Document:

Exhibit 10.1

 

SECURITIES
PURCHASE AGREEMENT

 

This Securities Purchase
Agreement (this “Agreement”) is dated as of December 16, 2016, between One Horizon Group, Inc. a Delaware corporation
(the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively the “Purchasers”).

 

 

WHEREAS, the Company
and each Purchaser desire to enter into this transaction to purchase the Common Shares and Warrants (as defined below) set forth
herein pursuant to a currently effective shelf registration statement on Form S-3, which includes the Company’s Common Stock
(the “Common Stock”) registered thereunder (Registration Number 333-205049) (the “Registration Statement”),
which Registration Statement has been declared effective in accordance with the Securities Act of 1933, as amended (the “1933
Act”), by the United States Securities and Exchange Commission (the “SEC”).

 

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

 

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

 

ARTICLE I.

DEFINITIONS

 

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

 

“Acquiring Person”
shall have the meaning ascribed to such term in Section 4.5.

 

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

 

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

 

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

 

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

 

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

 

“Closing
Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Purchase Price and (ii) the Company’s
obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than the third Trading
Day following the date hereof.

 

     

     

    

 

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

 

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

 

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

 

“Company
Counsel” means Hunter Taubman Fischer & Li LLC, with offices located at 1450 Broadway, New York, New York 10018.

 

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

 

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

 

“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company
pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors
or a majority of the members of a committee of non-employee directors established for such purpose for services rendered to the
Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement,
provided that such securities have not been amended since the date of this Agreement to increase the number of such securities
or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits
or combinations) or to extend the term of such securities, (c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person
(or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset
in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in securities, or (d) the sale of not more than $500,000
of restricted Common Stock and/or restricted Common Stock Equivalents on or before August 31, 2016.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.11(a).

 

     

     

    

 

“Per
Share Purchase Price” equals $[ ], subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

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

 

 

“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.11(b).

 

“Pro
Rata Portion” shall have the meaning ascribed to such term in Section 4.11(e).

 

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

 

“Prospectus”
means the final base prospectus filed with respect to the Registration Statement.

 

“Prospectus
Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that relates to the
offering of the Securities and has been delivered by the Company to each Purchaser prior to the execution of this Agreement.

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8.

 

“Registration
Statement” means the effective registration statement filed with the Commission on Form S-3 (File No. 333-205049) which
registers the sale of the Shares, the Warrants and the Warrant Shares to the Purchasers.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Shares”
means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.

 

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

 

“Purchase
Price” means, shall be the amount set forth opposite each Purchaser’s name in column (5) on the Schedule of Purchasers.
For clarification purposes, the Warrants shall be issued to such Purchaser for no additional consideration.

     

     

    

 

“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable, also include any
direct or indirect subsidiary of the Company formed or acquired after the date hereof but before the Closing Date.

 

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

 

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

 

“Transaction
Documents” means this Agreement, the Warrants and any other documents or agreements executed by the Company and delivered
to the Purchasers in connection with the transactions contemplated hereunder.

 

“Transfer
Agent” means Nevada Agency and Transfer Company, the current transfer agent of the Company, with a mailing address of
50 West Liberty Street, Suite 880, Reno, Nevada 89501, and any successor transfer agent of the Company. 

 

“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, in the form of Exhibit A attached hereto.

 

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

 

ARTICLE II.

PURCHASE AND SALE

 

2.1           Closing.
On the Closing Date, (i) each Purchaser shall pay its respective Purchase Price to the Company for the Shares and the Warrants
to be issued and sold to such Purchaser at the Closing, by wire transfer of immediately available funds in accordance with the
Company’s written wire instructions, and (ii) the Company shall (A) cause the Transfer Agent through the Depository Trust
Company (“DTC”) Fast Automated Securities Transfer Program to credit, without restriction, to such Purchaser’s
or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian (“DWAC”) system such aggregate
number of Common Shares that such Purchaser is purchasing as is set forth opposite such Purchaser’s name in column (3) on
the Schedule of Purchasers, (B) deliver to each Purchaser a warrant certificate, in the form attached hereto as Exhibit A, pursuant
to which such Purchaser shall have the right to initially acquire up to the number of Warrant Shares as is set forth opposite such
Purchaser’s name in column (4) on the Schedule of Purchasers and (C) deliver to such Purchaser the other documents, instruments
and certificates set forth in Section 2.2. Notwithstanding anything to the contrary contained in the Warrants, all Warrant Shares
shall be delivered via DWAC.

 

2.2           Deliveries.

 

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

 

(i)            this
Agreement duly executed by the Company;

 

(ii)           [RESERVED]

 

(iii)          subject
to the last sentence of Section 2.1, a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent
to deliver on an expedited basis via DWAC Shares, registered in the name of such Purchaser;

 

(iv)          Warrant
certificate registered in the name of such Purchaser (such Warrant certificate may be delivered within three Trading Days of the
Closing Date); and

 

     

     

    

 

(v)          the
Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).

 

(b)          On
or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i)           this
Agreement duly executed by such Purchaser; and

 

(ii)          such
Purchaser’s Purchase Price, which shall be made available by wire transfer to the Company.

 

2.3          Closing
Conditions.

 

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

 

(i)          the
accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Purchasers contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);

 

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

 

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

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

 

(i)          the
accuracy in all material respects (or, to the extent representations or warranties are qualified by materiality or Material Adverse
Effect, in all respects) when made and on the Closing Date of the representations and warranties of the Company contained herein
(unless as of a specific date therein in which case they shall be accurate as of such date);

 

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

 

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

 

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

 

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

 

     

     

    

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1          Representations
and Warranties of the Company. Except as set forth in the Prospectus or Prospectus Supplements, including the documents incorporated
by reference therein, the Company hereby makes the following representations and warranties to each Purchaser:

 

(a)          Subsidiaries.
The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear
of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries,
all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

 

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

 

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

 

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

 

     

     

    

 

(e)          Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement,
(iii) application(s) to each applicable Trading Market for the listing of the Shares and Warrant Shares for trading thereon in
the time and manner required thereby and (iv) such filings as are required to be made under applicable state securities laws (collectively,
the “Required Approvals”).

 

(f)          Issuance
of the Securities; Registration. The Securities are duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company. The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the maximum
number of shares of Common Stock issuable pursuant to this Agreement and the Warrants. The Company has prepared and filed the Registration
Statement in conformity with the requirements of the Securities Act, which became effective on July 6, 2015 (the “Effective
Date”), including the Prospectus, and such amendments and supplements thereto as may have been required to the date of
this Agreement. The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the Commission
and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission.
The Company, if required by the rules and regulations of the Commission, shall file the Prospectus with the Commission pursuant
to Rule 424(b). At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement
and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects
to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus
and any amendments or supplements thereto, at time the Prospectus or any amendment or supplement thereto was issued and at the
Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will
not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.

