Document:

Exhibit 4.5

  

EXECUTION
COPY

 

THIS PROMISSORY
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE
WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO MAKER
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.

 

This
promissory note and the indebtedness and securities evidenced hereby are subordinated in accordance with and subject to the terms
of that certain Subordination Agreement (as amended, restated, supplemented or modified from time to time, the “Subordination
Agreement”), dated as of July 8, 2015 by and among Alison Fogel and David Fogel, a married couple residing in the State of
Maine, jointly and severally, Staffing 360 Solutions, Inc., a Nevada corporation, and MidCap Funding X Trust, in its capacity as
agent (together with its affiliates and their respective successors and assigns, “Senior Agent”) for the Senior Lenders
(as defined in the Subordination Agreement), and each holder and transferee of this promissory note, by its acceptance hereof,
irrevocably agrees to be bound by the provisions of the Subordination Agreement.

 

UNSECURED
CONVERTIBLE PROMISSORY NOTE 

 

Issuance
Date: July 8, 2015

Aggregate
Principal Amount: $624,595.00

 

For
value received, Staffing 360 Solutions, Inc., a Nevada corporation (“Maker”), promises to pay to Alison
Fogel and David Fogel, a married couple residing in the State of Maine (each, a “Payee” and together,
“Payees”), an aggregate principal sum of Six Hundred Twenty-Four Thousand Five Hundred Ninety-Five U.S.
Dollars ($624,595.00) (the “Aggregate Principal Amount”), with fifty-one percent (51%) of the Aggregate
Principal Amount payable to Alison Fogel and forty-nine percent (49%) of the Aggregate Principal Amount payable to David Fogel,
together with interest accrued but unpaid thereon, at the rate and on the terms set forth below in this promissory note (this
“Note”). The date of this Note is the date first set forth above as the “Issuance Date” (the
“Issuance Date”). This Note is being issued in connection with that certain Equity Purchase Agreement,
dated as of the date hereof (the “Purchase Agreement”), by and among Payees, Lighthouse Placement Services,
LLC, a Massachusetts limited liability company (the “Company”) and Maker, and is the Two Year Note referenced
therein. All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.
The Aggregate Principal Amount of this Note (and each Payee’s portion thereof), and the dollar amount of each Quarterly Installment
(as defined below) may be increased or decreased, as the case may be, in accordance with Section 1.5(d) of the Purchase Agreement,
in which case this Note shall be amended to reflect the adjusted Aggregate Principal Amount and Maker shall promptly thereafter
amend the Payment and Amortization Schedule (as defined below).

 

    	 

    	 

    

  

1.          Repayment.
All payments of interest and principal under this Note shall be in lawful money of the United States of America in immediately
available funds, at the address of each Payee on the books of Maker or at such other place, or by wire transfer of funds to an
account of each Payee, as such Payee may designate in writing to Maker. Unless this Note is paid or otherwise satisfied in full
as set forth herein, or the obligations hereunder are converted into Conversion Shares in accordance with Section 6, and
otherwise subject to Sections 3 and 7(a)(vi), payments of principal and interest on this Note shall be made in installments
each fiscal quarter (including the partial fiscal quarter in which the Issuance Date occurs and the partial fiscal quarter in which
the Maturity Date occurs), on a straight-line basis amortizing the payments of principal and interest on this Note over a two (2)
year period (with the amount for the partial fiscal quarter in which (x) the Issuance Date occurs allocated on a fractional basis
based on the number of remaining days in the fiscal quarter from and after the Issuance Date or (y) the Maturity Date occurs allocated
on a fractional basis based on the number of days in the fiscal quarter prior to and including the Maturity Date) (the “Quarterly
Installments”), each to be set forth in a Payment and Amortization Schedule to be delivered by Maker to Payees promptly
(but in any event within ten (10) Business Days) after the Issuance Date and reasonably acceptable to Payees setting forth the
payments under this Note and the allocation of each payment between interest and principal, assuming in each case that there is
no suspension or forfeiture of such amounts in accordance with the terms of this Note (as it may be amended in connection with
an adjustment to the Aggregate Principal Amount in accordance with Section 1.5(d) of the Purchase Agreement, the “Payment
and Amortization Schedule”), with any remaining principal amount of, and all unpaid accrued interest on, this Note
(less any amounts forfeited or suspended pursuant to Section 3) due and payable on the two (2) year anniversary of the Issuance
Date (the “Maturity Date”); provided, however, that in the event that a Suspension of Payment
occurs pursuant to Section 3 below for (i) the second to last full fiscal quarter prior to the Maturity Date, the Maturity
Date shall be extended after the two (2) year anniversary of the Issuance Date to be the date which is the fifteenth (15th) day
after the last day of the fiscal quarter in which the Maturity Date otherwise would have occurred or (ii) the last full fiscal
quarter prior to the Maturity Date, the Maturity Date shall be extended after the two (2) year anniversary of the Issuance Date
to be the date which is the fifteenth (15th) day after the last day of the first full fiscal quarter ending after the fiscal quarter
in which the Maturity Date otherwise would have occurred. In the event of any extension of the Maturity Date pursuant to the preceding
proviso, the amount that would have otherwise been due on the original Maturity Date for the partial fiscal quarter ending on the
Maturity Date shall be added to the amount otherwise payable for the last full fiscal quarter ended prior to the original Maturity
Date and paid or forfeited, as applicable, at the same time that the amount for the last full fiscal quarter ended prior to the
original Maturity Date is, as applicable, paid or forfeited. All payments or deemed payments under this Note, including any offsets
under Section 8 hereof, shall be applied first to any fees and expenses due to Payees under this Note, then any accrued
and unpaid interest on principal amounts previously paid and then to accrued interest on unpaid principal, then to the unpaid principal
under this Note, and finally to any other obligations under this Note (provided, that the Quarterly Installments shall be allocated
between principal and interest as described above in this Section 1 and as set forth in the Payment and Amortization Schedule
and incorporated herein by reference, with any partial payment first applied to accrued interest). Except to the extent otherwise
provided in Section 3(f), all payments or offsets, and all obligations of Maker, under this Note shall be allocated fifty-one
percent (51%) to Alison Fogel and forty-nine percent (49%) to David Fogel.

 

2.          Interest
Rate and Payments; No Security Interest. Subject to this Section 2 and Section 7(c), interest on the outstanding
principal amount shall accrue daily at a rate equal to six percent (6%) per annum (the “Interest Rate”).
Interest will be calculated on the basis of a 365-day year for the actual number of days elapsed. Except to the extent forfeited
pursuant to Section 3 for any fiscal quarter in which a Suspension of Payment occurs (each fiscal quarter in which a Suspension
of Payment occurs, a “Suspension Quarter”), interest will accrue from the date hereof until the outstanding
principal amount is paid or otherwise satisfied in full. The Quarterly Installments shall be payable on a fiscal quarterly basis,
no later than the fifteenth (15th) day after the end of such fiscal quarter, beginning with the fiscal quarter in which
the Issuance Date occurs. On the Maturity Date (as it may be extended pursuant to Section 1), Maker will pay all remaining
principal and accrued but unpaid interest that has not been forfeited pursuant to Section 3 below. Whenever any payment
or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding
Business Day. This Note is subject to the express condition that at no time shall Maker be obligated or required to pay interest
on the principal balance at a rate which could subject Maker or either Payee to either civil or criminal liability as a result
of being in excess of the maximum rate which Maker is permitted by applicable law to contract or agree to pay. If by the terms
of this Note, Maker is at any time required or obligated to pay interest on the principal balance at a rate in excess of such maximum
rate, the Interest Rate under this Note shall be deemed to be immediately reduced to such maximum rate and interest payable hereunder
shall be computed at such maximum rate. This Note is an unsecured promissory note.

 

    	2

    	 

    

  

3.          Suspension
of Payments; Calculation of Gross Profit.

 

(a)          Notwithstanding
any other provisions of this Note (but subject to Section 3(f) below), the obligation of Maker to pay any Quarterly Installment
due hereunder shall immediately be suspended (a “Suspension of Payment”)
if the Gross Profit for the trailing four (4) full fiscal quarter period ending as of the fiscal quarter for which such Quarterly
Installment is due (the “TFQ Gross Profit”) is less than eighty-five percent (85%) of the Closing Gross
Profit (the “Target Gross Profit”). With respect to each Suspension Quarter, (i) if the TFQ Gross Profit
as of the end of either of the two (2) fiscal quarters immediately following such Suspension Quarter exceeds the Target Gross Profit,
Maker shall pay the Quarterly Installment for such Suspension Quarter at the same time that it pays the Quarterly Installment for
such subsequent fiscal quarter as of the end of which the TFQ Gross Profit exceeds the Target Gross Profit (or with respect to
the last two fiscal quarters prior to the initial Maturity Date, by the fifteenth (15th) day after the end of such subsequent
fiscal quarter), and (ii) if the TFQ Gross Profit for each of the two (2) fiscal quarters immediately following such Suspension
Quarter does not exceed the Target Gross Profit, Payees shall forfeit any rights to, and Maker shall have no obligation under this
Note with respect to, the Quarterly Installment for such Suspension Quarter (and any interest or other amounts payable on the principal
or interest included in such forfeited Quarterly Installment). For the avoidance of doubt, on the Maturity Date (subject to extension
in accordance with Section 1 of this Note) the outstanding principal balance of this Note together with all accrued interest
(net of any Quarterly Installments which were forfeited pursuant to the terms of this Section 3) shall be due and payable
and shall be paid in full by the Maker to the Payees on the Maturity Date (as extended in accordance with Section 1 of this
Note).

