Company timely complied with its obligations hereunder and pay cash to such Purchaser in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Note Shares or Warrant Shares
(as the case may be) that the Company was required to deliver to such Purchaser by the Required Delivery Date multiplied by (B)
the lowest Closing Sale Price (as defined in the Warrants) of the Common Stock on any Trading Day during the period commencing
on the date of the delivery by such Purchaser to the Company of the applicable Note Shares or Warrant Shares (as the case may be)
and ending on the date of such delivery and payment under this clause (ii).

 

10.         Miscellaneous.

 

10.1         Governing
Law, Jurisdiction and Waiver of Jury Trial.

 

(a)          THIS
AGREEMENT AND THE OTHER RELATED AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

 

    	36

    	 

    

 

(b)          THE
COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE AND/OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND, AND ANY CREDITOR
PARTY, ON THE OTHER HAND, PERTAINING TO THIS AGREEMENT OR ANY OF THE RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR ANY OF THE OTHER RELATED AGREEMENTS; PROVIDED, THAT EACH CREDITOR PARTY AND THE COMPANY ACKNOWLEDGE
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK;
AND FURTHER PROVIDED, THAT, NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY CREDITOR PARTY FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL (AS
DEFINED IN THE MASTER SECURITY AGREEMENT) OR ANY OTHER SECURITY FOR THE OBLIGATIONS (AS DEFINED IN THE MASTER SECURITY AGREEMENT),
OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF ANY CREDITOR PARTY. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HEREBY WAIVES ANY OBJECTION THAT IT MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT
AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH HEREIN AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

 

(c)          THE
PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING
IN CONTRACT, TORT, OR OTHERWISE BETWEEN ANY CREDITOR PARTY AND/OR THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL
TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, ANY OTHER RELATED AGREEMENT OR THE TRANSACTIONS
RELATED HERETO OR THERETO.

 

    	37

    	 

    

 

10.2         Severability.
Wherever possible, each provision of this Agreement and the Related Agreements shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement or any Related Agreement shall be prohibited by or invalid
or illegal under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity or illegality,
without invalidating the remainder of such provision or the remaining provisions thereof which shall not in any way be affected
or impaired thereby.

 

10.3         Survival.
The representations, warranties, covenants and agreements made herein shall survive any investigation made by any Creditor Party
and the closing of the transactions contemplated hereby to the extent provided therein. All statements as to factual matters contained
in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such
certificate or instrument. All indemnities set forth herein shall survive the execution, delivery and termination of this Agreement
and the Notes and the making and repayment of the obligations arising hereunder, under the Notes and under the other Related Agreements.

 

10.4         Successors.

 

(a)          Except
as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors,
heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each Person which
shall be a holder of the Securities from time to time, other than the holders of Common Stock which has been sold by any Purchaser
pursuant to Rule 144 under the Securities Act or an effective registration statement. Each Purchaser may assign any or all of the
Obligations to any Person and, subject to acceptance and recordation thereof by the Agent pursuant to Section 10.4(b) and
receipt by the Agent of a copy of the agreement or instrument pursuant to which such assignment is made (each such agreement or
instrument, an “Assignment Agreement”), any such assignee shall succeed to all of such Purchaser’s rights
with respect thereto. Upon such assignment, such Purchaser shall be released from all responsibility for the Collateral (as defined
in the Master Security Agreement) to the extent same is assigned to any transferee. Each Purchaser may from time to time sell or
otherwise grant participations in any of the Obligations (as defined in the Master Security Agreement) and the holder of any such
participation shall, subject to the terms of any agreement between such Purchaser and such holder, be entitled to the same benefits
as such Purchaser with respect to any security for the Obligations in which such holder is a participant. The Company agrees that
each such holder may exercise any and all rights of banker’s lien, set-off and counterclaim with respect to its participation
in the Obligations as fully as though the Company were directly indebted to such holder in the amount of such participation. The
Company may not assign any of its rights or obligations hereunder without the prior written consent of the Agent. All of the terms,
conditions, promises, covenants, provisions and warranties of this Agreement shall inure to the benefit of each of the undersigned,
and shall bind the representatives, successors and permitted assigns of the Company.

 

    	38

    	 

    

 

(b)          The
Agent shall maintain, or cause to be maintained, for this purpose only as agent of the Company, (i) a copy of each Assignment Agreement
delivered to it and (ii) a book entry system, within the meaning of U.S. Treasury Regulation Sections 15f.103-1(c) and 1.871-14(c)
(the “Register”), in which it will register the name and address of each Purchase and the name and address of
each assignee of each Purchaser under this Agreement, and the principal amount of, and stated interest on, the Notes owing to each
such Purchaser and assignee pursuant to the terms hereof and each Assignment Agreement. The right, title and interest of the Purchasers
and their assignees in and to such Notes shall be transferable only upon notation of such transfer in the Register, and no assignment
thereof shall be effective until recorded therein. The Company and each Creditor Party shall treat each Person whose name is recorded
in the Register as a Purchaser pursuant to the terms hereof as a Purchaser and owner of an interest in the Obligations hereunder
for all purposes of this Agreement, notwithstanding notice to the contrary or any notation of ownership or other writing or any
Note. The Register shall be available for inspection by the Company or any Purchaser, at any reasonable time and from time to time,
upon reasonable prior notice.

 

10.5         Entire
Agreement; Maximum Interest. This Agreement, the Related Agreements, the exhibits and schedules hereto and thereto and the
other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard
to the subjects. Nothing contained in this Agreement, any Related Agreement or in any document referred to herein or delivered
in connection herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of
the maximum rate permitted by applicable law. In the event that the rate of interest or dividends required to be paid or other
charges hereunder exceed the maximum rate permitted by such law, any payments in excess of such maximum shall be credited against
amounts owed by the Company to the Purchasers and thus refunded to the Company.

 

10.6         Amendment
and Waiver.

 

(a)          This
Agreement and the other Related Agreements may not be modified, altered or amended except by an agreement in writing signed by
the Company, Agent and Purchasers holding greater than fifty percent (50%) of the outstanding principal amount of the Notes (the
“Required Purchasers”) as provided in paragraph (b) below.

 

(b)          The
Required Purchasers or the Agent with the consent in writing of the Required Purchasers, on the one hand, and the Company, on the
other hand, may, subject to the provisions of this Section 10.6(b), from time to time enter into written supplemental agreements
to this Agreement, the Notes or the other Related Agreements executed by the Company, for the purpose of adding or deleting any
provisions or otherwise changing, varying or waiving in any manner the rights of Purchasers, Agent or the Company thereunder or
the conditions, provisions or terms thereof of waiving any Event of Default thereunder, but only to the extent specified in such
written agreements; provided, however, that no such supplemental agreement shall, without the consent of all the
Purchasers and with respect to clause (iv) below, the consent of Agent:

 

    	39

    	 

    

 

(i)          extend
the maturity of any Note or the due date for any amount payable hereunder, or decrease the rate of interest or reduce any principal
payment due on the Notes;

 

(ii)         alter
the definition of the term Required Purchasers or alter, amend or modify this Section 10.6(b);

 

(iii)        release
(x) any Subsidiary form its obligations under any Subsidiary Guaranty or (y) any Collateral during any calendar year having an
aggregate value in excess of $100,000, other than Collateral which is permitted to be sold or otherwise disposed of pursuant to
the Master Security Agreement;

 

(iv)        change
the rights and duties of the Agent; or

 

(v)         change
any provision in this Agreement or any Related Agreement in a manner that would alter the pro rata sharing of payments or setoffs
required thereby.