 

(g)          Capitalization.
The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant
to the Company’s equity incentive plans or employee stock purchase plans or pursuant to the conversion and/or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person
has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights
or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock or the capital stock of any Subsidiary, or contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents
or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate the Company or any Subsidiary to
issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are
no outstanding securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound
to redeem a security of the Company or such Subsidiary. The Company does not have any stock appreciation rights or “phantom
stock” plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company
are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities
laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for
the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among
any of the Company’s stockholders. 

 

     

     

    

 

(h)          SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with
the Registration Statement, Prospectus and the Prospectus Supplement, including the exhibits thereto, if applicable, and the documents
incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis
or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities
Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule
144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in all material respects in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as
may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may
not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(i)          Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed on or prior to the date hereof, (i) there
has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property
to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v)
the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to the Company equity incentive
plans or employee stock purchase plan. The Company does not have pending before the Commission any request for confidential treatment
of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance,
occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective businesses, prospects, properties, operations, assets or financial condition that would be required
to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has
not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

 

     

     

    

 

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

 

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

 

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

 

(m)          Environmental
Laws.  The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating
to pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface
or subsurface strata), including 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 (“Environmental
Laws”); (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 clause (i), (ii) and (iii), the failure to so comply would be reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect.

 

     

     

    

 

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

 

(o)          Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens
for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP
and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by
the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance. 

 

(p)          Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports
and which the failure to so have would have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights
has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the
date of this Agreement, except where the same would not reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written
notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any
Person, except as would not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company,
all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual
Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to do so would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

 

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

 

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

 

     

     

    

 

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

 

(t)          Certain
Fees. Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable
by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank
or other Person with respect to the transactions contemplated by the Transaction Documents. To the Company’s knowledge, the
Purchasers have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction
Documents.

 

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

 

(v)         Registration
Rights. No Person has any right to cause the Company or any Subsidiary to effect the registration under the Securities Act
of any securities of the Company or any Subsidiary.

 

(w)        Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has received notice from the Nasdaq Stock Market that the Company was not in compliance with the
stockholder equity requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company
or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or
such other established clearing corporation) in connection with such electronic transfer.

 

     

     

    

 

(x)         
Reserved.

 

(y)          Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes material, non-public information which is not otherwise disclosed in the Prospectus
Supplement, including the documents incorporated by reference therein. The Company understands and confirms that the Purchasers
will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished
by or on behalf of the Company to the Purchasers in the Transaction Documents regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, 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 light of the circumstances
under which they were made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

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

 

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

 

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

 

(cc)         Accountants.
The Company’s accounting firm is Peterson Sullivan LLP. To the knowledge and belief of the Company, such accounting firm
is a registered public accounting firm as required by the Exchange Act.

 

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

 

     

     

    

 

(ee)        Acknowledgement
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently
may have a “short” position in the Common Stock that was created prior to such Purchaser having any knowledge of the
transactions contemplated by this Agreement, and (iv) each Purchaser shall not be deemed to have any affiliation with or control
over any arm’s length counter-party in any “derivative” transaction. The Company further understands and
acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities
are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable with respect
to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders'
equity interests in the Company at and after the time that the hedging activities are being conducted.  The Company acknowledges
that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

 

(ff)        
[RESERVED]

 

(gg)       [RESERVED].

 

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

 

(ii)         U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.

 

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

 

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

 

     

     

    

 

3.2           Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein, in which case they
shall be accurate as of such date):

 

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

 

(b)          Understandings
or Arrangements. Such Purchaser is acquiring the Securities as principal for its own account and has no present intention or
direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities
(this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.

 

(c)          Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants, it will be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act.

 

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

 

(e)          Access
to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto) and the SEC Reports and has been afforded, (i) the opportunity to ask such questions as it
has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company
and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate
its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. 

 

     

     

    

 

(f)          Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not,
nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any
purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that
such Purchaser received any non-public material information from the Company regarding the transactions contemplated by this Agreement
(including the Company’s intention to enter into such transactions) or first received a term sheet (written or oral) from
the Company, or any other Person representing the Company setting forth material terms of the transactions contemplated hereunder
(such information or term sheet, “Material Transaction Information”) and ending immediately prior to the execution
hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth
above shall only apply with respect to the portion of assets managed by any portfolio manager that was in possession of any Material
Transaction Information. Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including,
without limitation, its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, in each case
who were subject to obligations of confidentiality with respect to such information, such Purchaser has maintained the confidentiality
of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding
the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude
any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to
effect Short Sales or similar transactions in the future.

 

(g)          Ownership.
As of immediately following the Closing, such Purchaser, (together with such Purchaser’s Affiliates, and any other Persons
acting as a group together with such Purchaser or any of its Affiliates (such Persons, “Attribution Parties”))
will not beneficially own in excess of 19.99% of the shares of Common Stock outstanding immediately after the Closing. Such Purchaser
acknowledges that for purposes of the foregoing sentence, beneficial ownership shall include the maximum number of shares of Common
Stock issuable upon exercise of any Warrants issued to such Purchaser, any of its Affiliates or any Attribution Parties at the
Closing, and shall otherwise be calculated in accordance with Section 13(d) of the Exchange Act.

 

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

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1           Warrant
Shares. If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover
the issuance or resale of the Warrant Shares or if the Warrant is exercised via cashless exercise, the Warrant Shares issued pursuant
to any such exercise shall be issued free of all legends. If at any time following the date hereof the Registration Statement (or
any subsequent registration statement registering the sale or resale of the Warrant Shares) is not effective or is not otherwise
available for the sale or resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing
that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration
statement is effective again and available for the sale or resale of the Warrant Shares (it being understood and agreed that the
foregoing shall not limit the ability of the Company to issue, or any Purchaser to sell, any of the Warrant Shares in compliance
with applicable federal and state securities laws). The Company shall use reasonable best efforts to keep a registration statement
(including the Registration Statement) registering the issuance or resale of the Warrant Shares effective during the term of the
Warrants.

 

4.2           Furnishing
of Information. Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the
Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the Exchange Act.

 

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

 

     

     

    

 

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

 

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

 

4.6           Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
which shall be disclosed pursuant to Section 4.4, the Company covenants and agrees that neither it, nor any other Person acting
on its behalf will provide any Purchaser or its agents or counsel with any information that constitutes, or the Company reasonably
believes constitutes, material non-public information, unless (i) prior thereto such Purchaser shall have consented to the receipt
of such information and agreed with the Company to keep such information confidential, (ii) such Purchaser or its agents or counsel
solicited such information from the Company or (iii) such information is provided pursuant to a notice pursuant to any of the Transaction
Documents. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions
in securities of the Company. Except in the case of a notice provided pursuant to any of the Transaction Documents, to the extent
that the Company delivers any unsolicited material, non-public information to a Purchaser without such Purchaser’s consent,
the Company hereby covenants and agrees that such Purchaser shall not have any duty of confidentiality to the Company, any of its
Subsidiaries, or any of their respective officers, directors, agents, employees or Affiliates, or a duty to the Company, any of
its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates not to trade on the basis of,
such material, non-public information, provided that the Purchaser shall remain subject to applicable law. To the extent that any
notice provided pursuant to any Transaction Document constitutes, or contains, material, non-public information regarding the Company
or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form
8-K. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions
in securities of the Company.

