Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities
Purchase Agreement (this “Agreement”) is dated as of April 13, 2017, between Transgenomic, Inc., a Delaware
corporation (the “Company”) and the investors set forth in Schedule A attached hereto (each a “Purchaser”
and collectively, the “Purchasers”).

 

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

 

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

 

ARTICLE
I

DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Company
Counsel” means Troutman Sanders LLP, with offices located at 1001 Haxall Point, Richmond, VA 23219.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Merger”
means the proposed merger of a wholly owned subsidiary of the Company with Precipio Diagnostics, LLC (“Precipio”).

 

“Notes”
means $1,250,000 principal amount of the 4% Promissory Notes, issued by the Company to the Purchasers hereunder, in the form of
Exhibit A attached hereto.

 

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

 

“Proposed
Transactions” means the transactions set forth on Schedule 1.1 to this Agreement.

 

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

 

“Registration
Statement” means a registration statement under the Securities Act covering the resale of the Underlying Shares by the
Purchaser as provided for herein.

 

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

 

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

 

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

 

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

 

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

 

“Securities”
means the Notes, the Warrants and the Underlying Shares.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Warrants”
means the Common Stock purchase warrants to be issued by the Company to the Purchasers hereunder, in the form of Exhibit C attached
hereto.

 

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ARTICLE
II

PURCHASE AND SALE

 

2.1          Closing.
Subject to the satisfaction of the conditions to closing set forth herein, the purchase and sale of Notes and Warrants, in the
amounts and to the Investors listed on Schedule A attached hereto shall take place at the offices of counsel to the Purchasers,
Sichenzia Ross Ference Kesner LLP at 61 Broadway, New York, NY 10006 or such other location as the parties shall mutually agree,
at 10:00 A.M., Eastern Standard Time, on April 13, 2017, or at such other time and place as the Company and the Investors mutually
agree upon orally or in writing (which time and place are designated as the “Closing”). Each Purchaser shall
deliver to the Company, via wire transfer with immediately available funds, or by delivery for cancellation a note payable by Precipio
to the Investor in an amount not to exceed $250,000, an amount equal to the Subscription Amount applicable to the Closing as set
forth on the signature page hereto executed by each such Purchaser and the Company and the Purchasers shall deliver the other items
set forth in Section 2.2 deliverable at the Closing. Upon receipt of the funds, the Company shall deliver to the respective
purchasers the Note and Warrants, as determined pursuant to Section 2.2.

 

2.2          Deliveries.

 

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

 

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

 

(ii)         a
Warrant exercisable for such number of shares of Common Stock equal to the following: (a) the Subscription Amount, multiplied by
(b) 50%, divided by (c) the Exercise Price at the Closing;

 

(iii)        a
certificate evidencing the formation and good standing of the Company in such entity’s jurisdiction of formation issued by
the Secretary of State (or comparable office) of such jurisdiction of formation as of a date within ten (10) days of the Closing
Date; and

 

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

 

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

 

2.3          Closing
Conditions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
III

REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

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(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 material provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case
of each of clauses (ii) and (iii), such as are waived or could not reasonably be expected to result in a Material Adverse Effect.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(m)          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 not have
a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is
no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except
where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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

 

    	 	12	 

     

    

 

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

 

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

 

    	 	13	 

     

    

 

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

 

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

 

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

 

(t)           Registration
Rights. Other than as disclosed in the SEC Reports and as contemplated by the Proposed Transactions, 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.

 

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

 

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

 

    	 	14	 

     

    

 

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

 

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

 

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

 

    	 	15	 

     

    

 

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

 

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

 

(bb)         Accountants.
The Company’s accounting firm is Marcum. To the knowledge and belief of the Company, such accounting firm: (i) is a registered
public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements
to be included in the Company’s Annual Report for the fiscal year ended December 31, 2016.

 

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

 

    	 	16	 

     

    

 

(dd)         Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that the Purchasers are each acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that the Purchasers are not acting as financial advisors or fiduciaries of the Company
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice
given by the Purchasers or any of its representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to each Purchaser’s purchase of the Securities. The Company further represents
to the Purchasers that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. It is understood
and acknowledged by the Company that (i) following the public disclosure of the transactions contemplated by the Transaction Documents,
in accordance with the terms thereof, none of the Purchasers have been asked by the Company or any of its Subsidiaries to agree,
nor has any Purchaser agreed with the Company or any of its Subsidiaries, to desist from effecting any transactions in or with
respect to (including, without limitation, purchasing or selling long) any securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold any of the Securities for any specified term; (ii) any Purchaser,
and counterparties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently
may have a “short” position in the Common Stock which was established prior to such Purchaser’s knowledge of
the transactions contemplated by the Transaction Documents; and (iii) each Purchaser shall not be deemed to have any affiliation
with or control over any arm’s length counterparty in any “derivative” transaction. The Company further understands
and acknowledges that following the public disclosure of the transactions contemplated by the Transaction Documents pursuant to
the Press Release (as defined below) one or more Purchasers may engage in hedging and/or trading activities at various times during
the period that the Securities are outstanding, including, without limitation, during the periods that the value and/or number
of Conversion Shares deliverable with respect to the Securities are being determined and such hedging and/or trading activities,
if any, can reduce the value of the existing stockholders’ equity interest in the Company both at and after the time the
hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading
activities do not constitute a breach of this Agreement, the Notes, Warrants or any other Transaction Document or any of the documents
executed in connection herewith or therewith.