 

Any such supplemental
agreement shall apply equally to each of the Purchasers and shall be binding upon the Company, the Purchasers and Agent and all
future holders of the Notes. In the case of any waiver, the Company, the Purchasers and Agent shall be restored to their former
positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as
the Event of Default which was waived), or impair any right consequent thereon. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any of this Agreement or the Related Agreements unless
the same consideration also is offered to all of the parties to this Agreement or the Related Agreements, all holders of Notes
or all holders of the Warrants (as the case may be).

 

10.7         Delays
or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement or the Related Agreements, shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein,
or of or in any similar breach, default or noncompliance thereafter occurring. All remedies, either under this Agreement or the
Related Agreements, by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

10.8         Notices.
All notices required or permitted hereunder shall be in writing and shall be deemed effectively given:

 

(a)          upon
personal delivery to the party to be notified;

 

(b)          three
(3) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or

 

(c)          one
(1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of
receipt.

 

    	40

    	 

    

 

All communications shall be sent as follows:

 

	If to the Company, to:	 	
        66 Ford Road

        Denville, NJ. 07834

        Attention:

	 	 	 
	with a copy to (which shall not constitute notice):	 	
        Loeb & Loeb, LLP

        345 Park Avenue

        New York, NY 10154

        Attention: Mitchell Nussbaum, Esq.

	 	 	 
	If to the Agent, to:	 	
        Chardan Capital Markets, LLC

        17 State Street, Suite 1600

        New York, NY 10004

        Attention: Kerry Propper

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

         
	 	
        Mintz, Levin, Cohn, ferris, Glovsky &
        Popeo, P.C.

        666 Third Avenue

        New York, NY 10017

        Attention: Jeffrey P. Schultz, Esq.

	 	 	 
	If to a Purchaser:	 	To the address indicated under its signature on the signature pages hereto
	 	 	 
	With a copy (which shall not constitute notice) to:	 	
        Mintz, Levin, Cohn, ferris, Glovsky &
        Popeo, P.C.

        666 Third Avenue

        New York, NY 10017

        Attention: Jeffrey P. Schultz, Esq.

 

or at such other address as the Company
or the applicable Creditor Party may designate by written notice to the other parties hereto given in accordance herewith.

 

10.9         Titles
and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

 

10.10         Signatures;
Counterparts. This Agreement may be executed by facsimile or electronic signatures and in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one agreement.

 

10.11         Construction.
Each party acknowledges that its legal counsel participated in the preparation of this Agreement and the Related Agreements and,
therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be
applied in the interpretation of this Agreement or any Related Agreement to favor any party against the other.

 

    	41

    	 

    

 

10.12         Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under this Agreement and the Related
Agreements are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under any of such agreements. Nothing contained herein or in
any Related Agreement, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers
as, and the Company acknowledges that the Purchasers do not so constitute, a partnership, an association, a joint venture or any
other kind of group or entity, or create a presumption that the Purchasers are in any way acting in concert or as a group or entity
with respect to such obligations or the transactions contemplated by this Agreement or the Related Agreements or any matters, and
the Company acknowledges that the Purchasers are not acting in concert or as a group, and the Company shall not assert any such
claim, with respect to such obligations or the transactions contemplated by this Agreement or the Related Agreements. The decision
of each Purchaser to purchase Securities pursuant to this Agreement or the Related Agreements has been made by such Purchaser independently
of any other Purchaser. Each Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in connection
with such Purchaser making its investment hereunder and that no other Purchaser will be acting as agent of such Purchaser in connection
with monitoring such Purchaser’s investment in the Securities or enforcing its rights under this Agreement or the Related
Agreements. The Company and each Purchaser confirms that each Purchaser has independently participated with the Company and its
Subsidiaries in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. 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 any Related Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated
hereby was solely in the control of the Company, not the action or decision of any Purchaser, and was done solely for the convenience
of the Company and its Subsidiaries and not because it was required or requested to do so by any Purchaser. It is expressly understood
and agreed that each provision contained in this Agreement and in each Related Agreement is between the Company, each Subsidiary
and a Purchaser, solely, and not between the Company, its Subsidiaries and the Purchasers collectively and not between and among
the Purchasers.

 

10.13         Agency.

 

(a)          Each
Purchaser hereby designates Chardan Capital Markets, LLC to act as agent for such Purchaser under this Agreement, the Security
Agreement and the other Related Agreements. Each Purchaser hereby irrevocably authorizes Agent to take such action on its behalf
under the provisions of this Agreement, the Master Security Agreement and the other Related Agreements and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and
interest, fees received pursuant to this Agreement, for the ratable benefit of Purchasers. Agent may perform any of its duties
hereunder by or through its agents or employees. As to any matters not expressly provided for by this Agreement, Agent shall not
be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of the Purchasers, and such instructions shall be
binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability
or which is contrary to this Agreement or the Related Agreements or applicable law unless Agent is furnished with an indemnification
reasonably satisfactory to Agent with respect thereto.

 

    	42

    	 

    

 

(b)          Agent
shall have no duties or responsibilities except those expressly set forth in this Agreement and the Related Agreements. Neither
Agent nor any of its officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such
hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct, or (ii) responsible
in any manner for any recitals, statements, representations or warranties made by Company or any officer thereof contained in this
Agreement, or in any Related Agreement or in any certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any Related Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, or any Related Agreement or for any failure of the Company to perform
its obligations hereunder. Agent shall not be under any obligation to any Purchaser to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of, this Agreement or any Related Agreement, or to inspect
the properties, books or records of the Company. The duties of Agent shall be mechanical and administrative in nature. Agent shall
not have by reason of this Agreement a fiduciary relationship in respect of any Purchaser and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except
as expressly set forth herein.

 

(c)          Independently
and without reliance upon Agent or any other Purchaser, each Purchaser has made and shall continue to make (A) its own independent
investigation of the financial condition and affairs of the Company, and (B) its own appraisal of the creditworthiness of the Company.
Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Purchaser with any credit
or other information with respect thereto. Agent shall not be responsible to any Purchaser for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate or a statement delivered in connection with or
for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency of this Agreement or any
Related Agreement, or of the financial condition of the Company, or be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of this Agreement, the Notes, the Related Agreements or the financial
condition of the Company, or the existence of any Event of Default.

 

(d)          If
Agent shall request instructions from Purchasers with respect to any act or action (including failure to act) in connection with
this Agreement or any other Related Agreement, Agent shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from the Required Purchasers; and Agent shall not incur liability to any person or
entity by reason of so refraining. Without limiting the foregoing, Purchasers shall not have any right of action whatsoever against
Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.

 

    	43

    	 

    

 

(e)          Agent
shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate,
telecopier message, order or other document or telephone message believed by it to be genuine and correct and to have been signed,
sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the other
Related Agreements and its duties hereunder, upon the reasonable advice of counsel selected by it. Agent may employ agents and
attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent
with reasonable care.

 

(f)          Agent
shall not be deemed to have knowledge or notice of the occurrence of any Event of Default hereunder, the Notes or under the other
Related Agreements, unless Agent has received notice from a Purchaser or the Company referring to this Agreement or the other Related
Agreements, describing such Event of Default and stating that such notice is a “notice of default.” In the event that
Agent receives such a notice, Agent shall give notice thereof to the Purchasers. Agent shall take such action with respect to such
Event of Default as shall be reasonably directed by the Required Purchasers; provided, that, unless and until Agent shall have
received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default as it shall deem advisable in the best interests of Purchasers.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY
LEFT BLANK]

 

    	44

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have executed the SECURITIES PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.