 

4.7           Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder as described under the “Use
of Proceeds” caption of the Prospectus Supplement and shall not use such proceeds: (a) for the optional prepayment of any
portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business
and prior practices), (b) for the redemption of any Common Stock, or (c) in violation of FCPA or OFAC regulations.

 

     

     

    

 

4.8           Indemnification
of Purchasers. Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (but only to the extent of) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other Transaction Documents. If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its
own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of
such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing,
(ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and
the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no
more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement
by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed;
or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in
the other Transaction Documents. The indemnification required by this Section 4.8 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements
contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others
and any liabilities the Company may be subject to pursuant to law.

 

4.9           Reservation
of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available
at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company
to issue Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise of the Warrants.

 

4.10         Listing
of Common Stock. For so long as any of the Warrants remain unexercised and outstanding:

 

The Company hereby agrees to use
reasonable best efforts to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently
listed. Concurrently with the Closing, the Company shall apply to list or quote all of the Shares and Warrant Shares on such Trading
Market and promptly secure the listing of all of the Shares and Warrant Shares on such Trading Market. The Company further agrees,
if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all
of the Shares and Warrant Shares, and will take such other action as is necessary to cause all of the Shares and Warrant Shares
to be listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action reasonably necessary
to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the Trading Market. The Company agrees to maintain the eligibility
of the Common Stock for electronic transfer through the Depository Trust Company or another established clearing corporation, including,
without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in
connection with such electronic transfer.

 

     

     

    

 

4.12         [Reserved]

 

4.13         [RESERVED].

 

4.14         
[RESERVED].

 

4.15         Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending
at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release
as described in Section 4.4.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until
such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press
release as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction
and all non-public information provided by the Company to such Purchaser, directly or indirectly.  Notwithstanding the foregoing
and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i)
no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities
of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions
in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated
by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 and (iii) no Purchaser
shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries
after the issuance of the initial press release as described in Section 4.4.  Notwithstanding the foregoing, in the case
of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to
the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by
this Agreement.

 

4.16         Exercise
Procedures. The form of Notice of Exercise included in the Warrants set forth the totality of the procedures required of the
Purchasers in order to exercise the Warrants. No additional legal opinion, other information or instructions shall be required
of the Purchasers to exercise their Warrants. Without limiting the preceding sentences, no ink-original Notice of Exercise shall
be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required
in order to exercise the Warrants. The Company shall honor exercises of the Warrants and shall deliver Warrant Shares in accordance
with the terms, conditions and time periods set forth in the Transaction Documents.

 

ARTICLE V.

MISCELLANEOUS

 

5.1           Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated within 5 days hereof; provided, however, that no such termination will affect
the right of any party to sue for any breach by any other party (or parties).

 

5.2           Fees
and Expenses. At the Closing, the Company has agreed to reimburse Hunter Taubman Fischer Li LLC (“HTFL”) the non-accountable
sum of $10,000 for its legal fees and expenses. Except as expressly set forth in the Transaction Documents to the contrary, each
party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall
pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter
delivered by the Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchasers.

 

     

     

    

 

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

 

5.4           Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto
at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile or email attachment at the facsimile number or email address as set forth on
the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight
courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices
and communications shall be as set forth on the signature pages attached hereto.

 

5.5           Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and Purchasers which purchased at least 50.1% in interest of the Shares based on the
initial Purchase Prices hereunder or, in the case of a waiver, by the party against whom enforcement of any such waived provision
is sought, provided that if any amendment, modification or waiver disproportionately and adversely impacts a Purchaser (or group
of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shall also be required. No waiver
of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver
in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall
any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Any proposed
amendment or waiver that disproportionately, materially and adversely affects the rights and obligations of any Purchaser relative
to the comparable rights and obligations of the other Purchasers shall require the prior written consent of such adversely affected
Purchaser, Any amendment effected in accordance with accordance with this Section 5.5 shall be binding upon each Purchaser and
holder of Securities and the Company.

 

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

 

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

 

5.8           No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.8 and this Section 5.8.

 

     

     

    

 

5.9           Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action
or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Action or Proceeding
is improper or is an inconvenient venue for such Proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such Action or Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner permitted by law. If any party shall commence an Action
or Proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under
Section 4.8, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action
or Proceeding.

 

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

 

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

 

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

 

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

 

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

 

     

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

(Signature Pages Follow)

 

     

     

    

 

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

 

	One Horizon Group, INC.	 
	 	 	 
	By:	 	 
	 	Name: Brian Collins	 
	 	Title: Chief Executive Officer	 

 

	With a copy to (which shall not constitute notice):	 
	 	 
	Address for Notice:	 
	 	 
	Attn:	 
	 	 
	Fax:	 
	 	 
	With a copy to (which shall not constitute notice):	 
	 	 
	Hunter Taubman Fischer & Li LLC	 
	1450 Broadway, 26th Floor	 
	New York, New York 10018	 
	Attention: Louis Taubman	 
	Fax: 212-202-6380	 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

     

     

    

  

[PURCHASER SIGNATURE PAGES TO SECURITIES
PURCHASE AGREEMENT]

 

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

 

	Name of Purchaser:	 
	 	 
	Signature of Authorized Signatory of Purchaser:	 
	 	 
	Name of Authorized Signatory:	 
	 	 
	Title of Authorized Signatory:	 
	 	 
	Email Address of Authorized Signatory:	 
	 	 
	Facsimile Number of Authorized Signatory:	 
	 	 
	Address for Notice to Purchaser:	 
	 	 
	 	 
	 	 

 

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

 

	 	 

 

Purchase Price: $_________________

 

Shares: _________________

 

Warrant Shares: __________________

 

EIN Number: _______________________Exhibit 10.1

 

Paul Dailey

Spitz Inc.

700 Brandywine Drive,

Chadds Ford, PA 19317

Re: Employment Agreement

Dear Paul:

This letter agreement sets forth the terms of your employment with Evans & Sutherland Computer Corporation, a Utah corporation ("E&S" or the "Company"), effective as of the date set forth in Section 2 below (the "Effective Date"). This letter agreement supersedes and replaces all prior employment agreements between you and the Company, which are void.

	
1.

	
Position and Duties.

	
(a)

	
You will be employed by the Company as its Executive Vice President and Chief Financial Officer. In such position, you will have the duties and authority consistent with the duties and authority of a chief financial officer of a public company in the information technology industry of a size comparable to E&S. The Company's Chief Executive Officer ("CEO"), in his sole discretion, may alter, modify, or change your duties, offices, positions, responsibilities and obligations set forth in this Agreement at any time, consistent with the status of a senior executive of the Company. You accept employment with the Company on the terms and conditions set forth in this Agreement, and you agree to devote your full business time, judgment, energy and skills exclusively to the advancement of the business interests of the Company and its affiliates and to discharge your duties and responsibilities for them. You shall report directly to the CEO. Your principal place of employment will be in Chadds Ford, Pennsylvania, except for required travel on Company business, including travel to the Company's headquarters in Salt Lake City, Utah, as necessary and appropriate.  You will use best efforts to travel to the Company's headquarters in Salt Lake City, Utah, not less frequently that you have historically.