 

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

 

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

 

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

 

    	 	17	 

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	 	18	 

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	 	19	 

     

    

 

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

 

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

 

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

 

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

 

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

 

    	 	20	 

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	 	21	 

     

    

 

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

 

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

 

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

 

    	 	22	 

     

    

 

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

 

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

 

    	 	23	 

     

    

 

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

 

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

 

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

 

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

 

4.5          [intentionally
omitted]

 

    	 	24	 

     

    

 

4.6          Disclosure
of Transactions and Other Material Information.

 

(a)          Disclosure
of Transaction. The Company shall, on or before 9:30 a.m., New York time, on the first (1st) Business Day after
the date of this Agreement, issue a press release (the “Press Release”) reasonably acceptable to the Purchasers
disclosing all the material terms of the transactions contemplated by the Transaction Documents. On or before 9:30 a.m., New York
time, on the first (1st) Business Day after the date of this Agreement, the Company shall file a Current Report on Form
8-K describing all the material terms of the transactions contemplated by the Transaction Documents in the form required by the
1934 Act and attaching all the material Transaction Documents (including, without limitation, this Agreement) (including all attachments,
the “8-K Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed all material,
non-public information (if any) provided to any of the Purchasers by the Company or any of its Subsidiaries or any of their respective
officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition,
effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers,
directors, affiliates, employees or agents, on the one hand, and any of the Purchasers or any of their affiliates, on the other
hand, shall terminate.

 

(b)          Limitations
on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective
officers, directors, employees and agents not to, provide any Purchaser with any material, non-public information regarding the
Company or any of its Subsidiaries from and after the date hereof without the express prior written consent of such Purchaser (which
may be granted or withheld in such Purchaser’s sole discretion). Subject to the foregoing, neither the Company, its Subsidiaries
nor any Purchaser shall issue any press releases or any other public statements with respect to the transactions contemplated hereby;
provided, however, the Company shall be entitled, without the prior approval of any Purchaser, to make the Press Release and any
press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i)
each Purchaser shall be consulted by the Company in connection with any such press release or other public disclosure prior to
its release). Without the prior written consent of the applicable Purchaser (which may be granted or withheld in such Purchaser’s
sole discretion), the Company shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such
Purchaser in any filing, announcement, release or otherwise.

 

    	 	25	 

     

    

 

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

 

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

 

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

 

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

 

    	 	26	 

     

    

 

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

 

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

 

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

 

4.9          Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes
and shall use 50% of the net proceeds from the sale of the Securities hereunder for a loan agreement with Precipio (of which $250,000
has previously been provided to Precipio), and shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s
debt, (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation
or (d) in violation of FCPA or OFAC regulations.

 

    	 	27	 

     

    

 

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

 

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

 

4.11        Listing
of Securities.

 

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

 

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

 

    	 	28	 

     

    

 

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

 

4.12        Certain
Transactions and Confidentiality.

 

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

 

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

 

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

 

4.13        Form
D; Blue Sky Filings. The Company shall file a Form D with respect to the Securities as required under Rule 506 of Regulation
D and to provide a copy thereof to each Purchaser promptly after such filing. Without limiting any other obligation of the Company
under this Agreement, the Company shall timely make all filings and reports relating to the offer and sale of the Securities required
under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable
“Blue Sky” laws), and the Company shall comply with all applicable foreign, federal, state and local laws, statutes,
rules, regulations and the like relating to the offering and sale of the Securities to the Purchasers and shall provide evidence
of any such action so taken to the Purchasers and the placement agent.

 

    	 	29	 

     

    

 

4.14        Offerings
of New Debt Securities; Registration.

 

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

 

(b)          The
Company shall not engage in an offering of equity securities or any securities convertible or exchangeable into equity securities
until 90 days after the Closing Date, other than in connection with an Exempt Issuance.

 

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

 

4.15        Reporting
Status. Until the date on which the Purchasers shall have sold all of the Underlying Securities (the “Reporting Period”),
the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations
thereunder would no longer require or otherwise permit such termination.