 

	COMPANY:	 
	 	 
	HEALTHCARE CORPORATION OF AMERICA	 
	 	 	 
	By:	/s/ Yoram Bibring	 
	 	Name:  Yoram Bibring	 
	 	Title:    Chief Financial Officer	 
	 	 	 
	AGENT:	 
	 	 
	CHARDAN CAPITAL MARKETS, LLC	 
	 	 	 
	By:	/s/ Kerry Propper	 
	 	Name:  Kerry Propper	 
	 	Title:    Chief Executive Officer	 

 

 

SIGNATURE PAGE TO

SECURITIES PURCHASE AGREEMENTTHIS NOTE AND THE CONVERSION SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THIS NOTE AND THE CONVERSION SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR (B) AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

 

THIS NOTE IS REGISTERED WITH THE AGENT
PURSUANT TO SECTION 10.4(B) OF THE PURCHASE AGREEMENT (AS DEFINED BELOW). TRANSFER OF ALL OR ANY PORTION OF THIS NOTE IS PERMITTED
SUBJECT TO THE PROVISIONS SET FORTH IN SUCH SECTION 10.4(B) WHICH REQUIRE, AMONG OTHER THINGS, THAT NO TRANSFER IS EFFECTIVE UNTIL
THE TRANSFEREE IS REFLECTED AS SUCH ON THE REGISTRY MAINTAINED WITH THE AGENT PURSUANT TO SUCH SECTION 10.4(B).

 

SECURED CONVERTIBLE TERM NOTE

 

FOR VALUE RECEIVED, HEALTHCARE
CORPORATION OF AMERICA, a Delaware corporation (the “Company”) hereby promises to pay to [insert name of
Purchaser] (the “Holder”) or its registered assigns or successors in interest, the sum of ______________
Dollars ($____________) (the “Original Principal Amount”), plus all PIK Amounts (as hereinafter defined) added
to the principal amount hereof pursuant to the terms of this Note (as hereinafter defined), together with any accrued and unpaid
interest hereon and any and all other sums due, accrued or payable to the Holder arising under this Note, the Purchase Agreement
or any other Related Agreements, on December __, 2015 (the “Maturity Date”), if not sooner indefeasibly paid
in full.

 

This Secured Convertible
Note (including all Secured Convertible Notes issued in exchange, transfer or replacement hereof, this “Note”)
is one of an issue of Secured Convertible Notes issued pursuant to the Purchase Agreement (as defined below) on the Closing Date
(as defined below) (collectively, the “Note,” and such other Senior Secured Convertible Notes, if any, the “Other
Notes”). Certain capitalized terms used herein are defined in Section 5.15, and others used herein without definition
shall have the meanings ascribed to such terms in that certain Purchase Agreement dated as of the date hereof (as amended, restated,
modified and/or supplemented from time to time, the “Purchase Agreement”) among the Company, the Holder, each
other Purchaser and Chardan Capital Markets, LLC, as administrative and collateral agent for the Purchasers (the “Agent”
together with the Purchasers, collectively, the “Creditor Parties”).

 

    	 

    	 

    

 

ARTICLE I

INTEREST; CONVERSION;
PREPAYMENT

 

1.1           Interest.
Unless otherwise provided herein, interest payable on the outstanding principal amount of this Note, including all PIK
Amounts added thereto through such time (the “Accreted Principal Amount”) shall accrue at a rate per annum
equal to ten percent (10%). Accrued and unpaid interest shall be payable in arrears on the first day of each month (each, an
“Interest Payment Date”) and shall be payable in cash; provided, however, at the election of
the Company, any portion of the interest due and payable on an Interest Payment Date may be paid by adding the amount of such
interest due to the then outstanding Accreted Principal Amount (such capitalized Interest, a “PIK
Amount”). In the event the Company elects to capitalize interest, then on the applicable Interest Payment Date, the
Company shall also issue to Holder a Warrant to purchase a number of shares of the Company’s common stock, no par value
(the “Common Stock”), equal to one (1) share for each one dollar and fifty cents ($1.50) of the applicable
PIK Amount. Interest on this Note shall accrue from the date of issuance until repayment of the Accreted Principal Amount and
payment of all accrued interest in full. Interest shall accrue and be computed on the basis of the actual number of days in
the related period over 360 days.

 

1.2           Optional
Redemption by the Company.

 

(a)          The
Company may prepay this Note (the “Optional Redemption”) by paying to the Holder a sum of money equal
to one hundred percent (100%) of the Accreted Principal Amount outstanding at such time together with accrued but unpaid interest
thereon and any and all other sums due, accrued or payable to the Holder arising under this Note, the Purchase Agreement or any
other Related Agreement (the “Redemption Amount”) outstanding on the Redemption Payment Date (as defined below).
The Company shall deliver to the Holder a written notice of redemption (the “Notice of Redemption”) specifying
the date for such Optional Redemption (the “Redemption Payment Date”), which date shall be not less than thirty
(30) days after the date of the Notice of Redemption (the “Redemption Period”). On the Redemption Payment Date,
the Redemption Amount must be paid in good funds to the Holder. In the event the Company fails to pay the Redemption Amount on
the Redemption Payment Date as set forth herein, then such Redemption Notice will be null and void. If Other Notes are outstanding
and the Company elects to make an Optional Redemption, then the Company shall pay the Redemption Amount outstanding on all such
Other Notes on a pro rata basis.

 

(b)          Following
receipt of a Notice of Redemption, but not after the fifteenth (15th) day immediately following receipt of the Notice
of Redemption, the Holder may elect to convert this Note into validly issued, fully paid and non-assessable shares of Common Stock
of the Company (“Conversion Shares”). The number of Conversion Shares to be received by any Holder in connection
with such conversion shall be an amount, as may be adjusted pursuant to Section 1.6 of this Note, determined by dividing (x) the
sum of the outstanding Accreted Principal Amount and/or accrued interest and fees due or accrued and payable to such Holder arising
under this Note, the Purchase Agreement or any other Related Agreement (the “Conversion Amount”) by (y) $1.50
(the “Conversion Price”). The Holder shall have the right, but not the obligation, to convert all, but not part,
of the issued and outstanding Accreted Principal Amount and/or accrued interest and fees due and payable into Conversion Shares
at the Conversion Price.

 

    	2

    	 

    

 

1.3           Optional
Conversion by the Holder.

 

(a)          The
Holder may, at any time from time to time while this Note is outstanding, upon two business days’ notice, elect to convert
this Note into Conversion Shares. In the event that the Holder elects to convert this Note into Conversion Shares, the Holder shall
deliver (whether via facsimile or otherwise), for receipt on or prior to 5:30 p.m., New York time, on any Trading Day, a copy of
an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to
the Company. A Conversion Notice delivered after such time or on a non-Trading Day shall be deemed to have been delivered on the
following Trading Day.  If required by Section 1.3(c), within three (3) Trading Days following a conversion of this Note
as aforesaid, the Holder shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company.
On or before the first (1st) Trading Day following the date of receipt of a Conversion Notice (whether via facsimile
or otherwise), the Company shall transmit by facsimile an acknowledgment of confirmation, in the form attached hereto as Exhibit
II, of receipt of such Conversion Notice to the Holder and the Company’s transfer agent (the “Transfer Agent”)
and shall promptly instruct and otherwise use its reasonable best efforts to cause the Transfer Agent to complete the following
actions on or before the second (2nd) Trading Day following the date of receipt of a Conversion Notice (whether via
facsimile or otherwise): (1) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program and provided that the shares issued pursuant to such exercise have been sold pursuant
to a bona fide sale under Rule 144, a registration statement or an exemption from registration, upon the request of the Holder,
credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s
designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (2) issue and deliver (via reputable
overnight courier) to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder shall be entitled. If this Note is physically surrendered
for conversion pursuant to Section 1.3(c) and the outstanding Accreted Principal Amount of this Note is greater than the Accreted
Principal Amount portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event
later than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the Holder (or its designee)
a new Note (in accordance with Section 1.3(c) representing the outstanding Accreted Principal Amount not converted. The Person
or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on the Conversion Date. The Holder shall be treated for all purposes
as the record holder of the Conversion Shares unless the Holder provides the Company written instructions to the contrary.