	
(b)

	
You will agree to serve, without additional compensation, if elected or appointed thereto, in one or more executive offices of the Company or any affiliate of the Company, or as a member of the board of directors of any affiliate of the Company; provided, however, that you are indemnified for serving in any and all such capacities on a basis no less favorable that is currently provided in the Company's bylaws, or otherwise.

	
2.

	
Term of Employment. You will be employed by the Company commencing on December 15, 2016, until December 31, 2019, after which your employment term will automatically renew for additional terms of one (1) year each; provided that either you or the Company may give written notice of non-renewal, which notice period shall be a minimum of three (3) months before the end of the then-current term, and further provided, that either you or the Company may terminate your employment at any time, with or without cause, subject to the provisions of Sections 4, 5 and 6 below.

	
3.

	
Compensation. You will be compensated for your services to the Company as follows:

	
(a)

	
Base Salary:  Commencing on the Effective Date, your annual base salary ("Base Salary") shall be Two Hundred Eighty Thousand dollars ($280,000) payable bi-weekly in accordance with the Company's normal payroll practices.  Base Salary shall be subject to periodic review and adjustment during the Term of this Agreement, but in no event shall Base Salary be reduced below Two Hundred Eighty Thousand dollars ($280,000).

	
(b)

	
Award of Options:  As of the Effective Date, you will be granted incentive stock options to purchase up to Sixty Thousand (60,000) in shares of the Company's common stock. Pursuant to the Company's 2014 Equity Incentive Plan (the "Equity Plan"), the options granted pursuant to this paragraph shall vest on each of the following dates: 20% on January 1, 2017; 20% on January 1, 2018; 20% on January 1, 2019; 20% on January 1, 2020; and 20% on January 1, 2021, all as more fully described in the Option Award Agreement dated as of the Effective Date between you and the Company. The above notwithstanding, in the event of a Change in Control all unvested equity grants, including options granted above, shall become immediately vested.  The Option Award Agreement shall reflect the full vesting of options upon Change in Control.

	
(c)

	
Incentive Bonus: As determined annually by the Compensation Committee, you will be eligible to receive an annual bonus under the E&S Management Incentive Plan (the "MIP"). Your bonus under the MIP will be based upon the Company's and your achievement of various financial goals established and approved annually by the Board of Directors (the "Board") or the Compensation Committee of the Board.  Nothing in this Agreement shall guaranty that you will receive an annual bonus or that any bonus awarded will be for a particular amount. Any bonus for a fiscal year will be paid within 90 days after the close of that fiscal year. The Company reserves the right to amend, change, or cancel the MIP at its sole discretion.

	
(d)

	
Benefits:  You will have the right, on the same basis as other similarly-situated employees of the Company, to participate in and to receive benefits under any applicable benefit plans, as well as under the Company's business expense reimbursement and other policies.  Your participation will be subject to the terms of the applicable plan documents and generally applicable Company policies, as the same may be in effect from time to time, and any other restrictions or limitations imposed by law, including without limitation, applicable tax rules.  You will accrue paid vacation in accordance with the Company's vacation policy.  The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.

	
(e)

	
Withholding:  All payments made by the Company under this Agreement shall be reduced by any tax or other amounts required to be withheld by the Company under applicable law.

	
4.

	
Voluntary Termination.  In the event that you voluntarily resign from your employment with the Company without Good Reason (as defined in Section 5) you will be entitled to no compensation or benefits from the Company other than those earned under Section 3(a) and (e) through the date of your termination.  You agree that if you voluntarily terminate your employment with the Company without Good Reason, you will provide the Company with 60 days' written notice of your resignation.  The Company may, in its sole discretion, elect to waive all or any part of such notice period and accept your resignation at an earlier date.

	
5.

	
Resignation for Good Reason.  During your employment with the Company, you may terminate your employment for Good Reason within thirty (30) days of the event constituting Good Reason by delivering to the Company a notice specifying that you are terminating your employment for Good Reason, setting forth in reasonable detail the facts and circumstances you claim give you Good Reason, and giving the Company thirty (30) days to cure the circumstances you claim give you Good Reason.  If you deliver such a notice and the Company fails to cure the circumstances you claim give you Good Reason within thirty (30) days resulting in a Separation (as defined in Section 6(c)) then the Company shall pay you the same severance pay and benefits you would have received if your employment had been terminated without cause pursuant Section 6(b) of this Agreement, provided however, that you must sign a general release of known and unknown claims in the form attached hereto as Exhibit A in order to receive such severance.  For purposes of this Agreement, "Good Reason" shall mean any of the following events if effected by the Company without your consent:  (i) a material diminution of your duties, responsibilities, or authority; (ii) a material reduction of your Base Salary; (iii) a requirement that you report to a corporate officer or employee instead of reporting directly to the CEO; (iv) a material change in the geographic location where you work; (v) the Company's failure to secure the written assumption of its material obligations under this Agreement from any successor to the Company; or (vi) a material breach of this Agreement by the Company which is not remedied within fifteen (15) business days following written notice from you.

	
6.

	
Other Termination.  Your employment may be terminated by the Company under the circumstances set forth below.

	
(a)

	
Termination for Cause:  If your employment is terminated by the Company for cause as defined below, you shall be entitled to no compensation or benefits from the Company other than those earned under Section 3(a) and (e) through the date of your termination for cause.

	
 

	
For purposes of this Agreement, a termination "for cause" occurs if you are terminated for any of the following reasons: (i) theft, dishonesty or falsification of any employment or Company records; (ii) improper disclosure of the Company's confidential or proprietary information resulting in damage to the Company; (iii) any action or omission by you that constitutes a knowing and material violation of the Company's policies and procedures; (iv) your failure or inability to perform any assigned duties after written notice from the Company to you of, and a reasonable opportunity to cure, such failure or inability; (v) your conviction (including any plea of guilty or no contest) of a felony, or of any other criminal act if that act impairs your ability to perform your duties under this Agreement or (vi) your failure to cooperate in good faith with a governmental or internal investigation of the Company or its directors, officers or employees, if the Company has requested your cooperation. For purposes of this paragraph, "Company" shall mean E&S and its affiliates.