 

(b)          For
purposes hereof: (i) “Gross Profit” shall mean, with respect to any applicable period, the consolidated
Revenues of the Lighthouse Companies less the consolidated direct Costs of Services of the Lighthouse Companies, calculated in
accordance with GAAP as consistently applied by Maker and its Subsidiaries; (ii) “Revenue” shall mean,
as determined in accordance with GAAP as consistently applied by Maker and its Subsidiaries: (A) revenue for temporary services
(recognized at the time that the service is provided and revenue is recorded on a time and materials basis); (B) temporary contracting
revenue (recognized as gross when a Lighthouse Company acts as principal in the transaction and is at risk for collection); (C)
revenue that does not meet the criteria for gross revenue reporting (reported on a net basis); (D) revenue generated when a Lighthouse
Company permanently places an individual with a client on a contingent basis (recorded at the time of acceptance of employment);
and (E) revenue generated when a Lighthouse Company places an individual with a client on a retained basis (recorded ratably over
the period the services are rendered); (iii) “Cost of Services” means the direct costs to generate the
Revenues, including payroll expenses to independent contractors, payroll burdens, payroll taxes and insurance obligations and reimbursable
expenses, as determined in accordance with GAAP as consistently applied by Maker and its Subsidiaries; and (iv) “Closing
Gross Profit” means the Gross Profit for the trailing four (4) full fiscal quarter period as of the fiscal quarter
ending June 30, 2015.

 

    	3

    	 

    

  

(c)          For
illustration purposes, the calculation of Gross Profit for the fiscal year ended December 31, 2014 is as set forth on Exhibit
A hereto. Any ambiguities in the calculation of the Gross Profit shall be determined in a manner consistent with Exhibit
A, or if there is a change in GAAP after the Issuance Date such that the manner contemplated by Exhibit A is no longer
in compliance with GAAP, then in such manner that is as close as possible to that contemplated under Exhibit A that is in
compliance with the new GAAP principles. In the event any such change in GAAP causes the manner of calculating Gross Profit going
forward to differ significantly from the manner in which the Closing Gross Profit was previously calculated, Maker and the Seller
Representative on behalf of the Payees shall adjust the Closing Gross Profit by re-calculating the Gross Profit for the trailing
four (4) full fiscal quarter period ending December 31, 2014 as if such new GAAP requirements were in effect at the time.

 

(d)          If
after the Issuance Date any Lighthouse Company acquires another business (including any portion or part of another business) or
enters into a line of business other than the normal business activities of the Company conducted as of the Issuance Date with
the prior written consent of Payees (such consent not to be unreasonably withheld, delayed or conditioned), then the TFQ Gross
Profit shall be computed taking into consideration the financial results of such acquired or new line of business. If after the
Issuance Date any Lighthouse Company acquires another business (including any portion or part of another business) or enters into
a line of business other than the normal business activities of the Company conducted as of the Issuance Date without the prior
written consent of Payees (such consent not to be unreasonably withheld, delayed or conditioned), then the TFQ Gross Profit for
the applicable fiscal quarter in which such acquisition occurs or such new line of business commences and for all subsequent fiscal
quarters shall be deemed to be greater than the Target Gross Profit for purposes of this Note, and any payments of principal and
interest under this Note after such acquisition occurs or such new line of business commences shall be made when otherwise due
in accordance with this Note. Maker hereby agrees that while any obligations are outstanding under this Note, subject to Section
3(e) below, Maker shall, and shall cause the Company to, use their commercially reasonable efforts to maintain a financial
reporting system that enables the parties to calculate the Gross Profit for purposes of this Note.

 

(e)          If
Maker consummates a Lighthouse Change of Control Transaction while any obligations are outstanding under this Note, Maker will
provide in the sale documents for such transaction that the acquirer shall assume and agree to perform Maker’s obligations
under this Note if the foregoing would not happen as a matter of law. In the event a Lighthouse Change of Control Transaction occurs
(including if deemed to have occurred), then the TFQ Gross Profit for the applicable fiscal quarter in which the Lighthouse Change
of Control Transaction occurs and for all subsequent fiscal quarters shall be deemed to be greater than the Target Gross Profit
for purposes of this Note, and any payments of principal and interest under this Note after such Lighthouse Change of Control Transaction
occurs shall be made when otherwise due in accordance with this Note (except for a Lighthouse Change of Control Transaction described
in clause (ii) of the definition thereof, in which case the principal balance of this Note plus all accrued interest under this
Note shall immediately accelerate and become due and payable upon the consummation of such Lighthouse Change of Control Transaction).

 

(f)          In
the event that while any obligations are outstanding under this Note, a Payee’s employment under such Payee’s Employment
Agreement, dated as of the date hereof (each, an “Employment Agreement”), between such Payee and the
Company is terminated in accordance with the terms of such Employment Agreement either (x) by the Company without Cause (as defined
in such Payee’s Employment Agreement) (other than due to death or Disability (as defined in such Payee’s Employment
Agreement)) or (y) by such Payee for Good Reason (as defined in such Payee’s Employment Agreement) (a termination described
in clauses (x) or (y), a “Qualifying Termination”), then, notwithstanding anything to the contrary contained
in this Note:

 

(i)          for
purposes of determining Maker’s obligations under this Note to such Payee subject to the Qualifying Termination (but not
the other Payee), the TFQ Gross Profit for any fiscal quarter ending after the Date of Termination (as defined in such Payee’s
Employment Agreement) of such terminated Payee shall be deemed for purposes of this Note to be greater than the Target Gross Profit;
and

 

    	4

    	 

    

  

(ii)         for
purposes of determining Maker’s obligations under this Note to the other Payee that has not been subject to the Qualifying
Termination, the Target Gross Profit for any period ending after the Date of Termination of the terminated Payee shall be reduced
by twenty percent (20%) (with the percentage reduction in the Target Gross Profit for any trailing four (4) fiscal quarter period
(the “TFQ”) in which the Date of Termination occurs being pro-rated so that such percentage reduction
is equal to (A) twenty percent (20%), multiplied by (B) the number of days in the TFQ from and after the Date of Termination, and
divided by (C) the total number of days in the TFQ).

 

4.          Procedures
for Determining Gross Profit. 

 

(a)          Together
with each Quarterly Installment (or if no Quarterly Installment is to be paid for such fiscal quarter as a result of a Suspension
of Payment as determined by Maker or with respect to a fiscal quarter after the end of the initial Maturity Date in which a Suspension
of Payment continues, within fifteen (15) days after the end of such fiscal quarter), Maker will prepare and deliver to the Seller
Representative on behalf of Payees a written statement (each, a “Gross Profit Statement”) that sets forth
Maker’s determination in accordance with the terms of this Note of the Gross Profit for the fiscal quarter most recently
ended (the “Subject Quarter”) and the TFQ Gross Profit for the TFQ ending as of the Subject Quarter (the
“Subject TFQ”), whether or not a Suspension of Payment has occurred for the Subject Quarter and, if there
was a Suspension Quarter in the either of the two (2) fiscal quarters prior to the Subject Quarter where the Suspension of Payment
is continuing, whether the Subject TFQ exceeds the Target Gross Profit such that the Suspension of Payment shall no longer continue
with respect to such prior Suspension Quarter. Payees and their Representatives will provide Maker and its Representatives with
reasonable access to the books and records, personnel and properties of the Lighthouse Companies, and any other information of
the Lighthouse Companies, that Maker reasonably requests in connection with Maker’s preparation of each Gross Profit Statement.