 

    	3

    	 

    

 

(b)          Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on the first (1st) Trading
Day immediately following the Company’s receipt of a Conversion Notice (whether via facsimile or otherwise) from a Holder,
to give notice to and instruct, and otherwise use the Company’s reasonable best efforts to cause, the Transfer Agent to thereafter
promptly issue to such Holder a certificate for the number of shares of Common Stock to which the Holder is entitled and register
such shares of Common Stock on the Company’s share register or to credit the Holder’s or its designee’s balance
account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of
any Conversion Amount (as the case may be) (a “Conversion Failure”), then, in addition to all other remedies
available to the Holder, the Holder may declare the Company to be in default under this Note. Furthermore, (1) the Company shall
pay in cash to the Holder on each Trading Day after such third (3rd) Trading Day that the issuance of such shares of
Common Stock is not timely effected an amount equal to 1% of the product of (A) the sum of the number of shares of Common Stock
not issued to the Holder on a timely basis and to which the Holder is entitled multiplied by (B) the Closing Sale Price of the
Common Stock on the Trading Day immediately preceding the last possible date which the Company could have issued such shares of
Common Stock to the Holder without violating Sections 1.3(a) and (b) the Holder, upon written notice to the Company, may void its
Conversion Notice with respect to, and retain or have returned (as the case may be) any portion of this Note that has not been
converted pursuant to such Conversion Notice, provided that the voiding of a Conversion Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 1.3(b) or otherwise.
In addition to the foregoing, if within three (3) Trading Days after the Company’s receipt of a Conversion Notice (whether
via facsimile or otherwise), the Company shall fail to issue and deliver a certificate to the Holder and register such shares of
Common Stock on the Company’s share register or credit the Holder’s designee’s balance account with DTC for the
number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may
be), and if on or after such third (3rd) Trading Day the Holder (or any other Person in respect, or on behalf, of the
Holder) purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to
all or any portion of the number of shares of Common Stock, issuable upon such conversion that the Holder so anticipated receiving
from the Company, then, in addition to all other remedies available to the Holder, the Company shall, within three (3) Business
Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal
to the Holder’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (including, without limitation, by any other Person in respect, or on behalf, of the Holder) (the
“Buy-In Price”), at which point the Company’s obligation to so issue and deliver such certificate or credit
the Holder’s designee’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled
upon the Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or
(ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such shares
of Common Stock for the number of shares of Common Stock or credit the Holder’s designee’s balance account with DTC
to which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash to the Holder in
an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock multiplied
by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable
Conversion Notice and ending on the date of such issuance and payment under this Section 1.3.

 

    	4

    	 

    

 

(c)          Registration;
Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the names and
addresses of the holders of each Note and the Accreted Principal Amount of the Notes held by such holders (the “Registered
Notes”). The entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company
and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes
(including, without limitation, the right to receive payments hereunder, including payments of Accreted Principal Amount and interest)
notwithstanding notice to the contrary. A Registered Note may be assigned, transferred or sold in whole or in part only by registration
of such assignment or sale on the Register. Upon its receipt of a request to assign, transfer or sell all or part of any Registered
Note by the holder thereof, the Company shall record the information contained therein in the Register and issue one or more new
Registered Notes in the same aggregate Accreted Principal Amount as the Accreted Principal Amount of the surrendered Registered
Note to the designated assignee or transferee pursuant to Article IV, provided that if the Company does not so record an assignment,
transfer or sale (as the case may be) of all or part of any Registered Note within two (2) Business Days of such a request, then
the Register shall be automatically updated to reflect such assignment, transfer or sale (as the case may be). Notwithstanding
anything to the contrary set forth in this Article I, following conversion of any portion of this Note in accordance with the terms
hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount
represented by this Note is being converted (in which event this Note shall be delivered to the Company following conversion thereof)
or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting
reissuance of this Note upon physical surrender of this Note. The Holder and the Company shall maintain records showing the Accreted
Principal Amount, interest and default interest converted and/or paid (as the case may be) and the dates of such conversions and/or
payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not
to require physical surrender of this Note upon partial conversion.

 

1.4           Pro
Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of Notes for
the same Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion,
the Company shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder’s
portion of its Notes submitted for conversion based on the Accreted Principal Amount of Notes submitted for conversion on such
date by such holder relative to the aggregate Accreted Principal Amount of all Notes submitted for conversion on such date. In
the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of this
Note, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance
with Section 5.10.

 

1.5           Fractional
Shares. 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 that may be payable with
respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

 

1.6           Adjustment
Provisions. The Conversion Price and number of Conversion Shares to be issued upon conversion determined pursuant to this Note
shall be subject to adjustment from time to time upon the occurrence of certain events during the period that this conversion right
remains outstanding, as follows:

 

    	5

    	 

    

 

(a)          Reclassification.
If the Company at any time shall, by reclassification or otherwise, change the Conversion Shares into the same or a different number
of securities of any class or classes, this Note, as to the unpaid Accreted Principal Amount and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have
been issuable as the result of such change with respect to the Conversion Shares (i) immediately prior to or (ii) immediately after,
such reclassification or other change at the sole election of the Holder.

 

(b)          Stock
Splits, Combinations and Dividends. If the Conversion Shares are subdivided or combined into a greater or smaller number of
shares of Redemption Conversion Shares, or if a dividend is paid on the Conversion Shares or any preferred stock issued by the
Company in shares of Conversion Shares, the Conversion Price shall be proportionately reduced in case of subdivision of shares
or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total
number of shares of Conversion Shares outstanding immediately after such event bears to the total number of shares of Conversion
Shares outstanding immediately prior to such event.

 

(c)          Adjustment
Upon Issuance of Additional Shares of Common Stock. In the event the Company shall, at any time after the date of the Purchase
Agreement and while this Note is outstanding, issue Additional Shares of Common Stock (as defined below), without consideration
or for a consideration per share less than the applicable Conversion Price in effect immediately prior to such issue, then the
Conversion Price shall be reduced, concurrently with such issue, to the consideration per share received by the Corporation for
such issue or deemed issue of the Additional Shares of Common Stock; provided that if such issuance or deemed issuance
was without consideration, then the Corporation shall be deemed to have received an aggregate of $.001 of consideration for all
such Additional Shares of Common Stock issued or deemed to be issued. “Additional Shares of Common Stock” shall
mean all shares of Common Stock issued by the Company after the date of the Purchase Agreement, other than (1) the following shares
of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses
(1) and (2), collectively, “Exempted Securities”):

 

(i)          shares
of Common Stock, options or convertible Securities issued as a dividend or distribution on the Outstanding Notes;

 

(ii)         shares
of Common Stock, options or convertible securities issued by reason of a dividend, stock split, split-up or other distribution
on shares of Common Stock that is covered by Subsection 3.3(a) and 3.3(b);

 

(iii)        shares
of Common Stock or options issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries
pursuant to a plan, agreement or arrangement already in place prior to the date of this Agreement that has been approved by the
Board of Directors of the Company;

 

(iv)        shares
of Common Stock or Convertible Securities actually issued upon the exercise of options or shares of Common Stock actually issued
upon the conversion or exchange of convertible securities, in each case provided such issuance is pursuant to the original terms
of such option or convertible security; or

 

    	6

    	 

    

 

(v)         shares
of Common Stock, options or convertible securities issued pursuant to the acquisition of another corporation by the Company by
merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided, that such
issuances are approved by the Board of Directors of the Company.