	
(b)

	
Termination Without Cause, Death or Disability:  If a Separation occurs because your employment is terminated by the Company without cause or as a result of your death or Disability (as defined below), and if you sign a general release of known and unknown claims in form attached hereto as Exhibit A, you will receive severance payments equal to one hundred thirty-five percent (135%) of your Base Salary at the time of such termination; less applicable withholding, payable over a period of twelve (12) months after the date of the Separation. Severance payments will be made periodically in accordance with the Company's normal payroll schedule.  You, your personal representative or guardian, as applicable, must execute and return the form of release attached hereto as Exhibit A to receive severance payments.  The severance payments will commence on the date in which the release becomes irrevocable in accordance with its terms or applicable law. During the twelve-month severance period, the Company will also pay the premiums to continue your group health insurance coverage under COBRA if you are eligible for COBRA and have elected continuation coverage under the applicable rules.  However, the Company's COBRA obligations shall immediately cease to the extent you become eligible for benefits from a subsequent employer.

	
(c)

	
Termination following Change of Control.  If a Change of Control (as defined in the Equity Plan) occurs and within twelve (12) months following such Change of Control, your employment with the Company or its successor is terminated:  (i) by the Company or its successor without cause; (ii) as a result of your death or Disability; or (iii) following your resignation for Good Reason, you shall be entitled to all separation payment and benefit set forth in Section 6(b); provided however, that the severance payments shall be made in a single lump sum upon execution and non-revocation of the form of release attached hereto as Exhibit A.

	
(d)

	
Definition of Separation. For purposes of this Agreement, "Separation" means a "separation from service," as defined in the regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"). For purposes of this Agreement, "Disability" means (i) your inability, by reason of physical or mental illness or other cause, to perform your duties hereunder on a full‐time basis for a period of ninety (90) days in any one year period, or (ii) in the discretion of the CEO, as such term is defined in any disability insurance policy in effect at the Company during the time in question.

	
(e)

	
Commencement of Payments.  For purposes of Section 409A of the Code, each salary continuation payment under Section 5 or 6(b) above is hereby designated as a separate payment.  If the Company determines that you are a "specified employee" under Section 409A(a)(2)(B)(i) of the Code at the time of your Separation, then (i) the salary continuation payments under Section 5 or 6(b) above, to the extent that they are subject to Section 409A of the Code, will commence during the seventh month after your Separation and (ii) the installments that otherwise would have been paid during the first six months after your Separation will be paid in a lump sum when the salary continuation payments commence.

	
7.

	
Termination Obligations.

	
(a)

	
Return of Property.  You agree that all property (including, without limitation, all equipment, tangible proprietary information, documents, records, notes, contracts and computer-generated materials) furnished to you by the Company or any affiliate or created or prepared by you in the course of your employment belongs to the Company and shall be promptly returned to the Company upon termination of your employment.

	
(b)

	
Resignation and Cooperation.  Following any termination of employment, you shall cooperate with the Company in the winding up of pending work on behalf of the Company or any affiliate and the orderly transfer of work to other employees. You shall also cooperate with the Company and any affiliate in the defense of any action brought by any third party against the Company that relates to your employment by the Company. The Company shall reimburse you for your time and reasonable expenses incurred in connection with such cooperation.

	
8.

	
Confidential Information.

	
(a)

	
You acknowledge that because of your position with the Company, you will have access to Confidential Information (as defined below) of the Company and its affiliates.  Accordingly, you hereby agree that, during your employment and at all times thereafter, you will hold the Confidential Information of the Company and its affiliates in strict confidence and will neither use (for yourself or any third party) the information nor furnish, make available or disclose it to anyone, except to the extent necessary to carry out your responsibilities as an employee of the Company or as specifically authorized in writing by the CEO.  As used in this Agreement, "Confidential Information" means any information relating to the business or affairs of the Company and its affiliates, including, but not limited to information relating to financial statements, operations manuals, systems manuals, customer identities, customer profiles, customer preferences, partner or investor identities, employees, suppliers, advertising programs, target markets, servicing methods, equipment, programs, strategies and information, market analyses, profit margins, past, current or future marketing strategies, or any other proprietary information used by the Company or its affiliates; provided, however, that Confidential Information shall not include any information which is in the public domain or becomes known in the industry through no act or omission by you.  You acknowledge that the Confidential Information is vital, sensitive, confidential and proprietary to the Company and that you are under a contractual and common law duty to not disclose the Confidential Information to any third party at any time.  You acknowledge and agree that your non-disclosure obligation applies to all Confidential Information of the Company, no matter when you obtained knowledge of or access to such Confidential Information.  You further acknowledge that the Company would not employ you or provide you with access to its Confidential Information, but for your promises and covenants contained in this Section 8 and elsewhere in this Agreement. Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation, or order. You shall promptly provide written notice of any such order to the CEO.

	
(b)

	
Notice of Immunity under the Economic Espionage Act of 1996, as amended by the Defend Trade Secrets Act of 2016.  Notwithstanding any other provision of this Agreement:

	
(i)

	
You will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that: (A) is made: (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding.

	
(ii)

	
If you file a lawsuit for retaliation by the Company for reporting a suspected violation of law, you may disclose the Company's trade secrets to your attorney and use the trade secret information in the court proceeding if you: (A) file any document containing the trade secret under seal; and (B) do not disclose the trade secret, except pursuant to court order.

	
9.

	
Ownership of Information and Property.  You agree that all information and property of the Company or its affiliates that comes into your control or possession due to your relationship with the Company or any of its affiliates, including without limitation any Confidential Information, are and shall remain the property of the Company or an Affiliate, as applicable, and, at the Company's request, you shall promptly return all such information and property to the Company and provide to Company a written certificate confirming that all such information and property have been returned to the Company.

	
10.

	
Non-Competition and Non-Solicitation Covenants.

	
(a)

	
Prohibited Activities.  During the Term of your employment and for twelve (12) months thereafter (the "Restricted Period"), in addition to your other obligations hereunder, you shall not, in any manner, directly or indirectly, (i) engage or invest in, (ii) own, manage, operate, finance, control, (iii) participate in the ownership, management, operation, financing, or control of, or (iv) be employed by, work for or with, or in any way assist any business or any person or entity that engages in the Restricted Business (as defined below) in the Restricted Territory (as defined below).  For purposes of this Agreement, (x) "Restricted Business" means the business and operations that are the same or similar to those engaged in by the Company or its affiliates during your employment with the Company, or in which any of the Company or its affiliates has material plans to engage of which you are aware during the period of your employment with the Company, which business and operations include the business of advanced computer graphics technology for digital planetariums and full dome digital cinemas worldwide, full-dome education including projection systems, software, curriculum, lighting and audio and dome screens, and other architectural domes, spheres, and freeform structures; and (y) "Restricted Territory" means the geographic area where the Company and its affiliates conduct business. For purposes of this paragraph, "Company" shall mean E&S and its affiliates.  For avoidance of doubt, a Restricted Business may take the form of a sole proprietorship, corporation, partnership, limited liability company, governmental or private entity or any other entity of whatever kind (including without limitation, a private equity fund) that engages in a Restricted Business.

	
(b)

	
Communication of Contents of Covenants.  During the Restricted Period, you will communicate the contents of this Agreement to any person or entity that you intend to be retained or employed by, associated with, or represent and which you know is engaged in the Restricted Business or in a business that competes with the Company in the Restricted Business.