 

(b)          In
the event that Maker notifies the Seller Representative on behalf of Payees that there is a Suspension of Payment for the Subject
Quarter or that a Suspension of Payment for one or more Suspension Quarters occurring in the prior two (2) fiscal quarters is still
continuing after calculating the Subject TFQ, the Seller Representative on behalf of Payees will have the right to have an independent
certified public accountant (the “CPA”) review and inspect the records of the Lighthouse Companies (and
any other records of Maker and its Subsidiaries to the extent relating to the Gross Profit determination) for the Subject Quarter
and the Subject TFQ for the purpose of determining the accuracy of the Gross Profit Statement and the Gross Profit calculated therein
by delivering written notice thereof within fifteen (15) days after the delivery of the Gross Profit Statement for the Subject
Quarter. The CPA selected to conduct such review must be acceptable to both Maker and the Seller Representative (provided, that
if the CPA does not accept its appointment or Maker and the Seller Representative cannot agree on the CPA, in either case within
ten (10) days after Maker’s receipt of the notice from the Seller Representative requesting the CPA, either Maker or the
Seller Representative may require, by written notice to the other, that the CPA be selected by the New York City Regional Office
of the American Arbitration Association in accordance with the procedures of the American Arbitration Association). Each of Maker
and the Seller Representative on behalf of the Payees will execute a reasonable and customary engagement letter with the CPA with
respect to its review that is consistent with the terms of this Section 4 (including the responsibility of the parties for
the CPA’s costs and expenses). In connection with the CPA’s review, Maker will permit the CPA, upon reasonable prior
written notice, to have access during normal business hours to such records and finance personnel of the Lighthouse Companies (and
any other records of Maker and its Subsidiaries to the extent relating to the Gross Profit determination), as may be reasonably
necessary to verify Maker’s calculation of the Gross Profit hereunder for the Subject Quarter and the Subject TFQ, including
their books, records and working papers. The CPA will promptly and diligently conduct its review and will provide in writing to
the Seller Representative and Maker within thirty (30) days after its engagement its final determination with respect to the Gross
Profit for the Subject Quarter and the Subject TFQ. Each Payee and Maker will use its commercially reasonable efforts to permit
the CPA to timely complete its review.

 

    	5

    	 

    

  

(c)          In
the event that the CPA reasonably determines that the TFQ Gross Profit for the Subject TFQ was equal to or greater than the Target
Gross Profit, (i) the parties will be bound by such determination, (ii) Maker shall be responsible for the reasonable fees and
expenses charged by the CPA with respect to its review of the Subject Quarter and the Subject TFQ, (iii) if the Seller Representative
requested the review by the CPA because Maker notified the Seller Representative that there was a Suspension of Payment for the
Subject Quarter, Maker will pay to Payees the Quarterly Installment for the Subject Quarter within fifteen (15) days after Maker’s
receipt of the CPA’s written report and (iv) if the Seller Representative requested the review by the CPA because there was
a Suspension of Payment for one or more Suspension Quarters occurring in the prior two (2) fiscal quarters and Maker notified the
Seller Representative that such Suspension of Payment is still continuing after calculating the Subject TFQ, Maker will pay to
Payees the Quarterly Installment for any such Suspension Quarter(s). In the event that the CPA reasonably determines that the TFQ
Gross Profit for the Subject TFQ was less than the Target Gross Profit, (i) the parties will be bound by such determination, (ii)
Payees shall be responsible for the reasonable fees and expenses charge by the CPA with respect to its review of the Subject Quarter
and the Subject TFQ, and (iii) the provisions of Section 3 will apply to such Subject Quarter. For the avoidance of doubt,
in the event of a Qualifying Termination of a Payee under Section 3(f), the provisions of this Section 4 (as modified
by Section 3(f)(ii)) will apply only to the Payee that has not been subject to the Qualifying Termination and payments will
be adjusted for such Payee’s share of this Note. Any calculations of TFQ Gross Profit for any subsequent fiscal quarter that
includes the Gross Profit for the Subject Quarter or any portion of the Subject TFQ will apply the determinations of the CPA with
respect to the Gross Profit for the Subject Quarter and the portion of the Subject TFQ that is included in the TFQ Gross Profit
for such subsequent fiscal quarter.

 

5.          Notice
to Payees; Prepayment.

 

(a)          Maker
shall provide Payees with written notice (i) promptly (but in any event within thirty (30) days) after Maker becomes aware that
any order or decree described in Section 7(a)(iii) is entered, (ii) immediately upon the
occurrence of any Event of Default listed in clause (iii), (iv), (v), or (vi) of Section 7(a), or (iii) promptly
(but in any event within thirty (30) days) after the consummation of any Lighthouse Change of Control Transaction.

 

(b)          Maker
may, in its discretion, prepay this Note in whole or in part prior to the Maturity Date.

 

6.          Conversion.

 

(a)          Subject
to Section 6(d) below, Payees shall have the right (the “Conversion Right”), exercisable at any
time prior to the Maturity Date by providing written notice thereof (a “Conversion Notice”) to Maker,
to convert all of the outstanding principal and accrued but unpaid interest under this Note (for the avoidance of doubt, (i) taking
into account any amounts forfeited prior to such time pursuant to Section 3 and (ii) less the amount of the Quarterly Installments
for any Suspension Quarters where a Suspension of Payments is still occurring at such time (and
any interest or other amounts payable on the principal or interest included in such Quarterly Installments)) (such net amount,
the “Outstanding Obligations”) into shares of Buyer Common Stock at a conversion price (the “Conversion
Price”) equal to the greater of (i) eighty percent (80%) of the VWAP Price as of the date of Payee’s delivery
of the Conversion Notice and (ii) the Buyer Common Stock Price. Upon the issuance of the shares of Buyer Common Stock after conversion
of the obligations under this Note in accordance with this Section 6 (the “Conversion Shares”),
all obligations of Maker under this Note, including any outstanding principal amounts and any accrued but unpaid interest, shall
be deemed to be paid and satisfied in full.

 

    	6

    	 

    

  

(b)          Maker
shall reasonably and in good faith make any equitable adjustments to the Conversion Price hereunder to account for any stock dividends,
stock splits, reverse stock splits, special dividends and distributions, recapitalizations and other similar transactions occurring
after the Issuance Date with respect to the Buyer Common Stock. In the event of any transaction occurring after the Issuance Date
in which all outstanding Buyer Common Stock is exchanged for another form of equity of Maker or equity of another entity, the Conversion
Right hereunder shall instead permit the outstanding obligations under this Note to be converted into such other form of equity
of Maker or equity of such other entity, as applicable, with Maker making any equitable adjustments to the Conversion Price as
it reasonably determines in good faith.

 

(c)          The
parties hereby acknowledge and agree that the shares of Buyer Common Stock issuable upon conversion of the obligations under this
Note in accordance with this Section 6 (the “Conversion Shares”) shall be subject to the terms
and conditions of Sections 6.7, 6.8 and 7.7 of the Purchase Agreement as if they were “Shares” thereunder. In the event
that the obligations under this Note are converted into Conversion Shares prior to the payment of any Adjustment Amount under Section
1.5(e) of the Purchase Agreement, any portion of the Adjustment Amount which would other be payable under Section 1.5(e) of the
Purchase Agreement pursuant to an increase or a decrease in the principal amount of the Note shall instead be paid by delivery
of Conversion Shares, with each Conversion Share valued at the Conversion Price for such purposes.

 

(d)          Notwithstanding
anything to the contrary contained in this Note, at any time when a Suspension of Payment for any Suspension Quarter is in effect
and still continuing (including if as a result of Section 3(f), such Suspension of Payment only applies to one Payee and
not the other), the Conversion Right shall not be available to Payees, and Maker shall have no obligation to deliver the Conversion
Shares hereunder.

 

7.          Events
of Default and Remedies.

 

(a)          Each
of the following shall constitute an “Event of Default”.

 

(i)          the
failure of Maker to pay or otherwise satisfy any amounts due under this Note when due (subject to the Suspension of Payment provided
for in Section 3 and the procedure for resolving any disputes), which failure is not cured within three (3) Business Days
after written notice of such failure is received by Maker from Payees;

 

(ii)         the
default by Maker of any of its covenants or agreements under this Note (other than those described in clause (i) above) in any
material respect, which default is not cured within thirty (30) days after written notice of such default is received by Maker
from Payees;

 

(iii)        a
decree, judgment, or order by a court of competent jurisdiction shall have been entered adjudging Maker as bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization of Maker under any bankruptcy or similar law, and such decree
or order shall have continued undischarged and unstayed for a period of ninety (90) days; or a decree or order of a court of competent
jurisdiction ordering the appointment of a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of Maker, or
for the winding up or liquidation of the affairs of Maker, shall have been entered, and such decree, judgment, or order shall have
remained in force undischarged and unstayed for a period of sixty (60) days;

 

    	7

    	 

    

  

(iv)        Maker
shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against
it, or shall file a petition or answer or consent seeking reorganization under any bankruptcy or similar law or similar statute,
or shall consent to the filing of any such petition, or shall consent to the appointment of a custodian, receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency of it or any of its assets or property, or shall make a general assignment for
the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due;

 

(v)         the
voluntary or involuntary dissolution, termination of existence or liquidation of Maker or the voluntary dissolution, termination
of existence or liquidation of the Company (in each case, other than in connection with an internal corporate reorganization or
a change of control of Maker, in either case, in which the successor to Maker assumes all of Maker’s obligations under this
Note); or

 

