Document:

Exhibit 10.1 

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of February 11, 2015, is by and among xG Technology, Inc.,
a Delaware corporation with headquarters located at 240 S. Pineapple Avenue, Suite 701, Sarasota, FL 34236 (the “Company”),
and each of the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively,
the “Buyers”).

 

RECITALS

 

A.          The
Company and each Buyer desire to enter into this transaction to purchase the Preferred Shares (as defined below) and related Warrants
(as defined below) set forth herein.

 

B.           The
Company will sell and issue the Preferred Shares (as defined below) and the Shares (as defined below) to each Buyer pursuant to
a currently effective shelf registration statement on Form S-3, which has at least $1,000,000 of unallocated securities, including
Common Stock (as defined below), and preferred stock, $0.00001 par value per share (the “Preferred Stock”) registered
thereunder (Registration Number 333-197820) (the “Registration Statement”), which Registration Statement has
been declared effective in accordance with the Securities Act of 1933, as amended (the “1933 Act”), by the United
States Securities and Exchange Commission (the “SEC”).

 

C.           The
Company will sell and issue the Warrants (as defined below) and the Warrant Shares (as defined below) to each Buyer provided for
herein without registration under the 1933 Act (as defined below), in reliance upon the provisions of Section 4(a)(2) of the 1933
Act, Rule 506 of Regulation D promulgated under the 1933 Act, and such other exemptions from the registration requirements of the
1933 Act as may be available with respect to any or all of the purchases/exchanges of the Warrants and Warrants Shares to be made
hereunder.

 

D.          The
Company has authorized a new series of convertible Preferred Stock of the Company designated as Series B Convertible Preferred
Stock, $0.00001 par value, the terms of which are set forth in the certificate of designations for such series of Preferred Stock
(the “Certificate of Designations”) in the form attached hereto as Exhibit A (together with any
convertible preferred shares issued in replacement thereof in accordance with the terms thereof, the “Preferred Shares”),
which Preferred Shares shall be convertible into Common Stock (such shares of Common Stock issuable pursuant to the terms of the
Certificate of Designations, including, without limitation, upon conversion or otherwise, collectively, the “Conversion
Shares”), in accordance with the terms of the Certificate of Designations.

 

E.           Each
Buyer wishes to purchase, and the Company wishes to sell, at the Closing (as defined below) upon the terms stated in this Agreement,
(i) the aggregate number of Preferred Shares set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers
(which aggregate amount for all Buyers shall be 350,000 Preferred Shares and shall collectively be referred to herein as the “Preferred
Shares”), and (ii) a warrant to acquire up to the aggregate number of shares of Common Stock set forth opposite such
Buyer’s name in column (4) on the Schedule of Buyers, in the form attached hereto as Exhibit B (the “Warrants”)
(as exercised, collectively, the “Warrant Shares”). 

 

F.           The
Preferred Shares, the Conversion Shares, the Warrants, the Warrant Shares and the Commitment Shares (as defined below) are collectively
referred to herein as the “Securities.”

 

AGREEMENT

 

NOW, THEREFORE,
in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:

 

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1.            
PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS.

 

(a)         
Preferred Shares and Warrants. The Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly,
shall purchase from the Company on the Closing Date (as defined below), the aggregate number of Preferred Shares, as is set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers, along with a Warrant to acquire up to the aggregate number
of Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers.

 

(b)         
Closing. The closing (the “Closing ”) of the purchase of the Preferred Shares and the Warrants shall
occur at the offices of Greenberg Traurig, LLP, MetLife Building, 200 Park Avenue, New York, NY 10166. The date and time of the
Closing (the “Closing Date”) shall be 10:00 a.m., New York time, on the third (3rd)
Trading Day (as defined in the Warrants) after the date hereof (or such earlier date as is mutually agreed to by the Company and
each Buyer).

 

(c)         
Purchase Price. The aggregate purchase price for the Preferred Shares and the Warrants to be purchased by each Buyer at
the Closing (the “Purchase Price”) shall be the amount set forth opposite such Buyer’s name in column
(5) on the Schedule of Buyers.

  

(d)         
Commitment Shares. In consideration for the Buyer’s execution and delivery of this Agreement, at the Closing, the
Company shall deliver to such Buyer 3% of the Purchase Price in shares of Common Stock (the “Commitment Shares”)
as set forth on column (6) of the Schedule of Buyers. The Commitment Shares shall be issued pursuant to the Registration Statement.

 

(e)         
Payment of Purchase Price; Deliveries. On the Closing Date, (x) each Buyer shall pay its respective Purchase Price to the
Company for the Preferred Shares and the Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of immediately
available funds in accordance with the Company’s written wire instructions, (less, in the case of any applicable Buyer, the
amounts withheld pursuant to Section 4(j)), and (y) the Company shall (A) deliver to each Buyer certificates representing such
aggregate number of Preferred Shares as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers,
(B) deliver to each Buyer a Warrant to initially acquire up to the aggregate number of Warrant Shares as is set forth opposite
such Buyer’s name in column (4) on the Schedule of Buyers, duly executed on behalf of the Company and registered in the name
of such Buyer or its designee, (C) deliver to each Buyer certificates representing such aggregate number of Commitment Shares as
is set forth opposite such Buyer’s name in column (6) of the Schedule of Buyers, and (D) deliver to each such Buyer the other
documents, instruments and certificates set forth in Section 6 duly executed on behalf of the Company.

 

2.            
BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally
and not jointly, represents and warrants to the Company with respect to only itself that:

 

(a)          
Organization; Validity; Enforcement. Such Buyer is either an individual or an entity duly incorporated or formed, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate,
partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated
by this Agreement and otherwise to carry out its obligations hereunder. This Agreement has been duly and validly authorized, executed
and delivered on behalf of such Buyer and constitutes the legal, valid and binding obligations of such Buyer enforceable against
such Buyer in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies.