 

    	 	30	 

     

    

 

4.16        Participation
Right. At any time on or prior to the first anniversary of the Closing Date, neither the Company nor any of its Subsidiaries
shall, directly or indirectly, effect any subsequent private offering of securities other than an Exempt Issuance (a “Subsequent
Placement”), unless the Company shall have first complied with this Section 4.16. The Company acknowledges
and agrees that the right set forth in this Section 4.16 is a right granted by the Company, separately, to each Purchaser.

 

(i)          At
least five (5) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Purchaser
a written notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including,
without limitation, material, non-public information) other than: (A) if the proposed Offer Notice (as defined below) constitutes
or contains material, non-public information, a statement asking whether the Investor is willing to accept material non-public
information or (B) if the proposed Offer Notice does not constitute or contain material, non-public information, (x) a statement
that the Company proposes or intends to effect a Subsequent Placement, (y) a statement that the statement in clause (x) above does
not constitute material, non-public information and (z) a statement informing such Purchaser that it is entitled to receive an
Offer Notice (as defined below) with respect to such Subsequent Placement upon its written request. Upon the written request of
a Purchaser within three (3) Trading Days after the Company’s delivery to such Purchaser of such Pre-Notice, and only upon
a written request by such Purchaser, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver
to such Purchaser an irrevocable written notice (the “Offer Notice”) of any proposed or intended issuance or
sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”)
in a Subsequent Placement, which Offer Notice shall (A) identify and describe the Offered Securities, (B) describe the price and
other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued,
sold or exchanged, (C) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued,
sold or exchanged and (D) offer to issue and sell to or exchange with such Purchaser in accordance with the terms of the Offer
each Purchaser’s pro rata portion of the Offered Securities, provided that the number of Offered Securities which such Purchaser
shall have the right to subscribe for under this Section 4.16 shall be (x) based on such Purchaser’s pro rata
portion of the aggregate original principal amount of the Notes purchased hereunder by all Purchasers (the “Basic Amount”),
and (y) with respect to each Purchaser that elects to purchase its Basic Amount, any additional portion of the Offered Securities
attributable to the Basic Amounts of other Purchasers as such Purchaser shall indicate it will purchase or acquire should the other
Purchasers subscribe for less than their Basic Amounts (the “Undersubscription Amount”), which process shall
be repeated until each Purchaser shall have an opportunity to subscribe for any remaining Undersubscription Amount.

 

    	 	31	 

     

    

 

(ii)         To
accept an Offer, in whole or in part, such Purchaser must deliver a written notice to the Company prior to the end of the fifth
(5th) Business Day after such Purchaser’s receipt of the Offer Notice (the “Offer Period”),
setting forth the portion of such Purchaser’s Basic Amount that such Purchaser elects to purchase and, if such Purchaser
shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Purchaser elects to purchase (in
either case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all Purchasers are less than
the total of all of the Basic Amounts, then each Purchaser who has set forth an Undersubscription Amount in its Notice of Acceptance
shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
for; provided, however, if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic
Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Purchaser who
has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription
Amount as the Basic Amount of such Purchaser bears to the total Basic Amounts of all Purchasers that have subscribed for Undersubscription
Amounts, subject to rounding by the Company to the extent it deems reasonably necessary. Notwithstanding the foregoing, if the
Company desires to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company
may deliver to each Purchaser a new Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day after
such Purchaser’s receipt of such new Offer Notice.

 

(iii)        The
Company shall have five (5) Business Days from the expiration of the Offer Period above (A) to offer, issue, sell or exchange all
or any part of such Offered Securities as to which a Notice of Acceptance has not been given by a Purchaser (the “Refused
Securities”) pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only
to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to
the Company than those set forth in the Offer Notice and (B) to publicly announce (x) the execution of such Subsequent Placement
Agreement, and (y) either (I) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (II)
the termination of such Subsequent Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with
such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.

 

(iv)        In
the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the
terms specified in Section 4.16 above), then each Purchaser may, at its sole option and in its sole discretion, reduce
the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the
number or amount of the Offered Securities that such Purchaser elected to purchase hereunder multiplied by a fraction, (i) the
numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange
(including Offered Securities to be issued or sold to Purchasers pursuant to this Section 4.16 prior to such reduction)
and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Purchaser so elects
to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or
exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered
to the Purchasers in accordance with this Section 4.16.

 

    	 	32	 

     

    

 

(v)         Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Purchaser shall acquire from
the Company, and the Company shall issue to such Purchaser, the number or amount of Offered Securities specified in its Notice
of Acceptance, as reduced hereunder if such Purchaser has so elected, upon the terms and conditions specified in the Offer. The
purchase by such Purchaser of any Offered Securities is subject in all cases to the preparation, execution and delivery by the
Company and such Purchaser of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form
and substance to such Purchaser and its counsel.

 

(vi)        Any
Offered Securities not acquired by a Purchaser or other Persons in accordance with this Section 4.16 may not be issued,
sold or exchanged until they are again offered to such Purchaser under the procedures specified in this Agreement.