	
(c)

	
Non-Solicitation of Customers.  You understand and acknowledge that because of your experience with and relationship to the Company, you will have access to and learn about much or all of the Company's customer information. "Customer Information" includes, but is not limited to, names, phone numbers, addresses, e-mail addresses, order history, order preferences, chain of command, pricing information and other information identifying facts and circumstances specific to the customer and relevant to sales and services. You understand and acknowledge that loss of these customer relationships or goodwill will cause significant and irreparable harm to the Company.  You agree and covenant that during the Restricted Period, you will not directly or indirectly solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact or meet with the Company's current, former or prospective customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company.

	
(d)

	
Tolling of Covenants.  If it is judicially determined that you have violated any of your obligations under this Agreement, then the Restricted Period will automatically be extended by a period of time equal in length to the period during which such violation or violations occurred.

	
(e)

	
Non-disparagement.  You and the Company both agree and covenant that neither will at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the other or its businesses, or any of its employees, officers, and existing and prospective customers, suppliers and other associated third parties. This section does not, in any way, restrict or impede you from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation or order.

	
(f)

	
Acknowledgments.  You understand that the nature of your position gives you access to and knowledge of Confidential Information and places you in a position of trust and confidence with the Company. You further understand and acknowledge that the Company's ability to reserve these for the exclusive knowledge and use of the Company is of great competitive importance and commercial value to the Company, and that improper use or disclosure by you is likely to result in unfair or unlawful competitive activity. You acknowledges that your obligations under this Section 10 (including the geographic boundaries, scope of prohibited activities and the time duration of the provisions) are reasonable in the context of the nature of the Restricted Business and the competitive injuries likely to be sustained by the Company if you were to violate such obligations, and are no broader than are necessary to protect the legitimate business interests of the Company.  You further acknowledge that the Company would not have employed you in the absence of this Section 10 and your other covenants and representations and warranties made herein, which you acknowledge constitutes good, valuable and sufficient consideration.

	
11.

	
Severability.  If any provision of this Agreement is deemed invalid, illegal or unenforceable, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected.

	
12.

	
Assignment.  In view of the personal nature of the services to be performed under this Agreement by you, you cannot assign or transfer any of your obligations under this Agreement.

	
13.

	
Entire Agreement.  This Agreement and the agreements referred to above constitute the entire agreement between you and the Company regarding the terms and conditions of your employment, and they supersede all prior negotiations, representations or agreements between you and the Company regarding your employment, whether written or oral.

	
14.

	
Modification.  This Agreement may only be modified or amended by a supplemental written agreement signed by you and an authorized representative of the Company.

	
15.

	
Governing Law.  This Agreement, and all matters relating hereto, including any matter or dispute arising out of the Agreement, shall be interpreted, governed, and enforced according to the laws of the State of Utah, without regard to conflict of laws principals.

	
16.

	
Remedies and Jurisdiction.

	
(a)

	
You hereby acknowledge and agree in addition to all other remedies available to the Company for a breach of this Agreement (including, without limitation, the right to recover damages), the Company shall be entitled to seek injunctive relief.  To enforce the provisions of this Section 16(a), the Company may seek relief from any court with proper jurisdiction.

	
(b)

	
All claims, disputes and other matters in question between the parties arising under this Agreement, shall, unless otherwise provided herein, be decided by binding arbitration before a single independent arbitrator selected pursuant to Section 16(d).  TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, ALL DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT DISCRIMINATION, BREACH OF CONTRACT OR POLICY, OR EMPLOYMENT TORT COMMITTED BY THE COMPANY OR A REPRESENTATIVE OF THE COMPANY, INCLUDING CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS AGREEMENT AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL.  The arbitration hearing shall occur at a time and place convenient to the parties in Minneapolis, Minnesota, within thirty (30) days of selection or appointment of the arbitrator.  The arbitration shall be governed by the National Rules for the Resolution of Employment Disputes of AAA in effect on the date of the first notice of demand for arbitration.  The arbitrator shall issue written findings of fact and conclusions of law, and an award, within fifteen (15) days of the date of the hearing unless the parties otherwise agree.

	
(c)

	
In cases of breach of contract or policy, damages shall be limited to contract damages.  In cases of discrimination claims prohibited by statute, the arbitrator may direct payment consistent with the applicable statute.  Issues of procedure, arbitrability, or confirmation of award shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1‐16.

	
(d)

	
The parties shall select the arbitrator from a panel list made available by the AAA.  If the parties are unable to agree to an arbitrator within ten (10) days of receipt of a demand for arbitration, the arbitrator will be chosen by alternatively striking from a list of five (5) arbitrators obtained by the Company from AAA.  The Executive shall have the first strike.

	
17.

	
Attorneys' Fees.  In any arbitration, court action or other adjudicative proceeding arising out of or relating to this Agreement or Employee's employment with the Company, each party shall pay its own attorneys', accountants', and experts' fees and costs of such proceeding(s).

	
18.

	
Section Headings.  The section headings of this Agreement are inserted only for convenience and in no way define, limit, or describe the scope or intent of this Agreement nor affect its terms and provisions.

	
19.

	
Construction.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement and no provision of this Agreement shall be construed against either party as the drafter thereof.

	
20.

	
Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Agreement, but all of which together shall constitute one and the same instrument.

	
21.

	
EMPLOYEE ACKNOWLEDGEMENT.  YOU HAVE HAD THE OPPORTUNITY TO CONSULT LEGAL COUNSEL CONCERNING THIS AGREEMENT AND HAVE OBTAINED AND CONSIDERED THE ADVICE OF SUCH LEGAL COUNSEL TO THE EXTENT YOU DEEMS NECESSARY OR APPROPRIATE.  YOU HAVE READ AND UNDERSTANDS THE AGREEMENT, ARE FULLY AWARE OF ITS LEGAL EFFECT, AND HAVE ENTERED INTO IT FREELY BASED ON YOUR OWN JUDGMENT AND NOT BASED ON ANY REPRESENTATIONS OR PROMISES OTHER THAN THOSE CONTAINED IN THIS AGREEMENT.

[Remainder of page left intentionally blank.

Signature page follows.]

Please sign and date this letter on the spaces provided below to acknowledge your acceptance of the terms of this Agreement.

EVANS & SUTHERLAND COMPUTER CORPORATION

By:  /s/ Jonathan Shaw        

Title:  Chief Executive Officer        

 

Accepted and agreed this 15th day of December, 2016:

EMPLOYEE

/s/ Paul Dailey 

 Executive Signature

EXHIBIT A

EXECUTIVE SEPARATION AND GENERAL RELEASE AGREEMENT

This Confidential Executive Separation and General Release Agreement ("Agreement") is between Paul Dailey ("Executive") and Evans & Sutherland Computer Corporation, a Utah corporation ("E&S" or the "Company"), as well as each and all of its parents, subsidiaries, and affiliates. Executive has been serving as Executive Vice President and Chief Financial Officer of the Company pursuant to an Employment Agreement dated as of December 15, 2016, as amended (the "Employment Agreement"). In consideration of the mutual promises recited in this Agreement, Executive and Company hereby agree:

1. General Terms of Termination.  Executive's employment relationship with Company will terminate on [                ] (the "Separation Date"). Executive understands and acknowledges that through and including the Separation Date, that all of Company's human resources policies and practices remain in effect, and that Executive will continue to receive current base salary and will be entitled to participate in the same employee benefit and incentive compensation plans/programs as other similarly situated employees, subject to any restriction, limitation and discretionary authority specified in such plans and programs.