 

(b)          
No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer
of the transactions contemplated hereby and the other Transaction Documents will not (i) result in a violation of the organizational
documents of such Buyer, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which such Buyer is a party or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws) applicable to such Buyer, except, in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

 

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(c)          
Short Sale. Each Buyer represents and warrants to the Company that at no time prior to the date of this Agreement has any
Restricted Person (as defined herein) engaged in or effected, in any manner whatsoever, directly or indirectly, any (i) “short
sale” (as such term is defined in Rule 200 of Regulation SHO of the 1934 Act (as defined herein)) of the Common Stock or
(ii) hedging transaction, which establishes a Net Short Position (as defined herein) with respect to the Common Stock.

 

(d)          
Investment Purpose. Each Buyer is acquiring the Warrants and the Warrant Shares as principal for its own account and not
with a view to or for distributing or reselling such Warrants or Warrant Shares or any part thereof in violation of 1933 Act or
any applicable state securities law, has no present intention of distributing any of such Warrants or Warrant Shares in violation
of the 1933 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 Warrants or Warrant Shares in violation of the 1933 Act or any applicable
state securities law (this representation and warranty not limiting any Buyer’s right to sell the Warrants and the Warrant
Shares at any time pursuant to any registration statement registering the resale thereof or otherwise in compliance with applicable
federal and state securities laws). Each Buyer is acquiring the Warrants and the Warrant Shares hereunder in the ordinary course
of its business.

 

(e)          
Accredited Buyer Status. Each Buyer is an "accredited Buyer" as that term is defined in Rule 501(a)(3) of Regulation
D promulgated under the 1933 Act.

 

(f)             Reliance on Exemptions. Each Buyer understands that the Warrants and the Warrant Shares may be 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 Buyer's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions
and the eligibility of such Buyer to acquire the Warrants and the Warrant Shares.

 

(g)          
Information. Each Buyer understands that its investment in the Warrants and the Warrant Shares involves a high degree of
risk. Each Buyer (i) is able to bear the economic risk of an investment in the Warrants and the Warrant Shares including a total
loss thereof, (ii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits
and risks of the proposed investment in the Warrants and the Warrant Shares and (iii) has had an opportunity to ask questions of
and receive answers from the officers of the Company concerning the financial condition and business of the Company and others
matters related to an investment in the Warrants and the Warrant Shares. Neither such inquiries nor any other due diligence investigations
conducted by the Buyers or their respective representatives shall modify, amend or affect each Buyer's right to rely on the Company's
representations and warranties contained in Section 3 below. Each Buyer 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 Warrants and the Warrant
Shares.

 

(h)          
Transfer or Sale. Each Buyer understands that (i) the Warrants and the Warrant Shares may not be offered for sale, sold,
assigned or transferred unless (A) registered pursuant to the 1933 Act or (B) an exemption exists permitting such Warrants and
the Warrant Shares to be sold, assigned or transferred without such registration; (ii) any sale of the Warrants and the Warrant
Shares made in reliance on Rule 144 under the 1933 Act may be made only in accordance with the terms of Rule 144 under the 1933
Act and further, if Rule 144 under the 1933 Act is not applicable, any resale of the Warrants and the Warrant Shares under circumstances
in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in
the1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder.

 

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3.            
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents
and warrants to each of the Buyers that:

 

(a)          
Organization and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly
existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority
to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of
the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used
in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties,
assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or
any Subsidiary, either individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction
Documents or (iii) the authority or ability of the Company to perform any of its obligations under any of the Transaction Documents.
Other than the Persons (as defined below) set forth in the SEC Documents (as defined below) the Company has no Subsidiaries. “Subsidiaries”
means any Person in which the Company, directly or indirectly, (I) owns any of the outstanding capital stock or holds any equity
or similar interest of such Person or (II) controls or operates all or any part of the business, operations or administration of
such Person, and each of the foregoing, is individually referred to herein as a “Subsidiary.”

 

(b)          
Authorization; Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations
under this Agreement and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Preferred Shares, the reservation
for issuance and issuance of the Conversion Shares issuable under the Certificate of Designations with respect to the Preferred
Shares, the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable upon exercise
of the Warrants and the issuance of the Commitment Shares) have been duly authorized by the Company’s board of directors
and (other than the filing with the SEC of the prospectus supplement required by the Registration Statement pursuant to Rule 424(b)
under the 1933 Act (the “Prospectus Supplement”) supplementing the base prospectus forming part of the Registration
Statement (the “Prospectus”) and any other filings as may be required by the SEC and by any state securities
agencies or the Principal Market (as defined below)) no further filing, consent or authorization is required by the Company, its
board of directors or its stockholders or other governing body. This Agreement has been, and the other Transaction Documents will
be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be limited
by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification
and to contribution may be limited by federal or state securities law. The Certificate of Designations in the form attached hereto
as Exhibit A has been filed with the Secretary of State of the State of Delaware and is in full force and effect, enforceable
against the Company in accordance with its terms and has not been amended. “Transaction Documents” means, collectively,
this Agreement, the Certificate of Designations, the Preferred Shares, the Warrants, the Irrevocable Transfer Agent Instructions
(as defined below) and each of the other agreements and instruments entered into or delivered by any of the parties hereto in connection
with the transactions contemplated hereby and thereby, as may be amended from time to time.