 

(vii)       The
Company and each Purchaser agree that if any Purchaser elects to participate in the Offer, neither the Subsequent Placement Agreement
with respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement
Documents”) shall include any term or provision whereby such Purchaser shall be required to agree to any restrictions
on trading as to any securities of the Company 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, any agreement previously entered into with the Company or any instrument received
from the Company.

 

(viii)      Notwithstanding
anything to the contrary in this Section 4.16 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 Placement has been abandoned or shall
publicly disclose its intention to issue the Offered Securities, in either case, in such a manner such that such Purchaser will
not be in possession of any material, non-public information, by the fifth (5th) Business Day following delivery of
the Offer Notice. If by such fifth (5th) Business Day, no public disclosure regarding a transaction with respect to
the Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser,
such transaction shall be deemed to have been abandoned and such Purchaser shall not be in possession of any material, non-public
information with respect to the Company or any of its Subsidiaries. Should the Company decide to pursue such transaction with respect
to the Offered Securities, the Company shall provide such Purchaser with another Offer Notice and such Purchaser will again have
the right of participation set forth in this Section 4.16.

 

(ix)         The
restrictions contained in this Section 4.16 shall not apply in connection with any Exempt Issuances.

 

    	 	33	 

     

    

 

ARTICLE
V

MISCELLANEOUS

 

5.1           Termination.
This Agreement may be terminated by Purchasers purchasing a majority in interest of the Notes at the Closing as to the Purchasers’
obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchaser, by
written notice to the other parties, if the Closing has not been consummated on or before April 13, 2017; provided, however, that
such termination will not affect the right of any party to sue for any breach by any other party (or parties).

 

5.2           Fees
and Expenses. The Company shall reimburse Purchasers or their counsel for attorney’s fees and expenses for the transactions
contemplated by this Agreement, in an amount of $35,000 in the aggregate. The Company shall deliver to the Purchasers, prior to
the Closing, a completed and executed copy of the Closing Statement, attached hereto as Annex A. The Company shall pay all Transfer
Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the
Company and any exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchaser. The Company shall also be directly responsible for the payment any fees or commissions
payable to the placement agent for the offering, Aegis Capital Corp.

 

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

 

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

 

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

 

    	 	34	 

     

    

 

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

 

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

 

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

 

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

 

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

 

    	 	35	 

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

    	 	36	 

     

    

 

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

 

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

 

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

 

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

 

    	 	37	 

     

    

 

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

 

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

 

(Signature Pages Follow)

 

    	 	38	 

     

    

 

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.

 

	TRANSGENOMIC INC.	 	Address for Notice:
	 	 	 	 
	By:	/s/ Robert M. Patzig	 	12325 Emmet Street
	 	 	 	 
	 	Robert M. Patzig	 	Omaha, NE 68164
	 	 	 	 
	 	Chairman of the Board	 	pkinnon@transgenomic.com

 

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

 

Troutman Sanders LLP

1001 Haxall Point, Richmond, VA 23219

Attn.: John Owen Gwathmey, Esq.

johnowen.gwathmey@troutmansanders.com

Facsimile: (804) 698-5174

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

    	 	 	 

     

    

 

PURCHASER SIGNATURE PAGE TO SECURITIES

PURCHASE AGREEMENT

 

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

 

Name of Purchaser:

 

	Signature of Authorized Signatory of Purchaser:	 

 

	Name of Authorized Signatory:	 

 

	Title of Authorized Signatory:	 

 

	Email Address of Authorized Signatory:	 

 

	Facsimile Number of Authorized Signatory:	 

 

Address for Notice to Purchaser:

 

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

 

	Subscription Amount:	 

 

	EIN Number:	 

 

	Wire Instructions:	 

 

[SIGNATURE PAGES CONTINUE]

 

    	 	 	 

     

    

 

DISCLOSURE SCHEDULE

 

TO THE

 

SECURITIES
PURCHASE AGREEMENT

BY
AND BETWEEN

 

TRANSGENOMIC,
INC.

 

AND

 

THE
INVESTORS SET FORTH IN

SCHEDULE
A ATTACHED THERETO

 

DATED
AS OF APRIL 13, 2017

 

    	 	 	 

     

    

 

Schedule 1.1

 

Merger Agreement

 

On October 12, 2016, Transgenomic, New Haven
Labs Inc., a wholly owned subsidiary of Transgenomic (“Merger Sub” and, together with Transgenomic, the “Transgenomic
Parties”), and Precipio Diagnostics, LLC (“Precipio”) entered into an Agreement and Plan of Merger (as amended
by the Merger Agreement Amendment (as defined below) the “Merger Agreement”) pursuant to which Precipio will become
a wholly owned subsidiary of Transgenomic (the “Merger”), on the terms and subject to the conditions set forth in the
Merger Agreement. On February 2, 2017, Transgenomic, Merger Sub and Precipio entered into a First Amendment to Agreement and Plan
of Merger (the “Merger Agreement Amendment”) which provided for, among other things, the revision of the exchange ratio
set forth in the Merger Agreement, the waiver and removal of certain closing conditions and the authorization of certain actions
taken by each of Transgenomic and Precipio since the date the Merger Agreement. The parties expect the Merger to close in the second
quarter of 2017.