(vi)        both
(A) the occurrence of an “Event of Default” under, and as defined in, either (I) that certain Credit and Security Agreement
dated as of April 8, 2015 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Monroe
Credit Agreement”), by and among MidCap Funding X Trust, as Agent thereunder (“Agent”),
the lenders named therein, PeopleSERVE, Inc., Monroe Staffing Services, LLC, Maker and any additional borrowers thereunder or (II)
that certain Credit and Security Agreement, dated as of April 8, 2015 (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the “PRS Credit Agreement” and, together with the Monroe Credit Agreement,
the “Credit Agreements”), by and among Agent, the lenders named therein and PeopleSERVE PRS, Inc., and
(B) where Agent has delivered notice to Payees pursuant to the terms of the Subordination Agreement, dated as of the Issuance Date
(as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Subordination Agreement”),
by and among Payees (as subordinated lenders), Maker, Agent and the lenders named therein, that Permitted Subordinated Loan Payments
(as defined in the Subordination Agreement) are not permitted pursuant to the terms of the Subordination Agreement as a result
of such Event of Default under a Credit Agreement (a “Suspension Notice”); provided, that if such
Event of Default under a Credit Agreement is cured or such Suspension Notice is rescinded, in either case, within ninety (90) days
after the receipt of the Suspension Notice by Payees, any Event of Default under this clause (vi) as a result of such Event of
Default under a Credit Agreement or such Suspension Notice shall be automatically deemed to have been cured, and Payees shall have
no rights with respect thereto (other than to collect any payments under this Note which were not otherwise permitted to be paid
by Maker as a result thereof).

 

(b)          If
an Event of Default occurs and is continuing, then Payees, by providing written notice to Maker (an “Acceleration Notice”),
may declare to be due and payable immediately all of the Outstanding Obligations, together
with all Quarterly Installments which are then suspended pursuant to Section 3(a); provided, that upon the
occurrence of any Event of Default listed in clause (iii), (iv) or (v) of Section 7(a), the
Outstanding Obligations shall immediately accelerate and become due and payable without the requirement of an Acceleration Notice
or any other action on the part of Payees.

 

(c)          Without
in any way derogating Payees’ rights upon the occurrence of an Event of Default, if there is an Event of Default under clause
(i) of Section 7(a) and either (x) any Quarterly Installment due under this Note or (y) the principal and interest due on
the Maturity Date, in either case, is not paid or otherwise satisfied within ten (10) days after such Event of Default, then in
addition to its other obligations under this Note, Maker shall pay to Payees a late fee equal to five percent (5%) of the amount
of such late payment (for the avoidance of doubt, such late fee will not apply to any accelerated obligations under this Note).
If there is an Event of Default which extends beyond any and all applicable notice and cure periods (and whether or not Payees
exercise their rights on account thereof), then from the occurrence of such Event of Default and during the continuance of such
Event of Default, the Interest Rate for purposes of this Note shall be equal to twelve percent (12%) per annum.

 

    	8

    	 

    

  

8.          Right
to Set-Off. The obligations of Maker under this Note may be offset as set forth in and in accordance with Article VII of
the Purchase Agreement, any such offset obligations shall be deemed paid for purposes of this Note.

 

9.          Attorneys’
Fees. Except with respect to the costs of the review by the CPA as set forth in Section 4, the non-prevailing party
to any claim that is finally determined under this Note will pay its own expenses and the reasonable documented out-of-pocket expenses,
including reasonable attorneys’ fees and costs, reasonably incurred by the other party, including any claims by Payees to
collect and/or to enforce any of the obligations of Maker hereunder and/or to enforce any of Payees’ rights, remedies or
powers against or in respect of Maker. The parties will request in connection with any such claim that the applicable court determine
and declare the prevailing party in such claim.

 

10.         No
Transfer of Rights to Receive Payments. Without limiting anything contained in this Note, without the prior written consent
of Maker (which may be withheld in its sole discretion), neither Payee may transfer, assign, convey or subject to any Lien any
of Payee’s rights under this Note to receive any payments; provided, that this Section 10 and the first restrictive
legend at the top of the first page of this Note shall not prevent transfers of such rights by a Payee to (i) such Payee’s
estate or heirs (by will or intestate succession) upon such Payee’s death or (ii) one or more trusts for the benefit of the
immediate family members of such Payee, provided that, in each case, the transferee acknowledges and agrees to the terms, conditions
and obligations set forth in this Note.

 

11.         Incorporation
of Purchase Agreement Provisions. The parties hereby agree that Sections 8.2 through 8.7 and Sections 8.9 through 8.14
of the Purchase Agreement are hereby incorporated herein as if set forth in this Agreement, with any reference to the Purchase
Agreement therein referring to this Note instead. Without limiting the foregoing, Payees hereby acknowledge and agree that the
Seller Representative shall be fully authorized, and shall represent each Payee with respect to the enforcement of, determinations
made under, notices provided under, and any disputes in connection with, this Note.

 

12.         Subordination
Agreement. Maker and Payees hereby acknowledge that this Note is subject to the terms and conditions of the Subordination
Agreement, which is hereby incorporated herein by reference.

 

13.         Miscellaneous.
This Note (and to the extent incorporated herein, the Purchase Agreement, the Employment Agreements and the Subordination Agreement)
constitutes the entire agreement between the parties with respect to the subject matter hereof and referenced herein, and supersedes
and terminates any prior agreements or understanding between the parties or their respective Affiliates (written or oral) with
respect to the subject matter hereof. Unless otherwise specified, any reference in this Note to a quarter shall mean a fiscal quarter.

 

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

 

    	9

    	 

    

 

IN WITNESS WHEREOF, Maker
has caused this Unsecured Convertible Promissory Note to be duly executed and delivered as of the date first set forth above.

 

	 	STAFFING 360 SOLUTIONS, INC.
	 	 	 
	 	By: 	/s/ Matthew Briand
	 	Name:  Matthew Briand
	 	Title:    Chief Executive Officer

 

Acknowledged and agreed
as of the date first set forth above:

 

Payees:

 

	/s/ Alison Fogel	 
	Alison Fogel	 
	 	 
	/s/ David Fogel	 
	David Fogel	 

 

[Signature
Page to Two Year Note]

 

    	 

    	 

    

 

Exhibit A

Sample Gross Profit Calculation

 

See attachment.Exhibit 10.1

 

THIS INSTRUMENT IS SUBORDINATED IN ACCORDANCE
WITH AND SUBJECT TO THE TERMS OF THAT CERTAIN SUBORDINATION AGREEMENT (AS AMENDED, RESTATED, SUPPLEMENTED OR MODIFIED FROM TIME
TO TIME, THE “SUBORDINATION AGREEMENT”), DATED AS OF JULY 8, 2015 BY AND AMONG [PURCHASERS], JOINTLY AND SEVERALLY
(COLLECTIVELY, “SUBORDINATED LENDER”), STAFFING 360 SOLUTIONS, INC., A NEVADA CORPORATION (“PARENT”), CERTAIN
OF THE PARENT’S SUBSIDIARIES PARTY THERETO AND MIDCAP FUNDING X TRUST, IN ITS CAPACITY AS AGENT (TOGETHER WITH ITS AFFILIATES
AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, “SENIOR AGENT”) FOR THE SENIOR LENDERS (AS DEFINED IN THE SUBORDINATION
AGREEMENT), AND EACH HOLDER AND TRANSFEREE OF THIS INSTRUMENT OR AGREEMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE
BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

 

SECURITIES PURCHASE AGREEMENT

 

This Securities
Purchase Agreement (this “Agreement”) is dated as of July 8, 2015, between Staffing 360 Solutions, Inc.,
a Nevada 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, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser,
and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described
in this Agreement.

 

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: (a) capitalized terms that are not otherwise defined herein have
the meanings given to such terms in the Debentures (as defined herein), and (b) the following terms have the meanings set forth
in this Section 1.1:

 

“Acquisition
Agreement” means that certain Equity Purchase Agreement, among the Company, Lighthouse Placement Services, LLC, a Massachusetts
limited liability company (“Lighthouse”), and Allison and David Fogel, dated as of July 8, 2015, pursuant to
which, the Company has agreed to acquire all of the issued and outstanding membership interests of Lighthouse.

 

    	 

    	 

    

 

“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. The term “control”
(including the terms “controlled by” and “under common control with”) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.

 

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

 

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

 

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

 

“Closing”
means the closing of 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 Subscription Amount and (ii)
the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived.

 

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

 

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

 

“Common
Stock” means the common stock of the Company, par value $0.00001 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 Ellenoff Grossman & Schole LLP, with offices located at 1345 Avenue of the Americas, New York, New
York 10105-0302.

 

“Conversion
Price” shall have the meaning ascribed to such term in the Debentures.

 

“Conversion
Shares” shall have the meaning ascribed to such term in the Debentures.