 

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(c)          
Issuance of Securities; Registration Statement. The issuance of the Commitment Shares, Preferred Shares and the Warrants
are duly authorized and, upon issuance in accordance with the terms of the Transaction Documents, shall be validly issued, fully
paid and non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes,
rights of first refusal, encumbrances, security interests and other encumbrances (collectively “Liens”) with
respect to the issuance thereof. As of the Closing, the Company shall have reserved from its duly authorized capital stock not
less than 250% of the sum of (i) the maximum number of Conversion Shares issuable pursuant to the terms of the Certificate of Designations,
including, without limitation, upon conversion or otherwise (assuming for such purpose that (x) such Preferred Shares are convertible
at the initial Conversion Price (as defined in the Certificate of Designations), (y) dividends on the Preferred Shares shall accrue
through the twelve month anniversary of the Closing Date and will be converted in shares of Common Stock at a dividend conversion
price equal to the initial Conversion Price and (z) any such conversion shall not take into account any limitations on the conversion
of the Preferred Shares set forth in the Certificate of Designations), and (ii) the maximum number of Warrant Shares issuable upon
exercise of the Warrants (without taking into account any limitations on the exercise of the Warrants set forth in the Warrants)
(the “Required Reserve Amount”). “Common Stock” means (i) the Company’s shares
of common stock, $0.00001 par value per share, and (ii) any capital stock into which such common stock shall have been changed
or any share capital resulting from a reclassification of such common stock. The issuance of the Conversion Shares and the Warrant
Shares are duly authorized, and upon issuance in accordance with the Certificate of Designations or exercise in accordance with
the Warrants (as the case may be), the Conversion Shares and the Warrant Shares, respectively, when issued, will be validly issued,
fully paid and non-assessable and free from all preemptive or similar rights, taxes or Liens with respect to the issue thereof,
with the holders being entitled to all rights accorded to a holder of Common Stock. The issuance by the Company of the Preferred
Shares, Conversion Shares and Commitment Shares has been registered under the 1933 Act, the Preferred Shares, Conversion Shares
and Commitment Shares are being issued pursuant to the Registration Statement and all of the Preferred Shares, Conversion Shares
and Commitment Shares are freely transferable and freely tradable by each of the Buyers without restriction, whether by way of
registration or some exemption therefrom. The Registration Statement is effective and available for the issuance of the Preferred
Shares, Conversion Shares and Commitment Shares thereunder and the Company has not received any notice that the SEC has issued
or intends to issue a stop-order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn
the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened in writing to
do so. The “Plan of Distribution” section under the Registration Statement permits the issuance and sale of the Preferred
Shares, Conversion Shares and Commitment Shares hereunder and as contemplated by the other Transaction Documents. Upon receipt
of the Securities, each of the Buyers will have good and marketable title to the Securities. The Registration Statement and any
prospectus included therein, including the Prospectus and the Prospectus Supplement, complied in all material respects with the
requirements of the 1933 Act and the 1934 Act and the rules and regulations of the SEC promulgated thereunder and all other applicable
laws and regulations. At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement
and at each deemed effective date thereof pursuant to Rule 430B(f)(2) of the 1933 Act, the Registration Statement and any amendments
thereto complied and will comply in all material respects with the requirements of the 1933 Act and did not and will not contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus and any amendments or supplements thereto (including, without limitation the
Prospectus Supplement), at the time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, complied,
and will comply, in all material respects with the requirements of the 1933 Act and did not, and will not, contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company meets all of the requirements for the use of Form S-3 under the 1933 Act
for the offering and sale of the Preferred Shares, Conversion Shares and Commitment Shares contemplated by this Agreement and the
other Transaction Documents, and the SEC has not notified the Company of any objection to the use of the form of the Registration
Statement pursuant to Rule 401(g)(1) under the 1933 Act. The Registration Statement meets the requirements set forth in Rule 415(a)(1)(x)
under the 1933 Act. At the earliest time after the filing of the Registration Statement that the Company or another offering participant
made a bona fide offer (within the meaning of Rule 164(h)(2) under the 1933 Act) relating to any of the Securities, the Company
was not and is not an “Ineligible Issuer” (as defined in Rule 405 under the 1933 Act). The Company (i) has not distributed
any offering material in connection with the offer or sale of any of the Securities and (ii) until no Buyer holds any of the Securities,
shall not distribute any offering material in connection with the offer or sale of any of the Securities to, or by, any of the
Buyers (if required), in each case, other than the Registration Statement, the Prospectus or the Prospectus Supplement. The offering
of the Preferred Shares, Conversion Shares and Commitment Shares has been registered with the SEC on Form S-3 under the 1933 Act,
and the Preferred Shares, Conversion Shares and Commitment Shares are being offered pursuant to Rule 415 promulgated under the
1933 Act. The offering of the Warrants are made without registration under the 1933 Act in reliance upon the provisions of Section
4(a)(2) of the 1933 Act, Rule 506 of Regulation D promulgated under the 1933 Act, and such other exemptions from the registration
requirements of the 1933 Act as may be available with respect to any or all of the purchases/exchanges of the Warrants and the
Warrant Shares to be made hereunder.

 

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(d)          
No Conflicts. The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance
of the Preferred Shares, the Warrants, the Commitment Shares, the Conversion Shares and the Warrant Shares and the reservation
for issuance of the Conversion Shares and the Warrant Shares) will not (i) result in a violation of the Certificate of Incorporation
(as defined below) (including, without limitation, any certificates of designation contained therein), the Certificate of Designations
or other organizational documents of the Company or any of its Subsidiaries, any capital stock of the Company, or Bylaws (as defined
below), (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument
to which the Company or any of its Subsidiaries is a party or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including, without limitation, foreign, federal and state securities laws and regulations and the rules and
regulations of the Nasdaq Capital Market (the “Principal Market”)) applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, except, in the case of clause
(ii) or (iii) above, to the extent such violations that could not reasonably be expected to have a Material Adverse Effect.