 

Upon the effectiveness of the Merger (the “Effective
Time”), (i) the outstanding common units of Precipio will be converted into the right to receive approximately 160.6
million shares of common stock of New Precipio (“New Precipio common stock”), together with cash in lieu of fractional
units, which will result in Precipio common unit holders owning approximately 53% of the issued and outstanding shares of New Precipio
common stock on a fully diluted basis, taking into account the issuance of shares of convertible preferred stock of New Precipio
(“New Precipio preferred stock”) in the Merger and the private placement as discussed below (the “fully diluted
New Precipio common stock”) and (ii) the outstanding preferred units of Precipio will be converted into the right to
receive approximately 24.1 million shares of New Precipio preferred stock with an aggregate face amount equal to $3 million (based
upon the purchase price of the new preferred stock of New Precipio in the new preferred stock financing), which will result in
the Precipio preferred unit holders owning approximately 8% of the fully diluted New Precipio common stock.

 

Conversion of Secured Debt

 

In connection with the Merger, at the Effective
Time, in addition to the New Precipio preferred stock to be issued to holders of preferred units of Precipio, New Precipio also
will issue shares of New Precipio preferred stock and New Precipio common stock to holders of certain secured indebtedness of Transgenomic,
whereby such holders will receive in exchange for such indebtedness, approximately 24.1 million shares of New Precipio Preferred
Shares in an amount equal to $3 million, which represents approximately 8% of the fully diluted New Precipio common stock, and
approximately 10.4 million shares of New Precipio common stock, which represents approximately 3% of the fully diluted New Precipio
common stock.

 

    	 	44	 

     

    

 

Private Placement

 

In addition and as a condition to the Merger
and conversion of secured debt, New Precipio also will issue shares of New Precipio preferred stock and New Precipio common stock
in a related private placement, whereby New Precipio will issue for cash up to approximately 56.2 million shares of New Precipio
preferred stock for $7 million to investors in a private placement, which represents approximately 18% of the fully diluted New
Precipio common stock.

 

The New Precipio preferred stock issued in
the Merger, the conversion of secured debt and the private placement will be issued based on a $25 million pre-money equity valuation
of New Precipio and will represent, in the aggregate, approximately 34% of the fully diluted New Precipio common stock.

 

The New Precipio preferred stock to be issued
in the Merger and the private placement will be new designations of preferred shares effectuated by a Certificate of Designation
amending Transgenomic’s Certificate of Incorporation. The cash proceeds received from the private placement will be used
to finance the Merger, for working capital and growth capital to expand into new markets.

 

The shares of New Precipio preferred stock
may be convertible into New Precipio common stock any time at an applicable conversion price. Certain material corporate events
also will require the consent of a supermajority of holders of the New Precipio preferred stock. In the event of New Precipio’s
liquidation, dissolution or winding up, holders of the New Precipio preferred stock will be entitled to receive assets or surplus
funds of New Precipio in an amount equal to the greater of (i) 1.5 times the original purchase price of the New Precipio preferred
stock, plus an amount equal to all unpaid and accrued dividends and dividend equivalents and (ii) the amount that would
be payable on the New Precipio preferred stock if it were converted into New Precipio common stock (the “Liquidation Preference”).
This Liquidation Preference also would be due in the event of a future merger or sale of New Precipio, unless a supermajority of
holders of New Precipio preferred stock elect otherwise. The New Precipio preferred stock will be entitled to an annual 8% cumulative
payment in lieu of interest or dividends, payable in-kind for the first two years and in cash or in-kind thereafter, at the option
of the holder. The New Precipio preferred stock also will be entitled to share on any dividends paid on the New Precipio common
stock.

 

In connection with the private placement, New Precipio will enter
into an investor rights agreement with the holders of the New Precipio preferred stock. The investor rights agreement will grant
rights to such parties, including with respect to the designation of nominees for election to the New Precipio board of directors
upon the closing of the Merger. The investor rights agreement also will contain transfer restrictions and standstill restrictions
relating to shares of New Precipio common stock that will be issued to such parties in connection with the Merger and the private
placement. In addition, the investor rights agreement gives such parties rights with respect to the registration under the Securities
Act of 1933, as amended, of the shares of New Precipio common stock to be issued to such parties, including the shares that may
be issued upon future conversion of the New Precipio preferred stock.

 

    	 	45	 

     

    

 

Schedule 3.1(a)(i)

Subsidiaries

 

		1.	Merger Sub

		2.	Annovis, Inc.,
                                         a Delaware corporation1

		3.	Transgenomic
                                         Japan, Inc., a Delaware corporation2

 

 

1         This
entity has not carried on business operations over the last four years. The Company is in the process of dissolving and terminating
this entity. Such dissolution and termination is not expected to be complete prior to the closing of the merger.