 

1.7           Rights
upon Fundamental Transaction.

 

(a)          Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing
all of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of
this Section 3.4(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder
prior to such Fundamental Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security
of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Notes, including,
without limitation, having a Accreted Principal Amount and interest rate equal to the Accreted Principal Amount then outstanding
and the interest rates of the Notes held by such holder, having similar conversion rights as the Notes and having similar ranking
to the Notes, having similar guarantees from the subsidiaries of the Successor Entity and a second priority lien on all of the
assets (to the extent such assets would constitute Collateral) of the Successor Entity, and satisfactory to the Holder and (ii) the
Successor Entity (including its Parent Entity) is a publicly traded corporation whose common stock is quoted on or listed for trading
on an Eligible Market. Upon the occurrence of any 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 Note and the other Transaction Documents
referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Note, the Purchase Agreement and the Related Agreements
with the same effect as if such Successor Entity had been named as the Company herein. In addition to the foregoing, upon consummation
of a Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall also be issued upon
conversion or redemption of this Note at any time after the consummation of such Fundamental Transaction, in lieu of the shares
of Common Stock or other securities, cash, assets or other property issuable upon the conversion or redemption of the Notes prior
to such Fundamental Transaction, such shares of the publicly traded common stock (or their equivalent) of the Successor Entity
(including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction
had this Note been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion
of this Note), as adjusted in accordance with the provisions of this Note. The provisions of this Section 3.4 shall apply similarly
and equally to successive Fundamental Transactions and shall be applied without regard to any limitations on the conversion of
this Note.

 

    	7

    	 

    

 

(b)          Notice
of a Fundamental Transaction; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days
prior to the consummation of a Fundamental Transaction, but not prior to the public announcement of such Fundamental Transaction,
the Company shall deliver written notice thereof via facsimile and overnight courier to the Holder (a “Fundamental Transaction
Notice”). At any time during the period beginning after the Holder’s receipt of a Fundamental Transaction Notice
or the Holder becoming aware of a Fundamental Transaction if a Fundamental Transaction Notice is not delivered to the Holder in
accordance with the immediately preceding sentence (as applicable) and ending on the later of twenty (20) Trading Days after (A)
consummation of such Fundamental Transaction or (B) the date of receipt of such Fundamental Transaction Notice, the Holder may
require the Company to redeem all or any portion of this Note by delivering written notice thereof (“Fundamental Transaction
Redemption Notice”) to the Company, which Fundamental Transaction Redemption Notice shall indicate the Conversion Amount
the Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section 3.4 shall be redeemed
by the Company in cash at a price (the “Fundamental Transaction Redemption Price”) equal to the greatest
of (i) the Conversion Amount being redeemed, (ii) the product of (A) the Conversion Amount being redeemed multiplied by (B) the
quotient determined by dividing (1) the average Closing Sale Price of the shares of Common Stock during the period beginning on
the date immediately preceding the earlier to occur of (x) the consummation of the applicable Fundamental Transaction and (y) the
public announcement of such Fundamental Transaction and ending on the date the Holder delivers the Fundamental Transaction Redemption
Notice by (2) the Conversion Price in effect at the time of delivery by the Holder of the Fundamental Transaction Redemption Notice
and (iii) the product of (1) the Conversion Amount being redeemed multiplied by (2) the quotient of (A) the aggregate cash consideration
and the aggregate cash value of any non-cash consideration per share of Common Stock to be paid to the holders of the shares of
Common Stock upon consummation of such Fundamental Transaction (any such non-cash consideration constituting publicly-traded securities
shall be valued at average Closing Sale Price of the shares of Common Stock during the period beginning on the date immediately
preceding the earlier to occur of (x) the consummation of the applicable Fundamental Transaction and (y) the public announcement
of such Fundamental Transaction and ending on the date the Holder delivers the Fundamental Transaction Redemption Notice) divided
by (B) the Conversion Price then in effect. Redemptions required by this Section 1.7 shall have priority to payments to stockholders
in connection with such Fundamental Transaction. To the extent redemptions required by this Section 1.7 (b) are deemed or determined
by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary
prepayments. Notwithstanding anything to the contrary in this Section 1.7, until the Fundamental Transaction Redemption Price (together
with any default interest thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 1.7 (together
with any default interest thereon) may be converted, in whole or in part, by the Holder into Common Stock pursuant to the terms
hereof.

 

    	8

    	 

    

 

1.8           Reservation
of Shares. The Company shall initially reserve out of its authorized and unissued Common Stock a number of shares of Common
Stock for each of the Notes equal to 125% of the number of shares of Common Stock as shall from time to time be necessary to effect
the conversion of all of the Notes as of the Issuance Date. So long as any of the Notes are outstanding, the Company shall
take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose
of effecting the conversion of the Notes, 125% of the number of shares of Common Stock as shall from time to time be necessary
to effect the conversion of all of the Notes then outstanding, provided that at no time shall the number of shares of Common Stock
so reserved be less than the number of shares required to be reserved by the previous sentence (the “Required Reserve
Amount”). The initial number of shares of Common Stock reserved for conversions of the Notes and each increase in the
number of shares so reserved shall be allocated pro rata among the holders of the Notes based on the original Accreted Principal
Amount of the Notes held by each holder on the Closing Date or increase in the number of reserved shares (as the case may be) (the
“Authorized Share Allocation”). In the event that a Holder shall sell or otherwise transfer any of such Holder’s
Notes, each transferee shall be allocated a pro rata portion of such Holder’s Authorized Share Allocation. Any shares of
Common Stock reserved and allocated to any Person which ceases to hold any Notes shall be allocated to the remaining Holders of
Notes, pro rata based on the Accreted Principal Amount of the Notes then held by such Holders.

 

1.9           Insufficient
Authorized Shares. If, notwithstanding Section 1.8, and not in limitation thereof, at any time while any of the Notes remain
outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation
to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve
Amount (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase
the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve
Amount for the Notes then outstanding. Without limiting the generality of the foregoing sentence, to the extent required by law
or the rules of the Eligible Market on which the Common Stock is traded or quoted, 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, to the extent required by law or the rules of the Eligible Market on which the
Common Stock is traded or quoted, the Company shall provide each stockholder with a proxy statement and shall use its best efforts
to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors
to recommend to the stockholders that they approve such proposal. Notwithstanding the foregoing, subject to applicable law and
the rules of the Eligible Market, if the Company is able to increase its authorized share capital other than by a meeting no later
than sixty (60) days after the occurrence of such Authorized Share Failure, it shall not be require to hold a meeting of its stockholders
as provided in this Section 1.9.

 

1.10         No
Rights of Shareholder. No Holder shall be entitled to vote or receive dividends or be deemed the holder of the Conversion Shares
or any other securities of the Company which may at any time be issuable upon conversion of this Note for any purpose, nor shall
anything contained herein be construed to confer upon the Holder, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action (whether upon the recapitalization, issuance of shares, reclassification of shares,
change of nominal value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends
or subscription rights or otherwise, in each case, until the Delivery Date applicable to the respective Conversion Shares purchasable
upon the conversion hereof shall have occurred as provided herein.