2. Other Compensation and Benefits.  Executive understands that except as expressly provided for herein by this Agreement, all other compensation and benefit plans, policies and programs in which Executive participates in as a result of employment with Company, shall be administered pursuant to their terms, provisions and administrative practices and policies that are then in effect, as interpreted and applied by Company or the plan administrator(s) as applicable.

3. Separation Payment and Benefits.  Company agrees to provide Executive with separation payment and benefits and described as follows:

(a) Separation Payment.  Company will pay separation payments in the amount of [              ], which represents one hundred thirty-five percent (135%) of Executive's Base Salary as determined on the date of this Agreement.  Payment of such amount shall commence immediately following the expiration of the revocation period set forth in Section 15 and shall be made [over a period of twelve (12) months][in a single lump sum].

(b) Vesting of Equity Compensation.  Subject to the terms of the Company's 2014 Stock Incentive Plan (the "Equity Plan"), applicable awards and applicable law, Company will cause any outstanding, qualified option, non-qualified stock option, restricted stock unit and/or other equity awards provided pursuant to the Equity Plan to become vested to the extent not current vested.  The shares associated with any vested awards (less any applicable tax withholding) will be issued or delivered to Executive in accordance with the terms of the applicable awards, the Equity Plan, and applicable law.

(c) COBRA Continuation.  If Executive properly and timely elects to continue his medical, dental and vision insurance coverage (collectively, "health insurance coverage") under Company's group medical, dental and vision insurance plans (collectively, "Continuation Coverage") pursuant to the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), Company shall reimburse Executive for payments made by him for such Continuation Coverage for him and his dependents who qualify for continuation coverage under COBRA for one (1) year following the Separation Date (the "COBRA Pay Period").  If Executive elects to continue COBRA coverage after the end of the COBRA Pay Period, such Continuation Coverage shall be entirely at his own expense.  Notwithstanding the foregoing, if, during the COBRA Pay Period, Executive obtains insurance coverage through a new employer or Medicare, the Company shall have no further obligation to pay any portion of the premiums for Continuation Coverage under the Company's group health insurance plans.

4. General Release.  In consideration of the promises, covenants and agreements contained herein, Executive, for himself and his heirs, successors, and assigns, hereby releases and forever discharges Company and its officers, shareholders, directors, employees, agents, representatives, attorneys, parent, subsidiary and affiliated companies, successors and assigns, and each of them, of and from any and all claims, losses, demands, actions, causes of action, obligations, debts and/or liabilities (the "Released Claims") relating to any matters of any kind, presently known or unknown, in law or in equity, arising out of any acts, omissions, events or facts which have occurred up to, and including the time of, the Effective Date.  The Released Claims released pursuant to the foregoing paragraph include, without limitation, any claims, losses, demands, actions, causes of action, obligations, debts, and/or liabilities resulting from or arising out of Executive's employment by Company, the termination thereof, or any transaction, event, action, dispute and/or activity related thereto, as well as any claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Equal Pay Act of 1963, the Americans with Disabilities Act, the Family and Medical Leave Act, the Employment Retirement Income Security Act, the Utah Anti-Discrimination Act, the Utah Payment of Wages Act, or any other federal, state or local statute prohibiting employment discrimination, harassment, or retaliation, or any claim for general, special, or other compensatory damages, consequential damages, punitive damages, back or front pay, fringe benefits, attorneys' fees, costs, or other damages or expenses, or any claim for injunctive relief or other equitable relief, or any claim for alleged wrongful discharge, breach of express or implied contract, breach of the covenant of good faith and fair dealing, termination in violation of public policy, negligence, negligent hiring, retention, or employment, invasion of privacy, defamation, intentional or negligent infliction of emotional distress, fraudulent representation, fraudulent omission, assault, battery, interference with contract or other economic opportunity, failure to pay wages due or other monies owed, failure to pay pension benefits, conversion, breach of duty, vicarious liability, any claim arising under any federal or state statute or local ordinance regulating the health and/or safety of the workplace, or any other tort, contract or statutory claim.

5. Exclusions from General Release.  This Agreement's general release provisions exclude: claims arising after Executive signs this Agreement; claims for breach of this Agreement; any claim for coverage under E&S's Directors and Officers insurance policy or any applicable indemnification agreement or policy; and claims that cannot be waived, such as for unemployment or worker's compensation.

6. Protected Rights.  Employee understands that nothing contained in this Agreement limits Employee's ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission ("Government Agencies"). Employee further understands that this Agreement does not limit Employee's ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Employee's right to receive an award for information provided to any Government Agencies.

7. Cooperation and Assistance.  Executive agrees to cooperate and assist in the investigation, prosecution or defense of any potential claims or concerns regarding Company's or any affiliates' business about which he has relevant knowledge, including:  (i) by providing truthful information and testimony as reasonably requested by Company; and (ii) by providing truthful information and testimony with Government Agencies on matters pertaining to any investigation, litigation or administrative proceeding concerning Company or its affiliates.  Company will reimburse Executive for reasonable time, travel and out‐of‐pocket expenses incurred in providing such cooperation and assistance after the Separation Date.

Except as provided for in Section 18 with regard to governmental reporting, Executive further agrees to inform Company of all subpoenas, correspondence, telephone calls, and requests for information, inquiries or other contacts he may receive from third parties, concerning any fact or circumstances known to him during his employment.  Executive agrees to inform E&S within three (3) business days of each such contact.  All notices and other communications Executive may provide Company as required to accomplish this obligation shall be in writing and shall be given by Executive in hand or by overnight delivery, with a signed receipt, shall be deemed effective as of the date delivered.

8. Indemnification.  Company shall defend and indemnify Executive with respect to Executive's actions in the performance of Executive's duties arising from his employment and performance as an officer and employee through the Separation Date to the fullest extent permitted by the Company's Bylaws as in effect from time to time.

9. Non-Disparagement.  Executive agrees not to criticize, make any negative comment about or otherwise disparage Company and its current officers and directors in any manner, whether orally or in writing and directly or indirectly, that when viewed objectively, appears calculated to disrupt or impair their normal, ongoing business operations, or to harm their reputation with employees, suppliers, customers, agents, shareholders or the public.  Company agrees that it will instruct its executive officers and Directors, not to criticize, make any negative comment about or otherwise disparage Executive in any manner, whether orally or in writing and directly or indirectly, that when viewed objectively, appears calculated to disrupt or impair or to harm his reputation with prospective employers, employees, suppliers, customers, agents, shareholders or the public.