2         This
entity has not carried on business operations over the last four years. The Company is in the process of dissolving and terminating
this entity. Such dissolution and termination is not expected to be complete prior to the closing of the merger.

 

    	 	46	 

     

    

 

Schedule 3.1(e)

Filings, Consents and Approvals

 

		1.	Affiliates of Third Security, LLC pursuant to that
certain Loan and Security Agreement by and among Transgenomic, Inc, Third Security Senior Staff 2008 LLC and the lenders party
there to, as amended, restated, supplemented, or otherwise modified from time to time.

		2.	Precipio, Diagnostics, LLC pursuant to the Merger
Agreement.

 

    	 	47	 

     

    

 

Schedule 3.1(g)

Capitalization

 

TBIO Capitalization Table

 

	Diluted Shares Outstanding	 	Total 3/31/2017	 
	 	 	 	 
	Common Shares	 	 	26,868,062	 
	Convertible Preferred A-1	 	 	214,705	 
	Convertible Promissory Note	 	 	116,667	 
	Warrants	 	 	3,334,011	 
	Options	 	 	685,646	 
	Stock Appreciation Rights	 	 	83,333	 
	Fully Diluted Shares	 	 	31,302,424	 

 

Shares of Transgenomic, Inc. Common Stock reserved for issuance:
10,698,416

 

	Name and
    Address of Beneficial Owner(1)	 	Number
    of
 Shares 

Beneficially
 Owned	 	 	Percent
    of 
 Class	 
	 	 	 	 	 	 	 
	Directors
    and Executive Officers	 	 	 	 	 	 	 	 
	Paul
    Kinnon, President, Chief Executive Officer, Interim Chief Financial Officer and Director	 	 	332,499	(2)	 	 	1.2	%
	Doit L. Koppler,
    II, Director	 	 	19,665	(3)	 	 	*	 
	Robert M. Patzig,
    Director	 	 	68,832	(4)	 	 	*	 
	Michael A. Luther,
    Director	 	 	10,000	(5)	 	 	*	 
	Mya Thomae, Director	 	 	5,000	(6)	 	 	*	 
	All directors and
    executive officers as a group (5 persons)	 	 	435,996	(7)	 	 	1.6	%
	 	 	 	 	 	 	 	 	 
	Other
    Stockholders	 	 	 	 	 	 	 	 
	Randal J. Kirk	 	 	8,015,374	(8)	 	 	29.3	%

 

* Represents less than 1% of Transgenomic’s
outstanding common stock.

 

(1)   The address for all of
Transgenomic’s directors and executive officers is the address of its principal executive offices located at 12325 Emmet
Street, Omaha, Nebraska 68164.

 

(2)   Includes 332,499 shares issuable upon the exercise
of stock options and stock appreciation rights that are exercisable or will become exercisable within 60 days after March 31, 2017.

 

(3)   Includes (i) 4,166 shares owned by Mr. Koppler,
and (ii) 15,499 shares issuable upon the exercise of stock options that are exercisable or will become exercisable within 60 days
after March 31, 2017.

 

(4)   Includes (i) 3,333 shares owned by Mr. Patzig,
and (ii) 65,499 shares issuable upon the exercise of stock options that are exercisable or will become exercisable within 60 days
after March 31, 2017.

 

    	 	48	 

     

    

 

(5)   Includes 10,000 shares issuable upon the exercise
of stock options that are exercisable or will become exercisable within 60 days after March 31, 2017.

 

(6)   Includes 5,000 shares issuable upon the exercise
of stock options that are exercisable or will become exercisable within 60 days after March 31, 2017.

 

(7)   Includes shares which may be acquired by executive
officers and directors as a group within 60 days after March 31, 2017 through the exercise of stock options, stock appreciation
rights or warrants.

 