 

    	 

    	 

    

 

“Debentures”
means the 8% Senior Secured Convertible Debentures due, subject to the terms therein, April 1, 2017, issued by the Company to the
Purchasers hereunder, in the form of Exhibit A attached hereto.

 

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

 

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

 

“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, (d) shares of Common Stock pursuant to conversions
of any of the Company’s trade accounts payable in the ordinary course of business, consistent with past practice, and (e)
shares of Common Stock pursuant to the exercise of any warrant which was issued to a Senior Lender on or before the date hereof.

 

“Exercise
Price” shall have the meaning ascribed to such term in the Warrants.

 

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

 

“Federal
Reserve” shall have the meaning ascribed to such term in Section 3.1(oo).

 

“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(bb).

 

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

 

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

 

“Knowledge”
means, with respect to a specific Person, the actual or constructive knowledge of such Person (or if such Person is an entity,
any director, manager or other executive officer of such Person), after due inquiry.

 

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

 

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

 

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

 

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

 

“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.17.

 

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

 

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

 

“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.12(a).

 

“PC”
means Pryor Cashman LLP, with offices located at 7 Times Square, New York, New York 10036.

 

“Perfection
Certificate” means the Perfection Certificate executed by the Company and delivered to the Purchasers hereunder, in the
form of Exhibit B attached hereto.

 

“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Debentures, (b) the Indebtedness existing on the Original Issue
Date and set forth on Schedule 3.1(aa), lease obligations and purchase money indebtedness of up to $500,000, in the aggregate,
incurred in connection with the acquisition of capital assets and lease obligations with respect to newly acquired or leased assets
and (c) the Senior Loans.

 

    	 

    	 

    

 

“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company)
have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business
of the Company and its Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien, (c) Liens
incurred in connection with Permitted Indebtedness under subclauses (a) and (c) thereunder, and (d) Liens incurred in connection
with Permitted Indebtedness under subclause (b) thereunder, provided that such Liens are not secured by assets of the Company or
its U.S. Subsidiaries other than the assets so acquired or leased, other than as set forth on Schedule 3.1(aa).

 

“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.

 

“Pledged
Securities” means any and all certificates and other instruments representing or evidencing all of the capital stock
and other equity interests of the U.S. Subsidiaries.

 

“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.12(b).

 

“Principal
Amount” means, as to each Purchaser, the amounts set forth below such Purchaser’s signature block on the signature
pages hereto next to the heading “Principal Amount,” in United States Dollars, which shall equal such Purchaser’s
Subscription Amount multiplied by 1.12.

 

“Pro
Rata Portion” shall have the meaning ascribed to such term in Section 4.12(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.

 

“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).

 

“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).

 

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

 

    	 

    	 

    

 

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

 

“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants
or conversion in full of all Debentures, ignoring any conversion or exercise limits set forth therein, and assuming that each of
the Conversion Price and Exercise Price is at all times on and after the date of determination 75% of the then Conversion Price
or Exercise Price, as applicable, on the Trading Day immediately prior to the date of determination.

 

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

 

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

 

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

 

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

 

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

 

“Security
Agreement” means the Security Agreement, dated as of the date hereof, among the Company and the Purchasers, in the form
of Exhibit C attached hereto.

 

“Security
Documents” shall mean the Security Agreement, the Subsidiary Guarantees, the original Pledged Securities, along with
medallion guaranteed executed blank stock powers to the Pledged Securities, the Perfection Certificate, and any other documents
and filing required thereunder in order to grant the Purchasers a second priority security interest in the assets of the Company
and the Subsidiaries as provided in the Security Agreement, including all UCC-1 filing receipts.

 

“Senior Loans”
shall have the meaning ascribed to such term in the Subordination Agreement.

 

“Senior
Lenders” means MidCap Funding X Trust and those lenders parties to: (i) that certain Credit and Security Agreement dated
April 8, 2015 with PeopleSERVE, Inc., Monroe Staffing Services, LLC and the Company, and (ii) that certain Credit and Security
Agreement dated April 8, 2015 with PeopleSERVE PRS, Inc. and the Company.

 

    	 

    	 

    

 

“Shares”
means an aggregate of 1,250,000 shares of Common Stock to be issued to the Purchasers.

 

“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). 

 

“Subordination
Agreement” means the Subordination Agreement, dated July 8, 2015, by and among the Purchasers, the Company and Senior
Lenders.

 

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

 

“Subsequent
Financing” shall have the meaning ascribed to such term in Section 4.12(a).

 

“Subsequent
Financing Notice” shall have the meaning ascribed to such term in Section 4.12(b).

 

“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.

 

“U.S.
Subsidiary” means any United States Subsidiary of the Company except PeopleSERVE PRS, Inc. and shall, where applicable,
also include any direct or indirect United States Subsidiary of the Company formed or acquired after the date hereof.

 

“Subsidiary
Guarantee” means the Subsidiary Guarantee, dated the date hereof, by each U.S. Subsidiary in favor of the Purchasers,
in the form of Exhibit D attached hereto.

 

“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, OTCQB or OTCQX (or any successors to any of the foregoing).

 

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

 

    	 

    	 

    

 

“Transfer Agent”
means VStock Transfer, LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Place, Woodmere,
New York 11598 and a facsimile number of (646) 536-3179, and any successor transfer agent of the Company.

 

“Underlying
Shares” means the Conversion Shares and Warrant Shares, in each case without respect to any limitation or restriction
on the conversion of the Debentures or the exercise of the Warrants.

 

“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13(a).

 

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

 

“Warrants”
means, collectively, (i) the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section
2.2(a) hereof, which Warrants shall be exercisable immediately and have a term of exercise equal to five years, in the form of
Exhibit E attached hereto (the “A Warrants”), and (ii) the Common Stock purchase warrants delivered
to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be exercisable in accordance with
the terms thereof and shall be surrendered by the Purchasers upon the full and timely payment by the Company of all amounts due,
including principal and interest thereon, under the Debentures and have a term of exercise equal to five years, in the form of
Exhibit F attached hereto (the “B Warrants”).

 

“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, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, up to an aggregate of $3,920,000 in Principal Amount of the Debentures (corresponding to an aggregate Subscription
Amount of up to $3,500,000). Each Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately available
funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser,
and the Company shall deliver to each Purchaser its respective Debenture, A Warrant and B Warrant, as determined pursuant to Section
2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon
satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of PC or
such other location as the parties shall mutually agree.

 

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)         a
legal opinion of Company Counsel, substantially in the form of Exhibit G attached hereto;

 

(iii)        a
Debenture with a principal amount equal to such Purchaser’s Subscription Amount multiplied by 1.12, registered in the name
of such Purchaser;

 

(iv)        an
A Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of the initial
Principal Amount of the Debenture to be issued to such Purchaser divided by $1.00, with an exercise price per share equal to $1.00,
subject to adjustment therein;

 

(v)         a
B Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of the initial
Principal Amount of the Debenture to be issued to such Purchaser divided by $1.00, with an exercise price per share equal to $1.00,
subject to adjustment therein; 

 

(vi)        a
pro rata portion of the Shares based on the percentage of such Purchaser’s Subscription Amount respective to the aggregate
Subscription Amount of $3,500,000; and

 

(vii)       the
Security Agreement, duly executed by the Company and each U.S. Subsidiary, along with all of the Security Documents, including
the Subsidiary Guarantees, duly executed by the parties thereto, any original Pledged Securities and corresponding stock powers
that are not and will not be held in escrow by the Senior Lenders, and the Perfection Certificate.

 

(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;

 

(ii)         such
Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company; and

 

(iii)        the
Security Agreement duly executed by such Purchaser.

 

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 of written evidence satisfactory to the Purchasers of the consummation of the transactions contemplated by the Acquisition
Agreement, which solely for purposes of Article III hereof, shall be deemed to have occurred at the moment in time immediately
following the Closing;

 

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

 

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

 

    	 

    	 

    

 

(vi)        from
the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market and, at any time prior to the 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 Disclosure Schedules, which Disclosure Schedules shall be deemed
a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser, as
of the date hereof and as of Closing (unless as of a specific date therein in which case as of such date):

 

(a)          Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). Except as set forth on Schedule
3.1(a), 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.

 

(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 as set forth on Schedule
3.1(b)(i), 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 nor 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 as set forth on Schedule
3.1(b)(ii), except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably
be expected to result in, individually or in the aggregate: (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 that results, in the aggregate, in the loss of over 1% of the Company’s
revenue, on a consolidated basis, 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 or to consummate the transactions contemplated hereby
(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.

 

(i)          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.