 

    	9

    	 

    

 

1.11         Conversion
Shares. The Company represents that upon issuance, the Conversion Shares will be duly and validly issued, fully paid and non-assessable.
The Company agrees that its issuance of this Note shall constitute full authority to its officers, agents, and transfer agents
who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for the
Conversion Shares upon the conversion of this Note.

 

ARTICLE
II

EVENTS OF
DEFAULT

 

2.1           Events
of Default. The occurrence of any of the following events set forth in this Section 4.1 shall constitute an event of
default (“Event of Default”) hereunder:

 

(a)          the
failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC in
accordance with the terms of the Registration Rights Agreement;

 

(b)          while
the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement,
the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of
a stop order) or such Registration Statement (or the prospectus contained therein) is unavailable to any holder of Registrable
Securities (as defined in the Registration Rights Agreement) for sale of all of such holder’s Registrable Securities in accordance
with the terms of the Registration Rights Agreement, and (I) such lapse or unavailability continues for a period of five (5) consecutive
Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period (excluding days during an Allowable Grace
Period (as defined in the Registration Rights Agreement)) and (II) any such holder (who is not an affiliate of the Company) may
not then sell all of such holder’s Registrable Securities without restriction pursuant to Rule 144 (as defined in the Purchase
Agreement);

 

(c)          the
suspension from trading or the failure of the Common Stock to be quoted, trading or listed (as applicable) on an Eligible Market
on which the Common Stock as a class is then quoted, traded or listed (as applicable) for a period of five (5) consecutive Trading
Days or for more than an aggregate of ten (10) Trading Days in any 365-day period;

 

(d)          the
Company’s (A) failure to cure a Conversion Failure or a Delivery Failure (as defined in the Warrants) by delivery of the
required number of shares of Common Stock within three (3) Trading Days after the applicable Conversion Date or exercise date (as
the case may be) or (B) notice, written or oral, to any holder of the Notes or Warrants, including, without limitation, by way
of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for
conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes or a request
for exercise of any Warrants for Warrant Shares in accordance with the provisions of the Warrants;

 

    	10

    	 

    

 

(e)          the
Company fails to pay when due any installment of Accreted Principal Amount (it being agreed that the payment of interest by adding
amounts owing to the then outstanding Accreted Principal Amount shall not constitute a failure to pay), interest or other fees
hereon in accordance herewith, or the Company fails to pay any of the other Obligations (under and as defined in the Master Security
Agreement) when due, and, in any such case, such failure shall continue for a period of five (5) days following the date upon which
any such payment was due;

 

(f)          the
Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion
or exercise (as the case may be) of any Securities acquired by the Holder under the Purchase Agreement (including this Note) as
and when required by such Securities or the Purchase Agreement, unless otherwise then prohibited by applicable federal securities
laws, and any such failure of the Company remains uncured for at least five (5) days, provided that in determining whether a legend
may be removed, the Company may conclusively rely on the advice of its counsel;

 

(g)          the
occurrence of any default under, redemption of or acceleration prior to maturity of any Indebtedness (as defined in the Purchase
Agreement) in excess of $100,000 of the Company or any of its Subsidiaries;

 

(h)          the
Company or any of its Subsidiaries shall (i) apply for, consent to or suffer to exist the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary case under the federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing
for the relief of debtors, (vi) acquiesce to, without challenge within ten (10) days of the filing thereof, or failure to have
dismissed, within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take
any action for the purpose of effecting any of the foregoing;

 

(i)          the
Company or any of its Subsidiaries shall admit in writing its inability, or be generally unable, to pay its debts as they become
due or cease operations of its present business or become Insolvent (as defined in the Purchase Agreement); or

 

(j)          a
final judgment or judgments for the payment of money aggregating in excess of $1,000,000 are rendered against the Company and/or
any of its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment
which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $1,000,000 amount
set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written
statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity
and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within thirty
(30) days of the issuance of such judgment;

 

    	11

    	 

    

 

(k)          (i)
the Company or any of its Subsidiaries attempts to terminate, challenges the validity of, or its liability under, the Purchase
Agreement or any Related Agreement, (ii) any proceeding shall be brought to challenge the validity, binding effect of the Purchase
Agreement or any Related Agreement or (iii) the Purchase Agreement or any Related Agreement ceases to be a valid, binding and enforceable
obligation of the Company or any of its Subsidiaries (to the extent such persons or entities are a party thereto);

 

(l)          the
Company or any of its Subsidiaries breaches, in any material respect, any covenant or any other term or condition of the Purchase
Agreement, this Note or any other Related Agreements and such breach, if subject to cure, continues for a period of fifteen (15)
days after the occurrence thereof; provided, however, that if such Event of Default is susceptible of cure but cannot
reasonably be cured within such fifteen (15) day period and provided, further, that the Company or any of its Subsidiaries shall
have commenced to sure such Default within such fifteen (15) day period and thereafter diligently proceeds to cure the same, such
fifteen (15) day period shall be extended for such time as is reasonably necessary for the Company or any of its Subsidiaries in
the exercise of due diligence to cure such Default, such additional period not to exceed sixty (60) days;

 

(m)          any
representation, warranty or statement made or furnished by the Company or any of its Subsidiaries in this Note, the Purchase Agreement
or any other Related Agreement shall at any time be false or misleading in any material respect on the date as of which made or
deemed made;

 

(n)          any
material provision or provisions (when taken together) of the Purchase Agreement or any Related Agreement (including, without limitation,
the Subsidiary Guaranties and the Master Security Agreement) shall at any time for any reason (other than pursuant to the express
terms thereof) cease to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability of
any material provision of the Purchase Agreement or any Related Agreement shall be contested by the Company or any of its Subsidiaries,
or a proceeding shall be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction over any
of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary shall deny in writing
that it has any liability or obligation created under the Purchase Agreement or any Related Agreement (including, without limitation,
the Subsidiary Guaranties and the Master Security Agreement);

 

(o)          any
uninsured material damage to, or loss, theft or destruction of, any assets of the Company and its Subsidiaries, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen
(15) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Company
or any Subsidiary, if any such event or circumstance could have a Material Adverse Effect;

 

(p)          the
Company engages in a Change of Control; or

 

(q)          any
Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.

 

    	12

    	 

    

 

2.2           Default
Interest. Following the occurrence and during the continuance of an Event of Default, the Company shall pay additional interest
on the outstanding Accreted Principal Amount balance of this Note in an amount equal to two percent (2%) per annum, and all outstanding
obligations under this Note, the Purchase Agreement and each other Related Agreement, including unpaid interest, shall continue
to accrue interest at such additional interest rate from the date of such Event of Default until the date such Event of Default
is cured or waived.

 

2.3           Notice
of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any Other
Note, the Company shall within one (1) Business Day deliver written notice thereof via facsimile and overnight courier (with next
day delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier of the Holder’s
receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company
to redeem (regardless of whether such Event of Default has been cured) all or any portion of this Note by delivering written notice
thereof (the “Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice
shall indicate the portion of this Note the Holder is electing to redeem.

 

ARTICLE III

COVENANTS

 

3.1           Until
all of the Notes have been converted, redeemed or otherwise satisfied in accordance with their terms:

 

(a)          Rank.
All payments due under this Note shall (a) rank pari passu with all Other Notes, and (b) be senior to all other Indebtedness of
the Company and its Subsidiaries, except for the Senior Debt.

 

(b)          Incurrence
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
incur or guarantee, assume or suffer to exist any Indebtedness (other than Permitted Indebtedness).

 

(c)          Existence
of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, allow
or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”)
other than Permitted Liens (as defined in the Master Security Agreement).