(8)   Consists of (i) 7,550,669 shares of common
stock, (ii) 250,000 shares of common stock issuable upon exercise of warrants to purchase shares of common stock that are currently
exercisable, and (iii) 214,705 shares of common stock issuable upon conversion of 214,705 shares of Series A-1 Convertible
Preferred Stock. Excludes 161,026 shares of common stock issuable upon exercise or exchange of warrants to purchase shares of common
stock (the “Placement Warrants”) that are not currently exercisable as the exercise thereof is restricted by a blocker
provision (the “Warrant Blocker”) that restricts the exercise of each Placement Warrant if, as a result of such exercise,
the holder of the Placement Warrant, together with its affiliates and any other person whose beneficial ownership of common stock
would be aggregated with such holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended,
would beneficially own in excess of 9.99% of the Company’s then issued and outstanding shares of common stock (including
the shares of common stock issuable upon such exercise), as such percentage ownership is determined in accordance with the terms
of the Placement Warrants. The Warrant Blocker will automatically expire 61 calendar days prior to the expiration date of the Placement
Warrants. In addition, if certain approvals from the Company’s stockholders and The Nasdaq Stock Market LLC to issue
any additional shares of common stock pursuant to the exchange right under the Placement Warrants are obtained (the “Placement
Warrants Required Approvals”), an additional 100,000 shares of common stock may be issued upon exercise of an exchange
right under the Placement Warrants for an aggregate of up to 260,862 shares of common stock issuable upon exchange of the Placement
Warrants. The total of the shares of common stock, the warrants to purchase shares of common stock and the shares of Series
A-1 Convertible Preferred Stock are held by the following companies, which are managed by Third Security, LLC (“Third Security”),
which is managed by Randal J. Kirk. Mr. Randal J. Kirk could be deemed to have indirect beneficial ownership of these shares:
Third Security Senior Staff 2008 LLC beneficially owns 3,206,149 shares of common stock, which consist of (a) 3,020,267 shares
of common stock, (b) 85,882 shares of common stock issuable upon conversion of 85,882 shares of Series A-1 Convertible Preferred
Stock, and (c) 100,000 shares of common stock issuable upon exercise of warrants to purchase shares of common stock that are not
Placement Warrants and are currently exercisable; Third Security Staff 2010 LLC beneficially owns 2,268,595 shares of common stock,
which consist of (x) 2,125,654 shares of common stock, (y) 42,941 shares of common stock issuable upon conversion of 42,941 shares
of Series A-1 Convertible Preferred Stock, and (z) 100,000 shares of common stock issuable upon exercise of warrants to purchase
shares of common stock that are not Placement Warrants and are currently exercisable; Third Security Incentive 2010 LLC beneficially
owns 1,603,076 shares of common stock, which consist of (1) 1,510,135 shares of common stock, (2) 42,941 shares of common stock
issuable upon conversion of 42,941 shares of Series A-1 Convertible Preferred Stock, and (3) 50,000 shares of common stock issuable
upon exercise of warrants to purchase shares of common stock that are not Placement Warrants and are currently exercisable; Third
Security Staff 2014 LLC beneficially owns 937,554 shares of common stock, which consist of (A) 894,613 shares of common stock,
and (B) 42,941 shares of common stock issuable upon conversion of 42,941 shares of Series A-1 Convertible Preferred Stock. The business
address of these beneficial owners is 1881 Grove Avenue, Radford, Virginia 24141.

 

		·	Voting Agreement, dated as of October 12, 2016, by and among Transgenomic, Inc. Precipio Diagnostics, LLC and certain stockholders
listed therein.

 

    	 	49	 

     

    

 

Schedule 3.1(i)

Material Changes; Undisclosed Events, Liabilities
or Developments

 

None.

 

    	 	50	 

     

    

 

Section 3.1(j)

Litigation

 

See Item 3 of Part I of Transgenomic, Inc.’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2016.

 

    	 	51	 

     

    

 

Schedule 3.1(l)

Compliance

 

See Item 1A of Part I of Transgenomic, Inc.’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2016.

 

See Item 3 of Part I of Transgenomic, Inc.’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2016.

 

See Note 6 to the Transgenomic, Inc. and Subsidiary Notes to Consolidated
Financial Statements in Transgenomic’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

 

    	 	52	 

     

    

 

Schedule 3.1(p)

Sarbanes-Oxley; Internal Accounting Controls

 

See Item 9A of Part II of Transgenomic, Inc.’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2016.

 

    	 	53	 

     

    

 

Schedule 3.1(kk)

Management

 

None.

 

    	 	54Exhibit 10.2

 

THIS SECURITY HAS NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE
TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

	Principal Amount: $[                   ]	Original Issue Date: April 13, 2017

  

TRANSGENOMIC, INC.

 

4% PROMISSORY NOTE

DUE JULY 12, 2017

 

THIS 4% PROMISSORY NOTE
is one of a series of duly authorized and validly issued 4% Promissory Notes of Transgenomic, Inc., a Delaware corporation, (the
“Company”), having its principal place of business at 12325 Emmet Street, Omaha, NE 68164, designated as its
4% Promissory Notes due 2017 (this note, the “Note” and, collectively with the other notes of such series, the
“Notes”).

 

FOR VALUE RECEIVED, the
Company promises to pay to [                           
] or its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal
sum of [         ] Thousand dollars ($            
) on the earlier of (i) July 12, 2017, or (ii) the closing of a Qualified Offering (the “Maturity Date”), or
such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest to the Holder on
the aggregate unconverted and then outstanding principal amount of this Note in accordance with the provisions hereof. Any cash
payment of this Note shall be deemed to be an Optional Redemption and the Redemption Amount shall be paid in accordance with the
terms and conditions of Section 6(b) herein. This Note is subject to the following additional provisions:

 

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

 

    	 	1	 

     

    

 

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

 

“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.