 

(ii)         With
respect to the Subsidiary Guarantee, each of the U.S. Subsidiaries has the requisite corporate power and authority to enter into
and to consummate the transactions contemplated by such agreement and otherwise to carry out its obligations thereunder. The execution
and delivery of the Subsidiary Guarantees and the consummation by the Company of the transactions contemplated thereby have been
duly authorized by all necessary action on the part of the Company, and no further action is required by the respective U.S. Subsidiary,
its managers or its members in connection therewith. The Subsidiary Guarantee has been (or upon delivery will have been) duly executed
by the respective U.S. Subsidiaries and, when delivered in accordance with the terms thereof, will constitute the valid and binding
obligation of the respective U.S. Subsidiary enforceable against such U.S. Subsidiary in accordance with its terms, except: (A)
as limited by general equitable principals and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (B) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies and (C) insofar as indemnification and contribution provisions
may be limited by applicable law.

 

    	 

    	 

    

 

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

 

(e)          Filings,
Consents and Approvals. The Company and the Subsidiaries are not required to obtain any consent, waiver, approval, 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 and the U.S. Subsidiaries of
the Transaction Documents, other than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii) consent of Senior
Lenders and (iii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities
laws (collectively, the “Required Approvals”).

 

(f)          Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, free and clear of all Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with the terms of the Transaction Documents,
will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions
on transfer provided for in the Transaction Documents. The Company has reserved from its duly authorized capital stock a number
of shares of Common Stock for issuance of the Underlying Shares at least equal to the Required Minimum on the date hereof.

 

    	 

    	 

    

 

(g)          Capitalization.
The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the
number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof and shall
include a pro-forma capitalization giving effect to the transactions contemplated by the Acquisition Agreement. Except as set forth
on Schedule 3.1(g): (i) the Company has not issued any capital stock since its most recently filed periodic report or current
report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option
plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant
to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report
or current report under the Exchange Act; (ii) 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; (iii) except as a result of
the purchase and sale of the Securities hereunder, 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; (iv) the issuance
and sale of the Securities hereunder 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; (v) 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
and (vi) the Company does not have any stock appreciation rights or “phantom stock” plans 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. 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 (2) years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports”) 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 financial statements of the Company included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required
by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as
of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

    	 

    	 

    

 

(i)          Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as disclosed in a subsequent SEC Report filed prior to the date hereof or as set forth on Schedule
3.1(i): (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result
in a Material Adverse Effect, (ii) the Company and the Subsidiaries have 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 or the Subsidiaries’ financial statements pursuant to
GAAP or disclosed in filings made with the Commission, (iii) the Company and the Subsidiaries have not altered their method of
accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders
or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The
Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance
of the Securities contemplated by this Agreement, the transactions contemplated by the Acquisition Agreement or as set forth on
Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably
expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations,
assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time
this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date
that this representation is made.

 

(j)          Litigation.
Except as set forth on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the Knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county,
local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity
or enforceability of, or adversely affects the performance by the Company or the U.S. Subsidiaries of their respective obligations
under, any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably
be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof,
is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws
or a claim of breach of fiduciary duty. There has not been, and to the Knowledge of the Company, there is no 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 or the Subsidiaries, which could 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
director, manager or 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 director, manager or 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 could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.

 

(l)          Compliance.
Neither the Company nor any Subsidiary: (i) is in default under, in conflict with, or in violation or breach 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 under, result in the acceleration
of or create in any party the right to accelerate, terminate, modify or cancel), nor has the Company or any Subsidiary received
notice of a claim that it is in default under, in conflict with, or in violation or breach 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, conflict, violation or breach 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 could 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 could
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, approvals, 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 could not have or 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) Permitted Liens, (ii) 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 (iii) 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 as described in the SEC Reports as necessary or required for use in connection with their respective businesses
and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual
Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2)
years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited
financial statements included within the SEC Reports, a written notice of a claim or otherwise has any Knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to 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 Property Rights, except
where failure to do so could not have or reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

 

    	 

    	 

    

 

(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 that are sufficient
for compliance with all applicable laws and contracts to which each of the Company and the Subsidiaries is a party or by which
each of them is bound, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate
Subscription Amount. True and complete copies of such insurance policies have been made available to the Purchasers. Such insurance
policies are in full force and effect and shall remain in full force and effect following the consummation of the transactions
contemplated by this Agreement. 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,
without limitation, 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 compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of
the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) that could 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 on Schedule 3.1(t), no brokerage or finder’s fees or commissions are or will be payable
by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation
with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in
this Section 3.1(t) that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(u)          Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market on
which any securities of the Company are listed or designated.

 

(v)         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.

 

    	 

    	 

    

 

(w)          Registration
Rights. Except as set forth on Schedule 3.1(w), no Person has any right to cause the Company to effect the registration
under the Securities Act of any securities of the Company or any Subsidiaries.

 

(x)          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 not, in the twelve (12) months preceding the date hereof, received notice from any Trading Market
on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance 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.

 

(y)          Disclosure.
All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, 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 press releases disseminated
by the Company during the twelve (12) months preceding the date of this Agreement taken as a whole do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees
that 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,
and except as disclosed on Schedule 3.1(z), neither the Company, nor any of its Affiliates, nor any Person acting on its
or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes
of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable
shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

    	 

    	 

    

 

(aa)         Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities, provided, however that contingent liabilities with respect to the NewCSI litigation shall be valued
at zero except to the extent the same have been reduced to judgment) as they mature, (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital
requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company
would receive hereunder, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does
not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash
to be payable on or in respect of its existing debt). The Company has no Knowledge of any facts or circumstances which lead it
to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one (1) year from the Closing Date. Schedule 3.1(aa) sets forth as of the date hereof all outstanding secured and
unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments, and shall
include a pro-forma schedule giving effect to the transactions contemplated by the Acquisition Agreement. For the purposes of this
Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $100,000
(other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated
balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $100,000 due under
leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to
any Indebtedness.

 

(bb)         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.

 

    	 

    	 

    

 

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

 

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

 

(ee)         Accountants.
The Company’s and the Subsidiaries’ accounting firms are set forth on Schedule 3.1(ff) of the Disclosure Schedules.
To the Knowledge and belief of the Company, each such accounting firm: (i) is a registered public accounting firm as required by
the Exchange Act and (ii) with respect to the Company’s accounting firm, shall express its opinion with respect to the financial
statements to be included in the Company’s Annual Report for the fiscal year ended May 31, 2015.

 

(ff)         Seniority.
Except as set forth on Schedule 3.1(gg), as of the Closing Date, no Indebtedness or other claim against the Company or the
Subsidiaries is senior to the Debentures in right of payment, whether with respect to interest or upon liquidation or dissolution,
or otherwise, other than Indebtedness secured by purchase money security interests (which is senior only as to underlying assets
covered thereby) and capital lease obligations (which is senior only as to the property covered thereby).

 

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

 

(hh)         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.

 

    	 

    	 

    

 

(ii)         Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere
herein to the contrary notwithstanding (except for Sections 3.2(f) and 4.15 hereof), it is understood and acknowledged by the
Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from
purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term, (ii) past or future open market or other transactions
by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or
after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities, (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such
Purchaser is a party, directly or indirectly, may presently have a “short” position in the Common Stock and (iv) each
Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative”
transaction. The
Company further understands and acknowledges that (y) one (1) 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
Underlying 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.

 

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

 

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

 

    	 

    	 

    

 

(ll)          Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s Knowledge, any director, manager,
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”).

 

(mm)         U.S.
Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is or has 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.

 

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

 

(oo)         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.

 

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

 

    	 

    	 

    

 

(qq)         Other
Covered Persons. The Company is not aware of any Person (other than any Issuer Covered Person) that has been or will be paid
(directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Regulation D Securities.

 

(rr)         Notice
of Disqualification Events. The Company will notify the Purchasers in writing, prior to the Closing Date, of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Issuer Covered Person.

 

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

 

    	 

    	 

    

 

(c)          Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants or converts any Debentures 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)          General
Solicitation. Such Purchaser is not, to such Purchaser’s Knowledge, purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

(f)          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.

 

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

 

    	 

    	 

    

 

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 transaction contemplated hereby.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1           Transfer
Restrictions.

 

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

 

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

 

    	 

    	 

    

 

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

 

The Company
acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees
or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such
pledge. At the applicable Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, without
limitation, if the Securities are subject to registration, the preparation and filing of any required prospectus supplement under
Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of
selling stockholders thereunder.

 

(c)          Certificates
evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while
a registration statement covering the resale of such security is effective under the Securities Act, (ii) following any sale of
such Underlying Shares pursuant to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule 144 or (iv) if such
legend is not required under the applicable requirements of the Securities Act (including judicial interpretations and pronouncements
issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent
if required by the Transfer Agent to effect the removal of the legend hereunder and shall pay all
fees and expenses associated therewith, provided all requirements are met. If all or any portion of a Debenture is converted or
Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Underlying Shares,
or if such Underlying Shares may be sold under Rule 144 or if such legend is not otherwise required under the applicable requirements
of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying
Shares shall be issued free of all legends. The Company agrees that at such time as such legend is no longer required under this
Section 4.1(c), it will, no later than three (3) Trading Days following the delivery by a Purchaser to the Company or the Transfer
Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such third (3rd)
Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing
such Underlying Shares that is free from all restrictive and other legends. The Company may not make any notation on its records
or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.1. Certificates
for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting
the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. 