 

(e)           
Consents. Except as disclosed in the Prospectus, the Company is not required to obtain any consent from, authorization or
order of, or make any filing or registration with (other than the filing with the SEC of the Prospectus Supplement and a Form D,
and any other filings as may be required by the 1933 Act, any state securities agencies and the rules and regulations of the Principal
Market, any court, Governmental Entity (as defined below) or any other regulatory or self-regulatory agency or any other Person
in order for it to execute, deliver or perform any of its obligations under, or contemplated by, the Transaction Documents, in
each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which
the Company is required to obtain at or prior to the Closing have been obtained or effected on or prior to the Closing Date, and
neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company from obtaining
or effecting any of the registration, application or filings contemplated by the Transaction Documents. Except as disclosed in
the SEC Documents, the Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts
or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. “Governmental
Entity” means any (i) nation, state, county, city, town, village, district, or other political jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or other government; (iii) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); (iv) multi-national
organization or body; or (v) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterprise
owned or controlled by a government or a public international organization or any of the foregoing.

 

(f)           
Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate”
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”))
of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of the shares
of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)).
The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and
any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents
to each Buyer that the Company’s decision to enter into the Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.

 

(g)          
Placement Agent. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection
with the offer or sale of the Securities.

 

(h)          
No Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their
behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company. None of the
Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would cause
the offering of any of the Securities to be integrated with other offerings of securities of the Company.

 

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(i)            
Dilutive Effect. The Company understands and acknowledges that the number of Conversion Shares and Warrant Shares will increase
in certain circumstances. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the
Preferred Shares in accordance with this Agreement and the Certificate of Designations and its obligation to issue the Warrant
Shares upon exercise of the Warrants in accordance with this Agreement and the Warrants are, in each case, absolute and unconditional,
regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.

  

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

 

(k)           
SEC Documents; Financial Statements. During the two (2) years prior to the date hereof, or for as long as the Company has
had SEC reporting obligations under the 1934 Act, the Company has filed all reports, schedules, forms, proxy statements, statements
and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the
foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules
thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”)
on a timely basis or has received a valid extension of such time of filing and has filed any such SEC documents prior to the expiration
of any such extension. True, correct and complete copies of each of the SEC Documents are available on the EDGAR system. As of
their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied in all
material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto
as in effect as of the time of filing. Such financial statements have been prepared in accordance with United States generally
accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements,
to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects
the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either
individually or in the aggregate). No other information provided by or on behalf of the Company to any of the Buyers which is not
included in the SEC Documents contains any untrue statement of a material fact or omits to state any material fact necessary in
order to make the statements therein not misleading, in the light of the circumstance under which they are or were made. The Company
is not currently contemplating to amend or restate any of the financial statements (including, without limitation, any notes or
any letter of the independent accountants of the Company with respect thereto) included in the SEC Documents (the “Financial
Statements”), nor is the Company currently aware of facts or circumstances which would require the Company to amend or
restate any of the Financial Statements, in each case, in order for any of the Financials Statements to be in compliance with GAAP
and the rules and regulations of the SEC. The Company has not been informed by its independent accountants that they recommend
that the Company amend or restate any of the Financial Statements or that there is any need for the Company to amend or restate
any of the Financial Statements. 

 

    	7

    	 

    

 

(l)           
Absence of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in
a Form 10-K, except as disclosed in the SEC Documents filed subsequent to such Form 10-K, there has been no material adverse change
and no material adverse development in the business, assets, liabilities, properties, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company or any of its Subsidiaries. Since the date of the Company’s most recent
audited financial statements contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid
any dividends, (ii) sold any assets, individually or in the aggregate, outside of the ordinary course of business or (iii) made
any material capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company
nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency,
reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason to
believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of
any fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries, individually and on a consolidated
basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing will
not be, Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent” means, (I) with respect
to the Company and its Subsidiaries, on a consolidated basis, (i) the present fair saleable value of the Company’s and its
Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’ total Indebtedness
(as defined below), (ii) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured or (iii) the Company and its Subsidiaries intend to incur
or believe that they will incur debts that would be beyond their ability to pay as such debts mature; and (II) with respect to
the Company and each Subsidiary, individually, (i) the present fair saleable value of the Company’s or such Subsidiary’s
(as the case may be) assets is less than the amount required to pay its respective total Indebtedness, (ii) the Company or such
Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured or (iii) the Company or such Subsidiary (as the case may be) intends to
incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature. Neither the
Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in any business
or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably small
capital.

 

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

 

(n)           
Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of
or in default under its Certificate of Incorporation, any certificate of designation, preferences or rights of any other outstanding
series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter, certificate of formation
or certificate of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any
judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases
for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the
generality of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal
Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the Common Stock
by the Principal Market in the foreseeable future. Since July 19, 2013, (i) the Common Stock has been listed or designated for
quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal Market and
(iii) the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension
or delisting of the Common Stock from the Principal Market. The Company and each of its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material
Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit.

 

    	8

    	 

    

 

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

 

(p)          
Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with all applicable requirements of the Sarbanes-Oxley
Act of 2002, and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of the date hereof
and as of the Closing Date.

 

(q)          
Transactions With Affiliates. Except as set forth in the SEC Documents, none of the officers or directors of the Company
or any of its Subsidiaries and, to the knowledge of the Company, none of the employees or affiliates of the Company or any of its
Subsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries (other than for ordinary course
services as employees, officers or directors), including any contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from
any such officer, director or employee, affiliate or, to the knowledge of the Company or any of its Subsidiaries, any corporation,
partnership, trust or other Person in which any such officer, director, employee or affiliate has a substantial interest or is
an employee, officer, director, affiliate, trustee or partner, in each case other than for (i) payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits,
including stock option agreements under any stock option plan of the Company.