 

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

 

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

 

“Fundamental Transaction”
shall have the meaning set forth in Section 6(a).

 

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

 

    	 	2	 

     

    

 

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

 

“New York Courts” shall
have the meaning set forth in Section 7(d).

 

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

 

“Optional Redemption” shall
have the meaning set forth in Section 4(a).

 

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

 

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

 

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

 

“Optional Redemption Period”
shall have the meaning set forth in Section 4(a).

 

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

 

“Purchase Agreement”
means the Securities Purchase Agreement, dated as of April 13, 2017, among the Company and the Holder and the other persons signatory
thereto, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Qualified Offering”
means an underwritten public offering in the United States of the Company’s equity securities.

 

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

 

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

 

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

 

Section 2. Interest.
The Company shall pay interest to the Holder on the aggregate principal amount of this Note at the rate of 4% per annum.

 

    	 	3	 

     

    

 

Section 3. Registration
of Transfers and Exchanges.

 

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

 

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

 

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

 

Section 4. Redemption.

 

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

 

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

 

Section 5. Negative Covenants. Except
with respect to the transaction contemplated by the Proposed Transactions, as long as any portion of this Note remains outstanding
and Notes with an aggregate principal amount of $100,000, remain outstanding, unless the Holder of at least 66% in principal amount
of the then outstanding Notes shall have otherwise given prior written consent, the Company shall not, and shall not permit any
of the Subsidiaries to, directly or indirectly:

 

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

 

(b)       pay
cash dividends or distributions on any equity securities of the Company;

 

    	 	4	 

     

    

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6. Events of Default.

 

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

 

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

 

    	 	5	 

     

    

 

(ii)        the
Company shall fail to observe or perform in any material respect any other covenant or agreement contained in the Notes, which
failure is not cured, if possible to cure, within the earlier to occur of (A) five Trading Days after notice of such failure sent
by the Holder or by any other Holder to the Company and (B) 10 Trading Days after the Company has become aware of such failure;

 

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

 

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

 

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

 

(vi)       the
Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other credit facility,
indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured
or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves
an obligation greater than $500,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such
indebtedness being declared due and payable prior to the date on which it would otherwise become due and payable;

 

(vii)      the
Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all
or in excess of 50% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute
a Change of Control Transaction). For purposes hereof, a “Fundamental Transaction” shall mean, except as contemplated
in the Proposed Transactions (as such term is defined in the Purchase Agreement), if, at any time while this Note is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company
with or into another Person and the Company is not the surviving entity, (ii) the Company, directly or indirectly, effects any
sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or
a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holder of Common Stock are permitted to sell, tender or exchange their
shares for other securities, cash or property and has been accepted by the holder of 50% or more of the outstanding Common Stock,
(iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization
of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates
a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares
of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination);
or

 

    	 	6	 

     

    

 

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

 

(b)          Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Note, plus accrued but unpaid
interest, plus all interest that would have been earned through the Maturity Date if such interest has not yet accrued, liquidated
damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election,
immediately due and payable in cash at the Redemption Amount. Commencing five days after the occurrence of any Event of Default
that results in the eventual acceleration of this Note, the interest rate on this Note shall accrue at an interest rate equal to
the lesser of 18% per annum or the maximum rate permitted under applicable law. Upon the payment in full of the Redemption Amount,
the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described
herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind,
and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder
and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time
prior to payment hereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder
receives full payment pursuant to this Section 6(b). No such rescission or annulment shall affect any subsequent Event of Default
or impair any right consequent thereon.

 

Section 7. Miscellaneous.

 

(i)         Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation,
any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above, or such other facsimile number or address as the Company
may specify for such purposes by notice to the Holder delivered in accordance with this Section 9(a). Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile,
or sent by a nationally recognized overnight courier service addressed to the Holder at the facsimile number or address of the
Holder appearing on the books of the Company, or if no such facsimile number or address appears on the books of the Company, at
the principal place of business of the Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 4:00 p.m. (New York
City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later
than 4:00 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to
be given.

 

    	 	7	 

     

    

 

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

 

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

 

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

 

    	 	8	 

     

    

 

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

 

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

 

(vii)      Successors
and Assigns. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors
and assigns of the parties. The Company may not assign this note or delegate any of its obligations hereunder without the written
consent of the Holder. The Holder may assign this Note and its rights hereunder at any time without consent of Company.

 

    	 	9	 

     

    

 

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

 

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

 

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

 

(Signature Pages Follow)

 

    	 	10	 

     

    

 

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

 

	 	TRANSGENOMIC, INC.
	 		
	 	By:	
	 		Robert M. Patzig
	 		Chairman of the Board
	 		
	 	Email address for delivery of Notices: 
	 	pkinnon@transgenomic.com

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