Executive further agrees not to provide testimony as an expert or paid witness on behalf of a party adverse to Company or its affiliates.  This paragraph does not prohibit Executive from testifying pursuant to a subpoena or from accepting witness fees accompanying a subpoena, and this paragraph in no way limits Executive's right to report possible violations of law or regulation to Government Agencies; to file a charge with any governmental administrative agency or participate in any such agency investigation; nor from making other disclosures that are protected under whistleblower provisions of state or federal law or regulation.

10. Reference.  Executive agrees to direct all inquiries regarding employment, including those from prospective employers to [                       ].

11. Obligations Regarding Trade Secret and Company Confidential Information.  Executive acknowledges that during his employment, he developed and has been exposed to trade secrets or Confidential Information (as defined in the Employment Agreement) regarding Company and its affiliates.  Company considers such Confidential Information to be valuable and proprietary.  Except as provided for in Section 18 with regard to governmental reporting, Executive acknowledges that he is under a continuing obligation to keep confidential, not disclose and not use any Confidential Information, except as specifically authorized by Company, pursuant to Section 8 of the Employment Agreement, which continues to be enforceable by Company according to its terms.

12. Obligations Regarding Non-Solicitation and Non-Competition.  Executive acknowledges that he is obligated, during the Restricted Period (as defined in the Employment Agreement), not to directly or indirectly solicit, contact, attempt to contact or meet with the Company's current, former or prospective customers as more fully described in Section 10 of the Employment Agreement, which continues to be enforceable by Company according to its terms.  Executive further acknowledges that he is obligated, during the Restricted Period not to engage in any Restricted Business (as defined in the Employment Agreement) in the Restricted Territory (as defined in the Employment Agreement) as more fully described in Section 10 of the Employment Agreement, which continues to be enforceable by Company according to its terms.

13. Breach by Executive.  In the event of a breach by Executive of any of the provisions of this Agreement, including without limitation the duty to cooperate, confidentiality, non-solicitation, non-competition or non-disparagement provisions of this Agreement, Company's obligation to make any payment under this Agreement will immediately cease.  Executive acknowledges that irreparable harm would result from any breach by Executive of the provisions of this Agreement, and that monetary damages alone would not provide adequate relief for any such breach.  Accordingly, if Executive breaches or threatens to breach this Agreement, Executive consents to injunctive relief in favor of Company without the necessity of Company posting a bond.

14. Advice to Consult Legal Counsel.  Since this Agreement includes a waiver of rights, including those rights falling under the Age Discrimination in Employment Act, Executive has been advised to consult an attorney before signing this Agreement.

15. Period to Consider Agreement.  Executive agrees that he has at least twenty‐one (21) days from the day that he has been given this Agreement, not counting the day upon which he received it, to consider whether to sign the Agreement. If he signs the Agreement before the end of the 21‐day period, he agrees that he will have done so knowingly and voluntarily, without undue influence, duress or any type of pressure by Company.

16. Right to Revoke Agreement.  Executive may rescind this Agreement at any time within seven (7) days after signing it, not counting the day upon which he signs it.  This Agreement will not become effective or enforceable unless and until the 7‐day rescission period has expired without Executive rescinding it.

17. Procedure for Accepting or Rescinding the Agreement.  To accept the terms of this Agreement, Executive agrees that he must deliver the Agreement, after having signed and dated it, to Company by hand or mail.  If he decides to rescind the acceptance, the Executive must deliver to Company by hand or by mail a written, signed statement to announce that acceptance of this Agreement is rescinded.  This statement must be delivered to Company within the 7‐day rescission period.  Executive understands that all deliveries of acceptance or rescission to Company must be made to [                       ].

18. Executive Acknowledgments.  By signing this Separation Agreement, Executive agrees that: he has been advised to consult with legal counsel concerning the terms of this Agreement prior to signing it; that he is entering into this Separation Agreement knowingly and voluntarily; that he has been paid for all time worked; and that he has paid for all unused accrued paid vacation leave in accordance with Company's vacation leave policy.  Executive also acknowledges and agrees to cooperate in the return of all property belonging to Company, including but not limited to identification badge, keys, key cards, files (in whatever form – including electronic files), records, computer access codes, computer passwords, computer hardware, computer programs, instruction manuals, business plans, as well as other documents prepared or received and other property used in connection with his employment.

19. Confidentiality.  The parties mutually agree to keep the existence and terms of this Agreement, and the discussions between them regarding this Agreement, confidential and agree that neither the existence, the terms, nor the discussions with regarding this Agreement shall be disclosed or communicated in any manner except (i) as required by legal proceedings to secure compliance with or enforcement of the terms of this Agreement; (ii) in response to any proper subpoena, court order, or lawful discovery request in litigation; (iii) to Employee's spouse, domestic partner, or financial/legal advisors, all of whom shall agree to keep such information confidential; or (iv) as required by law.  This provision also does not prohibit or restrict Executive (or his attorney) from responding to any inquiry about this Agreement or its underlying facts and circumstances by the Securities and Exchange Commission ("SEC") or any other Government Agencies, nor does this confidentiality obligation require Executive to notify Company regarding any such reporting, disclosure or cooperation with SEC or any other entity or agency of the government.

20. Non-Admissions.  The fact and terms of this Separation Agreement are not an admission by Company or by the Executive of liability or other wrongdoing under any law.

21. Internal Revenue Code Section 409A.  The Parties agree that the separation payment made pursuant to this Agreement does not constitute deferred compensation for purposes of Section 409A of the Internal Revenue Code of 1986 and its accompanying regulations ("Section 409A").  Specifically, the separation payment described in this Agreement will be made in a manner that will cause it to be a short-term deferral as described in Treas. Reg. § 1.409A-1(b)(4).  This Agreement shall be implemented and construed in a manner to give effect to the foregoing.  In no event whatsoever shall Company or any of its affiliates be liable for any tax, interest or penalties that may be imposed on Executive pursuant to Section 409A.  Neither Company nor any of its affiliates have any obligation to indemnify or otherwise hold Executive harmless from any such taxes, interest or penalties, or liability for any damages related thereto.

22. Entire Agreement and Enforceability.  The Parties agree that this Agreement is the entire Agreement between them regarding the termination of their employment relationship, and that if any part of this Agreement is found to be invalid, the rest of the Agreement will be enforceable between them.  Any changes to this Agreement after it was first presented to Executive, whether material or immaterial, do not restart the decision period described in the Section entitled "Period to Consider Agreement."  Further, both parties agree that this Agreement shall be interpreted and enforced in accordance with the laws of the State of Utah. Notwithstanding any other provision of this Separation Agreement, it is expressly understood and agreed by the parties that Section 16 of the Employment Agreement shall remain in full force and effect.

 ______________________________

Executive Signature

Date: ____________________________

 

EVANS & SUTHERLAND COMPUTER CORPORATION

By: ______________________________

Title: ____________________________

Date: ____________________________

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