 

(d)          Restricted
Payments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, prepay,
by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private
transactions or otherwise), all or any portion of any Indebtedness (other than the Senior Debt).

 

(e)          Restriction
on Redemption and Cash Dividends. The Company shall not, directly or indirectly, redeem, repurchase or declare or pay any cash
dividend or distribution on any of its capital stock.

 

    	13

    	 

    

 

(f)          Restriction
on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
sell, lease, license, assign, transfer, convey or otherwise dispose of any assets or rights of the Company or any Subsidiary (including
the securities of any Subsidiary) owned or hereafter acquired whether in a single transaction or a series of related transactions,
other than (i) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by
the Company and its Subsidiaries that, in the aggregate, do not have a fair market value in excess of $100,000 in any twelve (12)
month period; (ii) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights
by the Company and its Subsidiaries that, (A) are with an unaffiliated third-party, (B) are at a price equal to, or greater than,
the fair market value of the asset or right, and (C) the full proceeds of which are received by the Company; and (iii) sales of
inventory in the ordinary course of business.

 

(g)          Maturity
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
permit any Indebtedness in excess of $100,000 except for the Senior Debt, of the Company or any of its Subsidiaries to mature or
accelerate prior to the Maturity Date.

 

(h)          New
Subsidiaries. Simultaneously with the acquisition or formation of each New Subsidiary, the Company shall cause such New Subsidiary
to execute, and deliver to each holder of Notes, a Subsidiary Guarantee and Master Security Agreement, as requested by the Holder.
The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, acquire or form any
New Subsidiary if such New Subsidiary would not be wholly-owned, directly or indirectly, by the Company.

 

(i)          Change
in Nature of Business. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, engage in any material line of business substantially different from those lines of business conducted by the Company
and each of its Subsidiaries on the Issuance Date or any business substantially related or incidental thereto. The Company shall
not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, modify its or their corporate structure
or purpose.

 

(j)          Issuance
of Equity Other Than for Cash. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly
or indirectly, issue shares of capital stock of the Company or any Subsidiary or securities convertible or exercisable into or
exchangeable for shares of capital stock of the Company or any Subsidiary (collectively, “Equity Securities”),
except (i) in a transaction where all such shares of capital stock are issued solely for cash or (ii) the issuance of shares of
Common Stock or standard options to purchase Common Stock to directors, officers or employees of the Company in their capacities
as such pursuant to an Approved Share Plan (as defined in the Purchase Agreement). For the avoidance of doubt, the Company shall,
and shall cause each of its Subsidiaries to not, directly or indirectly, issue shares of such capital stock in exchange for the
satisfaction or cancellation, in whole or in part, of any other securities or instruments, or any receivables, claims, judgments
or other liabilities of any Subsidiary.

 

    	14

    	 

    

 

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

 

(l)          Guaranties
and Security. Each existing and future Subsidiary shall jointly and severally, unconditionally guarantee all obligations under
the Notes on a senior basis (subject to the Senior Debt) pursuant to the Subsidiary Guaranties. This Note and the Other Notes are
secured to the extent and in the manner set forth in the Purchase Agreement and the Related Agreements (including, without limitation,
the Master Security Agreement and the Subsidiary Guaranties).

 

ARTICLE IV

REISSUANCE OF NOTE

 

4.1           Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note, registered as the Holder may request, representing the outstanding Accreted
Principal Amount being transferred by the Holder and, if less than the entire outstanding amount is being transferred, a new Note
to the Holder representing the outstanding Accreted Principal Amount not being transferred. The Holder and any assignee, by acceptance
of this Note, acknowledge and agree that, following conversion or redemption of any portion of this Note, the outstanding Accreted
Principal Amount represented by this Note may be less than the Accreted Principal Amount stated on the face of this Note.

 

4.2           Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice
as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall
execute and deliver to the Holder a new Note representing the then outstanding Accreted Principal Amount of this Note.

 

4.3           Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the Accreted
Principal Amount office of the Company, for a new Note or Notes (in principal amounts of at least $1,000) representing in the aggregate
the then outstanding Accreted Principal Amount of this Note, and each such new Note will represent such portion of such outstanding
Accreted Principal Amount as is designated by the Holder at the time of such surrender.

 

    	15

    	 

    

 

4.4           Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall
be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Accreted Principal Amount
remaining outstanding at that time (or in the case of a new Note being issued, the Accreted Principal Amount designated by the
Holder which, when added to the Accreted Principal Amount represented by the other new Notes issued in connection with such issuance,
does not exceed the Accreted Principal Amount remaining outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note,
(iv) shall have the same rights and conditions as this Note, and (v) shall represent accrued and unpaid Interest and default interest
on the Accreted Principal Amount of this Note, from the Issuance Date.

 

ARTICLE V

MISCELLANEOUS

 

5.1           Conversion
Privileges. The conversion privileges set forth herein shall remain in full force and effect immediately from the date hereof
until the date this Note is indefeasibly paid in full and irrevocably terminated.

 

5.2           Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note and any of the Purchase Agreement and Related Agreements at law
or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the
Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set
forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts
to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable
harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an
injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without
any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested
by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note.

 

5.3           Failure
or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.

 

5.4           Notices.
Any notice herein required or permitted to be given shall be given in writing in accordance with the terms of the Purchase Agreement.

 

    	16

    	 

    

 

5.5           Amendment.
Provisions of this Note may be amended only with the written consent of the Company and the Required Holders. Any amendment effected
in accordance with this Section 5.5 shall be binding upon the Holder and the Company, provided that no such amendment shall be
effective to the extent that it (a) applies to less than all of the holders of Notes, (b) imposes any obligation or liability on
the Holder without the Holder’s prior written consent (which may be granted or withheld in the Holder’s sole discretion)
or (c) applies retroactively. The term “Note” and all references thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and
any successor instrument as such successor instrument may be amended or supplemented.

 

5.6           Transfer;
Assignability. This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned
or transferred by the Holder without the consent of the Company, subject only to the applicable provisions of the Purchase Agreement
and subject to the Holder delivering written notice to the Company of all information relating to any subsequent purchaser, assignee
or transferee of the Note so that the Company may keep an accurate record of all the then current holders of the Notes. This Note
shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of the Holder and its successors
and assigns. The Company may not assign any of its obligations under this Note without the prior written consent of the Holder,
any such purported assignment without such consent being null and void.

 

5.7           Waiver
of Notice. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all
other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the
Purchase Agreement.

 

5.8           Payment
of Collection, Enforcement and Other Costs. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this
Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company
or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay
the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, reasonable attorneys’ fees and disbursements.

 

5.9           Governing
Law, Jurisdiction and Waiver of Jury Trial.

 

(a)          THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.

 

    	17

    	 

    

 

(b)          THE
COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE AND/OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND, AND THE HOLDER AND/OR
ANY OTHER CREDITOR PARTY, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER RELATED AGREEMENTS OR TO ANY MATTER ARISING
OUT OF OR RELATED TO THIS NOTE OR ANY OF THE RELATED AGREEMENTS; PROVIDED, THAT THE COMPANY ACKNOWLEDGES THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER
PROVIDED, THAT NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER AND/OR ANY OTHER CREDITOR PARTY FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS (AS DEFINED IN THE MASTER SECURITY
AGREEMENT), TO REALIZE ON THE COLLATERAL (AS DEFINED IN THE MASTER SECURITY AGREEMENT) OR ANY OTHER SECURITY FOR THE OBLIGATIONS,
OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE HOLDER AND/OR ANY OTHER CREDITOR PARTY. THE COMPANY EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY HEREBY WAIVES ANY
OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. THE COMPANY HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF
SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET
FORTH IN THE PURCHASE AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

 

(c)          THE
COMPANY HERETO WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING
IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER AND/OR ANY OTHER CREDITOR PARTY, ON THE ONE HAND, AND THE COMPANY, ON THE OTHER
HAND, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
NOTE, ANY OTHER RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.