 

(r)           
Equity Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 100,000,000 shares
of Common Stock, of which, 27,901,959 are issued and outstanding and, except as disclosed in the SEC Documents, no shares are reserved
for issuance pursuant to securities (other than the Preferred Shares and the Warrants) exercisable or exchangeable for, or convertible
into, shares of Common Stock and (ii) 10,000,000 shares of preferred stock, of which 475,000 are issued and outstanding. 2,284
shares of Common Stock are held in treasury. All of such outstanding shares are duly authorized and have been, or upon issuance
will be, validly issued and are fully paid and non-assessable. 9,343,136 shares of the Company’s issued and outstanding Common
Stock on the date hereof are owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated
based on the assumption that only officers, directors and holders of at least 10% of the Company’s issued and outstanding
Common Stock are “affiliates” without conceding that any such Persons are “affiliates” for purposes of
federal securities laws) of the Company or any of its Subsidiaries. Except as disclosed in the SEC Documents, to the Company’s
knowledge, no Person owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated based on
the assumption that all Convertible Securities (as defined below), whether or not presently exercisable or convertible, have been
fully exercised or converted (as the case may be) taking account of any limitations on exercise or conversion (including
“blockers”) contained therein without conceding that such identified Person is a 10% stockholder for purposes of federal
securities laws). (i) Except as disclosed in the SEC Documents, none of the Company’s or any Subsidiary’s capital stock
is subject to preemptive rights or any other similar rights or any Liens suffered or permitted by the Company or any Subsidiary;
(ii) except as set forth in the SEC Documents, there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable
for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of
its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its
Subsidiaries; (iii) except as set forth in the SEC Documents, there are no outstanding debt securities, notes, credit agreements,
credit facilities or other agreements, documents or instruments evidencing material Indebtedness of the Company or any of its Subsidiaries
or by which the Company or any of its Subsidiaries is or may become bound; (iv) except as set forth in the SEC Documents, there
are no financing statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries;
(v) except as set forth in the SEC Documents, there are no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act (except pursuant to this Agreement); (vi) except
as set forth in the SEC Documents, there are no outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries;
(vii) except as set forth in the SEC documents, there are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities; (viii) except as set forth in the SEC documents, neither the Company
nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or
agreement; and (ix) neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed
in the SEC Documents which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s
or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material
Adverse Effect. The Company has furnished to the Buyers true, correct and complete copies of the Company’s Certificate of
Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), and the
Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all
Convertible Securities (as defined below) and the material rights of the holders thereof in respect thereto.

 

    	9

    	 

    

 

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

 

(t)            
Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court,
public board, other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s or its Subsidiaries’
officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such, which would have a Material
Adverse Effect. No director, officer or employee of the Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519
or engaged in spoliation in reasonable anticipation of litigation. Without limitation of the foregoing, there has not been, and
to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company, any
of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. The SEC has not issued
any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the 1933 Act
or the 1934 Act, including, without limitation, the Registration Statement.

 

    	10

    	 

    

 

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

 

(v)           
Employee Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or
employs any member of a union. The Company believes that its and its Subsidiaries’ relations with their respective employees
are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company
or any of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to leave the Company or any
such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. The Company and
its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment
and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance
would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(w)          
Title. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and have good
and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries,
in each case, free and clear of all Liens except for Permitted Liens (as defined in the Certificate of Designations) and such other
Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to
be made of such property by the Company and any of its Subsidiaries. Any real property and facilities held under lease by the Company
or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such property and buildings by the Company or any of its Subsidiaries.

 

(x)            
Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights,
original works, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights
and all applications and registrations therefor (“Intellectual Property Rights ”) necessary to conduct their
respective businesses as now conducted and as presently proposed to be conducted. None of the Company’s or its Subsidiaries’
Intellectual Property Rights have expired, terminated or been abandoned, or are expected to expire, terminate or be abandoned,
within three years from the date of this Agreement. The Company has no knowledge of any infringement by the Company or any of its
Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought, or to the
knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries regarding
their Intellectual Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which
might give rise to any of the foregoing infringements or claims, actions or proceedings.

 

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

 

    	11

    	 

    

 

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

 

(aa)         
Tax Status. The Company and each of its Subsidiaries (i) has made or filed all foreign, federal and state income and all
other 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,
except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of
all 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 and its Subsidiaries
know of no basis for any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment
company, as defined in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.

 

(bb)        
Internal Accounting and Disclosure Controls. The Company and each of its Subsidiaries maintains internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP,
including 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 and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general
or specific authorization and (iv) the recorded accountability for assets and liabilities is compared with the existing assets
and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are designed to provide reasonable
assurance that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is
recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without
limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports
that it files or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its principal
executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding
required disclosure. Except as set forth in the SEC Documents, neither the Company nor any of its Subsidiaries has received any
notice or correspondence from any accountant or other Person relating to any potential material weakness or significant deficiency
in any part of the internal controls over financial reporting of the Company or any of its Subsidiaries.

 

(cc)         
Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company or any of
its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its
1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.

 

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

 

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

 

    	12

    	 

    

 

(ff)          
U.S. Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long
as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding corporation within the meaning
of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company and each Subsidiary shall so certify upon any
Buyer’s request.

 

(gg)        
Registration Eligibility. The Company is eligible to register the issuance and sale of the Preferred Shares, Conversion
Shares and Commitment Shares to the Buyers using Form S-3 promulgated under the 1933 Act.

 

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

 

(ii)           
Bank Holding Company Act. Neither the Company nor any of its Subsidiaries 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 (25%)
or more of the total equity of a bank or any equity 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)           
Public Utility Holding Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.