 

    	 

    	 

    

 

(d)          In
addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, the greater of (i)
as partial liquidated damages and not as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock
on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend, and subject to
Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue)
for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend; and (ii) if the Company
has not delivered such certificates by the Legend Removal Date and if, after the Legend Removal Date, such Purchaser purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of all
or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion
of the number of shares of Common Stock that such Purchaser anticipated receiving from the Company without any restrictive legend,
then, the amount, if any, by which (x) the Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket
expenses, if any) for the shares of Common Stock so purchased exceeds the product of (y) (A) such number of Underlying Shares that
the Company was required to deliver to such Purchaser by the Legend Removal Date, multiplied by (B) the lowest closing sale price
of the Common Stock on any Trading Day during the period commencing on the date of the delivery by such Purchaser to the Company
of the applicable Underlying Shares and ending on the date of such delivery and payment under this clause (ii).

 

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

 

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

 

    	 

    	 

    

  

4.3          Furnishing
of Information; Public Information.

 

(a)          Until
such time that (i) no Purchaser owns Securities or (ii) the Warrants have expired, the Company covenants to maintain the registration
of the Common Stock under Section 12(b) or 12(g) of the Exchange Act, if the Common Stock is so registered, and to timely file
(or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the
Exchange Act.

 

(b) At
any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of
the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company (x) (i) shall fail for any reason to satisfy the current public
information requirement under Rule 144(c) or (ii) has ever been an issuer described in Rule 144 (i)(1)(i) or hereafter becomes
an issuer described in Rule 144 (i)(1)(i), and (y) the Company shall fail to satisfy any condition set forth in Rule 144(i)(2)
(a “Public Information Failure”), then, in addition to such Purchaser’s other available remedies, the
Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or
reduction of its ability to sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount
of such Purchaser’s Securities on the day of a Public Information Failure and on every thirtieth (30th) day (pro
rated for periods totaling less than thirty (30) days) thereafter until the earlier of (a) the date such Public Information Failure
is cured and (b) such time that such public information is no longer required  for the Purchasers to transfer the Underlying
Shares pursuant to Rule 144.  The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred
to herein as “Public Information Failure Payments.”  Public Information Failure Payments shall be
paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are
incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure
Payments is cured.  In the event the Company fails to make Public Information Failure Payments in a timely manner,
such Public Information Failure Payments shall bear interest at the rate of one and one-half percent (1.5%) per month (pro
rated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages
for any Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

    	 

    	 

    

 

 

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

 

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

 

4.6           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, (a) issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file
with the Commission, within the time required by the Exchange Act, a Current Report on Form 8-K, including the Transaction Documents
as exhibits thereto. From and after the filing of such press release and Form 8-K, the Company represents to the Purchasers that
it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any
of its Subsidiaries or its Affiliates, or any of their respective officers, directors, managers, employees or agents in connection
with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of such press release and
Form 8-K, 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 its Affiliates, or any of their respective officers, directors,
managers, employees or agents, on the one hand, and any of the Purchasers or any of their Affiliates, on the other hand, shall
terminate. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the
transactions contemplated under the Transaction Documents, 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 be unreasonably 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 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 Section 4.6.

 

    	 

    	 

    

  

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

 

4.8           Non-Public
Information. To the extent that the Company delivers any 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 its Affiliates, or any of their respective officers, directors, managers, employees or agents, nor a
duty to the Company, any of its Subsidiaries or its Affiliates, or any of their respective officers, directors, managers, employees
or agents, not to trade on the basis of such material, non-public information; provided, that the Purchasers 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 within one (1) business day 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 covenants of this Section 4.8 in effecting transactions in securities of the Company.

 

4.9           Use
of Proceeds. Except as set forth on Schedule 4.9 attached hereto, the Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and shall not use such proceeds: (a) for the satisfaction 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 Common Stock Equivalents, (c) for the settlement of any outstanding litigation
or (d) in violation of FCPA or OFAC regulations.

 

    	 

    	 

    

  

4.10         Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, 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, 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) of such controlling Persons (each, a “Purchaser Party”),
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations or warranties, or any failure
to perform or comply with any covenants or agreements, made by the Company in this Agreement or in any other Transaction Documents
or (b) any Proceeding instituted against any Purchaser Party, in any capacity, by any stockholder of the Company who is not an
Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such
Proceeding is based upon a breach of such Purchaser Party’s representations or warranties, or any failure of such Purchaser
Party to perform or comply with any of its covenants or agreements, in this Agreement or in any other Transaction Documents, or
any violations by such Purchaser Party of state or federal securities laws, or any conduct by such Purchaser Party which constitutes
fraud, gross negligence or willful misconduct). If any Action or Proceeding 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 or Proceeding 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 or Proceeding 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
(1) such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (x) for any settlement by
a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed;
or (y) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations or warranties, or any failure to perform or comply with any of the covenants or agreements,
made by such Purchaser Party in this Agreement or in any other Transaction Documents. The indemnification required by this Section
4.10 shall be made by periodic payments of the indemnity 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 other Persons and any liabilities the Company may be subject to
pursuant to applicable law.

 

4.11        Reservation
and Listing of Securities.

 

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

 

(b)          If,
on any date of determination, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than
the Required Minimum on such date, then the Board of Directors shall use its best efforts to promptly amend the Company’s
certificate or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the
Required Minimum at such time, as soon as possible and in any event not later than the seventy-fifth (75th) day after
such date of determination.

 

    	 

    	 

    

 

(c)          The
Company shall, if applicable: (i) in the time and manner required by the principal Trading Market on which any of the Company’s
securities are listed or designated, prepare and file with such Trading Market an additional shares listing application covering
a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all steps
necessary to cause such shares of Common Stock to be approved for listing or quotation on such Trading Market as soon as possible
thereafter, (iii) provide to the Purchasers evidence of such listing or quotation and (iv) maintain the listing or quotation of
such Common Stock on any date at least equal to the Required Minimum on such date on such 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        Restriction
on Future Financing; Participation in Future Financing.

 

(a)          From
the date hereof until the date that is the twelve (12) month anniversary of the Closing Date, upon any issuance by the Company
or any of its Subsidiaries of Common Stock, Common Stock Equivalents, Indebtedness or any combination thereof (a “Subsequent
Financing”), each Purchaser shall have the right to participate in such Subsequent Financing in an amount of up to one
hundred percent (100%) of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions
and price provided for in the Subsequent Financing.

 

(b)          At
least five (5) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Purchaser for a Subsequent Financing Notice, and only upon a request by such Purchaser, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The
Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of
proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed
to be effected and shall include a term sheet or similar document relating thereto as an attachment.

 

(c)          Any
Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company that such Purchaser is
willing to participate (or to cause their designees to participate) in the Subsequent Financing by not later than 5:30 p.m. (New
York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice, which written
notice shall include the amount of such Purchaser’s participation and representations and warranties that such Purchaser
has such funds ready, willing and available for investment on the terms set forth in the Subsequent Financing Notice. If the Company
receives no such notice from a Purchaser as of such fifth (5th) Trading Day, such Purchaser shall be deemed to have
notified the Company that it does not elect to participate.

 

    	 

    	 

    

 

(d)          If
by 5:30 p.m. (New York City time) on the fifth (5th ) Trading Day after all of the Purchasers have received the Pre-Notice,
the Company receives responses to the Subsequent Financing Notice from Purchasers desiring to participate (or to cause their designees
to participate) in the Subsequent Financing less than, in the aggregate, the total amount of the Participation Maximum, then the
Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent
Financing Notice.

 

(e)          If
by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice,
the Company receives responses to the Subsequent Financing Notice from Purchasers desiring to participate (or to cause their designees
to participate) in the Subsequent Financing more than, in the aggregate, the total amount of the Participation Maximum, each such
Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum.  “Pro
Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased on the Closing Date by a Purchaser
participating under this Section 4.12 and (y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing
Date by all Purchasers participating under this Section 4.12.

 

(f)          If
a Subsequent Financing is not consummated for any reason on the terms set forth in the applicable Subsequent Financing Notice within
thirty (30) Trading Days after the date of such Subsequent Financing Notice, then the Company shall provide the Purchasers with
a second Subsequent Financing Notice and the Purchasers shall have the right to participate in such second Subsequent Financing
in accordance with the terms of this Section 4.12.

 

(g)          The
Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree
to any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or
termination of, or grant any waiver, release or the like under or in connection with, this Agreement or any other Transaction
Document, without the prior written consent of such Purchaser.