 

    	18

    	 

    

 

5.10         Dispute
Resolution. In the case of a dispute as to the determination of the Conversion Price, Closing Sale Price or fair market value
(as the case may be) or the arithmetic calculation of the Conversion Price, the Company or the Holder (as the case may be) shall
submit the disputed determinations or arithmetic calculations (as the case may be) via facsimile (i) within two (2) Business Days
after receipt of the applicable notice giving rise to such dispute to the Company or the Holder (as the case may be) or (ii) if
no notice gave rise to such dispute, at any time after the Holder learned of the circumstances giving rise to such dispute (including,
without limitation, as to whether any issuance or sale or deemed issuance or sale was an issuance or sale or deemed issuance or
sale of Excluded Securities). If the Holder and the Company are unable to agree upon such determination or calculation within two
(2) Business Days of such disputed determination or arithmetic calculation (as the case may be) being submitted to the Company
or the Holder (as the case may be), then the Company shall, within two (2) Business Days, submit via facsimile (a) the disputed
determination of the Conversion Price, the Closing Sale Price or fair market value (as the case may be) to an independent, reputable
investment bank selected by the Holder and reasonably acceptable to the Company or (b) the disputed arithmetic calculation of the
Conversion Price to an independent, outside accountant selected by the Holder and reasonably acceptable to the Company. The Company
shall cause at its expense the investment bank or the accountant (as the case may be) to perform the determinations or calculations
(as the case may be) and notify the Company and the Holder of the results no later than ten (10) Business Days from the time it
receives such disputed determinations or calculations (as the case may be). Such investment bank’s or accountant’s
determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable error.

 

5.11         Severability.
In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Note.

 

5.12         Maximum
Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges
in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum rate permitted by such law, any payments in excess of such maximum rate shall be credited against
amounts owed by the Company to the Holder and thus refunded to the Company.

 

5.13         Security
Interest. The Agent, for the ratable benefit of the Creditor Parties, has been granted a security interest in certain assets
of the Company as more fully described in the Master Security Agreement and the other Related Agreements.

 

5.14         Construction;
Counterparts. Each party acknowledges that its legal counsel participated in the preparation of this Note and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation
of this Note to favor any party against the other. This Note may be executed by the parties hereto in one or more counterparts,
each of which shall be deemed an original and all of which when taken together shall constitute one and the same instrument. Any
signature delivered by a party by facsimile or electronic transmission shall be deemed to be an original signature hereto.

 

5.15         Certain
Definitions. For purposes of this Note, the following terms shall have the following meanings:

 

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

 

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

 

    	19

    	 

    

 

(c)          “Change
in Control” means the acquisition, directly or indirectly, in one or a series of related transactions, by a Person of
30% or more of the Voting Stock of the Company, other than a Purchaser or any Person or its affiliates who held 5% or more of the
Voting Stock of the Company (or securities convertible into 5% or more of the Common Stock of the Company) as of the date of the
Purchase Agreement.

 

(d)          “Closing
Sale Price” means, for any security as of any date, the last closing trade price for such security on the Principal Market,
as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing
trade price (as the case may be) then last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price
of such security on the principal securities exchange or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg,
the average of the ask prices of any market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be calculated for a security on a particular date on any
of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 5.10. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during such period.

 

(e)          “Closing
Date” shall have the meaning set forth in the Purchase Agreement, which date is the date the Company initially issued
Notes pursuant to the terms of the Purchase Agreement.

 

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

 

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

 

    	20

    	 

    

 

(h)          “Fundamental
Transaction” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related
transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation)
any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its
respective properties or assets to any other Person, or (3) allow any other Person to make a purchase, tender or exchange offer
that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock of the Company (not including any shares
of Voting Stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making
or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other
Person whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not including
any shares of Voting Stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated
with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (5) reorganize,
recapitalize or reclassify the Common Stock, or (ii) any “person” or “group” (as these terms are used for
purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary
voting power represented by issued and outstanding Voting Stock of the Company.

 

(i)          “GAAP”
means United States generally accepted accounting principles, consistently applied.

 

(j)          “New
Subsidiary” means, as of any date of determination, any Person in which the Company after the Subscription Date, directly
or indirectly, (i) owns or acquires any of the outstanding capital stock or holds any equity or similar interest of such Person
or (ii) controls or operates all or any part of the business, operations or administration of such Person, and all of the foregoing,
collectively, “New Subsidiaries.”

 

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

 

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

 

(m)          “Permitted
Indebtedness” means (i) the Senior Debt, (ii) Indebtedness evidenced by this Note and the Other Notes, and subsidiary
guarantees in respect thereof, (iii) any other Indebtedness existing on the date hereof and disclosed to Purchasers, (iv) any Indebtedness
secured by Permitted Liens, (v) Indebtedness to trade creditors incurred in the ordinary course of business; (vi) Indebtedness
owed to the holders of “Stockholder Notes” and “Management Incentive Notes”, as defined in the those certain
Subordinated Unsecured Promissory Notes issued under and in connection with the Merger Agreement in a maximum aggregate principal
amount of $10,000,000; and (vii) Indebtedness consisting of financing of insurance premiums, subject to the limitations specified
therein.

 

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

 

(o)          “Principal
Market” means the Over-the-Counter Bulletin Board of the Financial Industry Regulatory Authority, Inc.

 

    	21

    	 

    

 

(p)          “Required
Holders” means the Holders, in the aggregate, holding at least a majority of the then-outstanding Accreted Principal
Amount of the Notes.

 

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

 

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

 

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

 

[Balance of page intentionally left blank;
signature page follows]

 

    	22

    	 

    

 

IN WITNESS WHEREOF,
the Company has caused this Secured Convertible Term Note to be signed in its name effective as of this ___ day of _________, 2013.

 

	 	HEALTHCARE CORPORATION OF AMERICA
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

    	 

    	 

    

 

EXHIBIT I

 

[____________________]

CONVERSION NOTICE

 

Reference is made to
the Secured Convertible Note (the “Note”) issued to the undersigned by Healthcare Corporation of America (the
“Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion
Amount (as defined in the Note) of the Note indicated below into shares of common stock, no par value (the “Common Stock”),
of the Company, as of the date specified below.

 

	Date of Conversion:	 

 

	Aggregate Conversion Amount to be converted:	 

 

	Conversion Price:	 

 

	Number of shares of Common Stock to be issued:	 

 

	Please issue the Common Stock into which the Note is being converted in the following name and to the following address:

 

	Issue to:	 
	 	 
	 	 
	 	 
	 	 

 

	Facsimile Number:	 

 

	Holder:	 

 

	By:	 

 

	Title:	 

 

	Dated:	 

 

	Account Number:	 
	  (if electronic book entry transfer)

 

	Transaction Code Number:	 
	  (if electronic book entry transfer)

 

	Installment Amount(s) to be reduced (and corresponding Installment Date(s)) and amount of reduction:	_________________________________

 

    	 

    	 

    

 

EXHIBIT II

 

ACKNOWLEDGMENT

 

The Company hereby
acknowledges this Conversion Notice and hereby directs _________________ to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged and agreed
to by ________________________.

 

	 	HEALTHCARE CORPORATION OF AMERICA
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00225-of-00352.parquet"}]]