 

(kk)         
Federal Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility”
under the Federal Power Act, as amended.

 

(ll)        
   No Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect
to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.

  

(mm)       
Management. Except as set forth in Schedule 3(mm) hereto, during the past five year period, no current or former
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:

 

    	13

    	 

    

 

(A)        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;

 

(B)         engaging
in any type of business practice; or

 

(C)         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.

 

(nn)       
Illegal or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the Company’s
knowledge, any of the officers, directors, employees, agents or other representatives of the Company or any of its Subsidiaries
or any other business entity or enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has,
directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services, whether or not in
contravention of applicable law, (a) as a kickback or bribe to any Person or (b) to any political organization, or the holder of
or any aspirant to any elective or appointive public office except for personal political contributions not involving the direct
or indirect use of funds of the Company or any of its Subsidiaries.

 

(oo)       
Money Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot
Act of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation,
the laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including,
without limitation, (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations
contained in 31 CFR, Subtitle B, Chapter V.

 

(pp)       
Registration Rights. No holder of securities of the Company has rights to the registration of any securities of the Company
because of the filing of the Registration Statement or the issuance of the Securities hereunder that could expose the Company to
material liability or any Buyer to any liability or that could impair the Company’s ability to consummate the issuance and
sale of the Securities in the manner, and at the times, contemplated hereby, which rights have not been waived by the holder thereof
as of the date hereof.

 

(qq)       
Stock Option Plans. Each stock option granted by 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.

 

    	14

    	 

    

 

(rr)         
No Disagreements with Accountants and Lawyers. There are no material 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. In addition, on or prior to the date hereof,
the Company had discussions with its accountants about its financial statements previously filed with the SEC. Based on those discussions,
the Company has no reason to believe that it will need to restate any such financial statements or any part thereof.

 

(ss)        
Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers
or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public
information concerning the Company or any of its Subsidiaries, other than the existence of the transactions contemplated by this
Agreement and the other Transaction Documents. The Company understands and confirms that each of the Buyers will rely on the foregoing
representations in effecting transactions in securities of the Company. All disclosure provided to the Buyers regarding the Company
and its Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to this Agreement, furnished
by or on behalf of the Company or any of its Subsidiaries is true and correct 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 the light of the circumstances under which they were made, not misleading. All of the written information furnished after the
date hereof by or on behalf of the Company or any of its Subsidiaries to each Buyer pursuant to or in connection with this Agreement
and the other Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date on which
such information is so provided and will not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.
No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which,
under applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company
but which has not been so publicly disclosed. All financial projections and forecasts that have been prepared by or on behalf of
the Company or any of its Subsidiaries and made available to you have been prepared in good faith based upon reasonable assumptions
and represented, at the time each such financial projection or forecast was delivered to each Buyer, the Company’s best estimate
of future financial performance (it being recognized that such financial projections or forecasts are not to be viewed as facts
and that the actual results during the period or periods covered by any such financial projections or forecasts may differ from
the projected or forecasted results). The Company acknowledges and agrees that no Buyer makes or has made any representations or
warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 2.

 

(tt)         
Private Placement; Compliance. Assuming that each Buyer is an “accredited investor” (as defined in Rule 501
of Regulation D), no registration under the 1933 Act is required for the offer and sale of the Warrants by the Company to each
Buyer as contemplated hereby.

 

4.            
COVENANTS.

 

(a)          
Maintenance of Registration Statement   For so long as any of the Preferred Shares remain outstanding, the Company
shall use its reasonable best efforts to maintain the effectiveness of the Registration Statement for the issuance thereunder of
the Conversion Shares, provided that if at any time while the Preferred Shares are outstanding the Company shall be ineligible
to utilize Form S-3 (or any successor form) for the purpose of issuance of the Conversion Shares, the Company shall promptly amend
the Registration Statement on such other form as may be necessary to maintain the effectiveness of the Registration Statement for
this purpose. If at any time following the date hereof the Registration Statement is not effective or is not otherwise available
for the issuance of the Conversion Shares or any prospectus contained therein is not available for use, the Company shall immediately
notify the holders of the Preferred Shares in writing that the Registration Statement is not then effective or a prospectus contained
therein is not available for use and thereafter shall promptly notify such holders when the Registration Statement is effective
again and available for the issuance of the Conversion Shares or such prospectus is again available for use.

 

    	15

    	 

    

 

(b)         
Amendments to the Registration Statement; Prospectus Supplements; Free Writing Prospectuses.

 

(i)          Except
as provided in this Agreement and other than periodic reports required to be filed pursuant to the 1934 Act, the Company shall
not file with the SEC any amendment to the Registration Statement that relates to the Buyer, this Agreement or the other Transaction
Documents or the transactions contemplated hereby or thereby or file with the SEC any Prospectus Supplement that relates to the
Buyer, this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby with respect to which
(a) the Buyer shall not previously have been advised, (b) the Company shall not have given due consideration to any comments thereon
received from the Buyer or its counsel, or (c) the Buyer shall reasonably object after being so advised, unless the Company reasonably
has determined that it is necessary to amend the Registration Statement or make any supplement to the Prospectus to comply with
the 1933 Act or any other applicable law or regulation, in which case the Company shall promptly (but in no event later than 24
hours) so inform the Buyer, the Buyer shall be provided with a reasonable opportunity to review and comment upon any disclosure
relating to the Buyer and the Company shall expeditiously furnish to the Buyer an electronic copy thereof. In addition, for so
long as, in the reasonable opinion of counsel for the Buyer, the Prospectus (or in lieu thereof, the notice referred to in Rule
173(a) under the 1933 Act) is required to be delivered in connection with any acquisition or sale of the Preferred Shares, Conversion
Shares or Commitment Shares by the Buyer, the Company shall not file any Prospectus Supplement with respect to such securities
without delivering or making available a copy of such Prospectus Supplement, together with the Prospectus, to the Buyer promptly.