 

(h)          Notwithstanding
anything to the contrary in this Section 4.12, and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing in such a manner such that such Purchaser will not
be in possession of any material, non-public information, in each case by no later than the tenth (10th) Business Day following
receipt of the Subsequent Financing Notice by the Purchasers. If by such tenth (10th) Business Day, no notice regarding the abandonment
of such transaction has been received by such Purchaser and no public disclosure regarding a transaction with respect to the Subsequent
Financing has been made, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be
in possession of any material, non-public information with respect to the Company or any of its Subsidiaries.
 

 

    	 

    	 

    

 

(i)          Notwithstanding
the foregoing, the provisions of this Section 4.12 shall not apply in respect of any Exempt Issuance.

 

4.13        Subsequent
Equity Sales.

 

(a)          From
the date hereof until the earlier of (i) such time as no Purchaser holds any of the Warrants or (ii) the Warrants have expired,
the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its
Subsidiaries of Common Stock or Common Stock Equivalents (or any combination of units thereof) involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity
securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common
Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with,
the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity
securities or (B) with a conversion price, exercise price or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including,
but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser
shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition
to any right to collect damages.

 

(b)          From
the date hereof until such time that the Debentures are no longer outstanding, neither the Company nor any Subsidiary shall make
any issuance whatsoever of Common Stock or Common Stock Equivalents at an effective price per share less than $1.00 (subject to
adjustment for forward and reverse stock splits and the like that occur after the date hereof). From the time that the Debentures
are no longer outstanding and for so long as any Warrants remain outstanding, the Company and each Purchaser (severally and not
jointly with any other Purchaser) agree that, in each instance that the Company desires or intends to make any issuance whatsoever
of Common Stock or Common Stock Equivalents at an effective price per share less than $1.00 (subject to adjustment for forward
and reverse stock splits and the like that occur after the date hereof), the Company shall pay to each Purchaser, in cash, an amount
equal to twenty percent (20%) of such Purchaser’s Subscription Amount hereunder. Any issuance of Common Stock or Common Stock
Equivalents pursuant to the foregoing sentence shall reduce the exercise price of each outstanding Warrant to the effective price
per share of such new issuance. In the event that the effective price per share of such new issuance is not set forth in the definitive
agreements pursuant to which such issuance is contemplated, then for purposes of this Section 4.13(b), the effective price per
share shall be calculated as the VWAP for the twenty (20) Trading Days immediately preceding, but not including, the date of such
issuance (the “20-Day VWAP”). For the avoidance of doubt, no Warrant exercise price shall be increased pursuant
to this Section 4.13(b) in the event that the 20-Day VWAP is at or above $1.00. Additionally, for the avoidance of doubt, no issuance
of Common Stock or Common Stock Equivalents by the Company pursuant to the second sentence of this Section 4.13(b) shall be effective
unless and until such time that all Purchasers have received their respective cash payment. Any Purchaser shall be entitled to
obtain injunctive relief against the Company to preclude any issuance in violation of this Section 4.13(b), which remedy shall
be in addition to any right to collect damages.

 

    	 

    	 

    

 

(c)          Notwithstanding
the foregoing, this Section 4.13 shall not apply in respect of (A) an Exempt Issuance, except that (i) no Variable Rate Transaction
shall be an Exempt Issuance and (ii) while the Debentures remain outstanding, any issuance of Common Stock or Common Stock Equivalents
pursuant to subclause (c) of the definition of Exempt Issuance shall not be made at an effective price per share less than $0.80
(subject to adjustment for forward and reverse stock splits and the like that occur after the date hereof) and (B) an issuance
as set forth on Schedule 4.13. 

 

4.14         Equal
Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any Person to amend or consent to a waiver or modification of any provision of the Transaction Documents, unless the same consideration
is also offered to all of the parties to such Transaction Documents. Further, the Company shall not make any payment of principal
or interest on the Debentures in amounts which are disproportionate to the respective principal amounts outstanding on the Debentures
at any applicable time. For the avoidance of doubt, this Section 4.14 constitutes a separate right granted to each Purchaser by
the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and
shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or
voting of Securities or otherwise.

 

4.15         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, 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 the Transaction Documents are first publicly announced pursuant to the initial press release as described in Section 4.6. 
Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated
by the Transaction Documents are publicly disclosed by the Company pursuant to the initial press release as described in Section
4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included
in the Transaction Documents and the Disclosure Schedules. 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 the Transaction Documents are first publicly announced pursuant to the initial press release as
described in Section 4.6, (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 the
Transaction Documents are first publicly announced pursuant to the initial press release as described in Section 4.6 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 4.6.  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         Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.

 

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 on or before July 15, 2015; provided, however, that such termination will not affect the
right of any party to sue for any breach by any other party (or parties).

 

5.2           Fees
and Expenses. At the Closing, the Company has agreed to reimburse Hillair Capital Management LLC, a Delaware limited liability
company (“Hillair”), (i) the non-accountable sum of $87,500 for its due diligence expenses (of which $20,000
has been paid prior to the date hereof); (ii) $50,000 for its legal fees and expenses (of which $20,000 has been paid prior to
the date hereof) and (iii) reasonable travel expenses and expenses associated with background checks of management and directors
(or director/management candidates) made by Hillair. The Company shall deliver to each Purchaser, prior to the Closing, a completed
and executed copy of the Closing Statement, attached hereto as Annex A. 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 and the other Transaction Documents. 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 conversion or 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, 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, respectively, 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, respectively,
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 the Purchasers holding at least fifty percent (50%) in interest of the Securities
then outstanding 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) relative
to the comparable rights and obligations of the other 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 amendment effected in accordance with this Section 5.5 shall be binding
upon each Purchase 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 acquisition by merger or consolidation with, or by sale of a substantial portion or all of the assets,
stock or other equity of the Company to, any other Person). 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 4.10.

 

    	 

    	 

    

  

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 hereto 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 4.10, 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 (2) 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 a conversion of a Debenture or exercise of a Warrant, the applicable Purchaser shall be required to return
any shares of Common Stock subject to any such rescinded conversion or exercise notice concurrently with the return to such Purchaser
of the aggregate conversion or 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 Debenture or Warrant, as the case may be (including, issuance of
a replacement debenture or 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 or Proceeding 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         Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any Action or Proceeding that may be brought by any Purchaser in order to enforce any
right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document,
it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof
forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such
excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at such Purchaser’s election.

 

5.18         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 Action or 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 PC. PC does not represent all of
the Purchasers and only represents Hillair. 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.

 

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

 

    	 

    	 

    

  

5.20         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.

 

5.21         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.

 

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

 

(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.

 

	STAFFING 360 SOLUTIONS, inc.	 	Address for Notice:
	 	 	 
	 	 	 
	By:	/s/ Jeff R. Mitchell	 	Facsimile Number:
	 	Name: Jeff R. Mitchell	 	 
	 	Title: Chief Financial Officer 	 	
	 	 	
	With a copy to (which shall not constitute notice):	 	Email Address:

 

[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: 	Hillair Capital Investments L.P.

 

	Signature of Authorized Signatory of Purchaser: 	/s/ Sean M. M. McAvoy

 

	Name of Authorized Signatory: 	/s/ Sean M. McAvoy

 

	Title of Authorized Signatory: 	Managing Member, Hillair Capital Advisors LLC

 

	Email Address of Authorized Signatory: 	seanm@Hillaircapital.com

 

	Facsimile Number of Authorized Signatory: 	 

 

	Address for Notice to Purchaser: 	Hillair Capital Management LLC
	 	345 Lorton Avenue, Suite 303
	 	Burlingame, CA 94010

 

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

 

	Subscription Amount:	$3,500,000	 

 

	Principal Amount (1.12 x Subscription Amount):	$3,920,000	 

 

	A Warrant Shares:	3,920,000	 

 

	B Warrant Shares:	3,920,000	 

 

	EIN Number:	90-0809696	 

 

 

[SIGNATURE PAGES CONTINUE]

 

    	 

    	 

    

 

Annex A 

 

CLOSING STATEMENT

 

Pursuant to the attached Securities Purchase
Agreement, dated as of the date hereof, the purchasers shall purchase Debentures and Warrants from Staffing 360 Solutions, Inc.,
a Nevada corporation (the “Company”). All funds will be wired into an account maintained by the Company. All
funds will be disbursed in accordance with this Closing Statement.

 

Disbursement
Date:July ___, 2015 

 

 

 

	
        I. PURCHASE PRICE

         
	 
	 	Gross Proceeds to be Received 	$
	 	 
	
        II.DISBURSEMENTS

         
	 
	 	 	$
	 	 	$
	 	 	$
	 	 	$
	 	 	$
	 	 
	Total Amount Disbursed:	$
	 	 
	
         

         

        Executed this ___ day of July, 2015

         

        STAFFING 360 SOLUTIONS, INC.

         

         

        By:____________________

        Name:

        Title:
	 
	 	 
	
        WIRE INSTRUCTIONS:

         

         
	 
	
        To: _____________________________________

         

         

         

         
	 
	To: _____________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00247-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00247-of-00352.parquet"}]]