 

(ii)         The
Company has not made, and agrees that unless it obtains the prior written consent of the Buyer it will not make, an offer relating
to the Securities that would constitute an “issuer free writing prospectus” as defined in Rule 433 promulgated under
the Securities Act (an “Issuer Free Writing Prospectus”) or that would otherwise constitute a “free writing
prospectus” as defined in Rule 405 promulgated under the Securities Act (a “Free Writing Prospectus”)
required to be filed by the Company or the Buyer with the SEC or retained by the Company or the Buyer under Rule 433 under the
1933 Act. The Buyer has not made, and agrees that unless it obtains the prior written consent of the Company it will not make,
an offer relating to the Securities that would constitute a Free Writing Prospectus required to be filed by the Company with the
SEC or retained by the Company under Rule 433 under the 1933 Act. Any such Issuer Free Writing Prospectus or other Free Writing
Prospectus consented to by the Buyer or the Company is referred to in this Agreement as a “Permitted Free Writing Prospectus.”
The Company agrees that (x) it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer
Free Writing Prospectus and (y) it has complied and will comply, as the case may be, with the requirements of Rules 164 and 433
under the Securities Act applicable to any Permitted Free Writing Prospectus, including in respect of timely filing with the SEC,
legending and record keeping.

	 

(c)          
Prospectus Delivery. Immediately prior to execution of this Agreement, the Company shall have delivered to the Buyer, and
as soon as practicable after execution of this Agreement the Company shall file, a Prospectus Supplement with respect to the Preferred
Shares, Conversion Shares and Commitment Shares to be issued on the Closing Date, as required under, and in conformity with, the
1933 Act, including Rule 424(b) thereunder. The Company shall provide the Buyer a reasonable opportunity to comment on a draft
of each Prospectus Supplement and any Issuer Free Writing Prospectus, shall give due consideration to all such comments and, subject
to the provisions of Section 4(b) hereof, shall deliver or make available to the Buyer, without charge, an electronic copy of each
form of Prospectus Supplement, together with the Prospectus, and any Permitted Free Writing Prospectus on the Closing Date. The
Company consents to the use of the Prospectus (and of any Prospectus Supplements thereto) in accordance with the provisions of
the 1933 Act and with the securities or “blue sky” laws of the jurisdictions in which the Preferred Shares, Commitment
Shares and Conversion Shares may be sold by the Buyer, in connection with the offering and sale of the Preferred Shares, Commitment
Shares and Conversion Shares and for such period of time thereafter as the Prospectus (or in lieu thereof, the notice referred
to in Rule 173(a) under the 1933 Act) is required by the 1933 Act to be delivered in connection with sales of the Preferred Shares,
Commitment Shares and Conversion Shares. If during such period of time any event shall occur that in the judgment of the Company
and its counsel is required to be set forth in the Registration Statement or the Prospectus or any Permitted Free Writing Prospectus
or should be set forth therein in order to make the statements made therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading, or if it is necessary to amend the Registration Statement or supplement or amend the
Prospectus or any Permitted Free Writing Prospectus to comply with the 1933 Act or any other applicable law or regulation, the
Company shall forthwith prepare and, subject to Section 4(b) above, file with the SEC an appropriate amendment to the Registration
Statement or Prospectus Supplement to the Prospectus (or supplement to the Permitted Free Writing Prospectus) and shall expeditiously
furnish or make available to the Buyer an electronic copy thereof.

 

    	16

    	 

    

 

(d)          
Stop Orders. The Company shall advise the Buyer promptly (but in no event later than 24 hours) and shall confirm such advice
in writing: (i) of the Company’s receipt of notice of any request by the SEC for amendment of or a supplement to the Registration
Statement, the Prospectus, any Permitted Free Writing Prospectus or for any additional information; (ii) of the Company’s
receipt of notice of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or prohibiting
or suspending the use of the Prospectus or any Prospectus Supplement, or of the suspension of qualification of the Preferred Shares,
Conversion Shares and Commitment Shares for offering or sale in any jurisdiction, or the initiation or contemplated initiation
of any proceeding for such purpose; (iii) of the Company becoming aware of the happening of any event, which makes any statement
of a material fact made in the Registration Statement, the Prospectus or any Permitted Free Writing Prospectus untrue or which
requires the making of any additions to or changes to the statements then made in the Registration Statement, the Prospectus or
any Permitted Free Writing Prospectus in order to state a material fact required by the 1933 Act to be stated therein or necessary
in order to make the statements then made therein (in the case of the Prospectus, in light of the circumstances under which they
were made) not misleading, or of the necessity to amend the Registration Statement or supplement the Prospectus or any Permitted
Free Writing Prospectus to comply with the 1933 Act or any other law or (iv) if at any time following the date hereof the Registration
Statement is not effective or is not otherwise available for the issuance of the Conversion Shares or any Prospectus contained
therein is not available for use for any other reason. The Company shall not be required to disclose to the Buyer the substance
or specific reasons of any of the events set forth in clauses (i) through (iv) of the immediately preceding sentence, but rather,
shall only be required to disclose that the event has occurred. Thereafter, the Company shall promptly notify such holders when
the Registration Statement, the Prospectus, any Permitted Free Writing Prospectus and/or any amendment or supplement thereto, as
applicable, is effective and available for the issuance of the Conversion Shares. If at any time the SEC shall issue any stop order
suspending the effectiveness of the Registration Statement or prohibiting or suspending the use of the Prospectus or any Prospectus
Supplement, the Company shall use its reasonable best efforts to obtain the withdrawal of such order at the earliest possible time.

 

 (e)          
Blue Sky. Except with regards to the filing of a Form D and complying with any state securities agencies’ requirements
upon the filing of a Form D, if required, the Company, on or before the Closing Date, shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyers at
the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or
prior to the Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely
make all filings and reports relating to the offer and sale of the Securities required under all applicable securities laws (including,
without limitation, all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall
comply with all applicable federal, state and local laws, statutes, rules, regulations and the like relating to the offering and
sale of the Securities to the Buyers.

 

(f)          
Reporting Status. Until the date on which no Preferred Shares or Warrants are outstanding (the “Reporting Period”),
the Company shall timely file (or obtain an extension in respect thereof and file within such extension period) 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 such reports or
would otherwise permit such termination.

 

(g)          
Use of Proceeds. The Company will use the proceeds from the sale of the Securities for general corporate purposes, but not,
directly or indirectly, for (i) the satisfaction of any indebtedness of the Company or any of its Subsidiaries (other than payment
of trade payables in the ordinary course of business), (ii) the redemption or repurchase of any securities of the Company or any
of its Subsidiaries or (iii) the settlement of any outstanding litigation.

 

    	17

    	 

    

 

(h)          
Financial Information. The Company agrees to send the following to each Buyer during the Reporting Period, unless filed
with the SEC through EDGAR and are available to the public through the EDGAR system, (i) within two (2) Business Days after the
filing thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports
or any consolidated balance sheets, income statements, stockholders’ equity statements and/or cash flow statements for any
period other than annual, any Current Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments
filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile copies of all press releases issued by the
Company or any of its Subsidiaries and (iii) copies of any notices and other information made available or given to the stockholders
of the Company generally, contemporaneously with the making available or giving thereof to the stockholders.

 

(i)           
Listing. The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Underlying
Securities upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed
or designated for quotation (as the case may be) (subject to official notice of issuance) (but in no event later than the Closing
Date) and shall use reasonable best efforts to maintain such listing or designation for quotation (as the case may be) of all Underlying
Securities from time to time issuable under the terms of the Transaction Documents on such national securities exchange or automated
quotation system. The Company shall use reasonable best efforts to maintain the Common Stock’s listing or authorization for
quotation (as the case may be) on the Principal Market, The New York Stock Exchange, the NYSE MKT, the Nasdaq Capital Market or
the Nasdaq Global Select Market (each, an “Eligible Market”). Neither the Company nor any of its Subsidiaries
shall take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible
Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(i). “Underlying
Securities” means the (i) Conversion Shares, (ii) the Warrant Shares and (iii) any capital stock of the Company issued
or issuable with respect to the Conversion Shares, the Warrant Shares, the Certificate of Designations, the Preferred Shares or
the Warrants, respectively, including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise and (2) shares of capital stock of the Company into which the shares of Common Stock are
converted or exchanged and shares of capital stock of a Successor Entity (as defined in the Warrants) into which the shares of
Common Stock are converted or exchanged, in each case, without regard to any limitations on conversion of the Preferred Shares
or exercise of the Warrants.

 

(j)           
Fees. The Company shall reimburse Greenberg Traurig, LLP (counsel to the lead investor) for all reasonable, documented costs
and expenses incurred by it in connection with preparing and delivering the Transaction Documents (including, without limitation,
all reasonable, documented legal fees and disbursements in connection therewith, and due diligence expenses in connection with
the transactions contemplated thereby, which amount may be withheld by a Buyer (at the request of Greenberg Traurig, LLP) from
its Purchase Price at any Closing or paid by the Company upon termination of this Agreement on demand by Greenberg Traurig, LLP,
provided, however, that the amount payable by the Company to Greenberg Traurig, LLP under any and all of the Transaction Documents
shall not exceed $35,000 in the aggregate unless agreed to in writing by the Company. The Company shall be responsible for the
payment of any transfer agent fees or DTC (as defined below) fees relating to or arising out of the transactions contemplated hereby.
The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable
attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as
otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the
sale of the Securities to the Buyers.

 

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

 

    	18

    	 

    

 

(l)           
Disclosure of Transactions and Other Material Information. The Company shall, within the time required under the 1934 Act,
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 (and all schedules to this Agreement), and the form of Warrants) (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) delivered
to any of the Buyers 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 with respect
to the transactions contemplated under the Transaction Documents, 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 Buyers or any
of their affiliates, on the other hand, shall terminate. 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 Buyer with any material, non-public
information regarding the Company or any of its Subsidiaries from and after the filing of the 8-K Filing without the express prior
written consent of such Buyer (which may be granted or withheld in such Buyer’s sole discretion). In the event of a breach
of any of the foregoing covenants by the Company, any of its Subsidiaries, or any of its or their respective officers, directors,
employees and agents (as determined in the reasonable good faith judgment of such Buyer), in addition to any other remedy provided
herein or in the Transaction Documents, such Buyer shall have the right to make a public disclosure, in the form of a press release,
public advertisement or otherwise, of such material, non-public information, as applicable, without the prior approval by the Company,
any of its Subsidiaries, or any of its or their respective officers, directors, employees or agents; provided the Buyer shall have
first provided written notice to the Company that it believes it has received information that constitutes material, non-public
information, the Company shall have at least 48 hours to publicly disclose such material, non-public information prior to any such
disclosure by the Buyer or demonstrate to the Buyer in writing why such information does not constitute material, non-public information,
and (assuming the Buyer and Buyer’s counsel disagree with the Company’s determination) the Company shall have failed
to publicly disclose such material, non-public information within such time period. No Buyer shall have any liability to the Company,
any of its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents, for any such
disclosure. To the extent that the Company delivers any material, non-public information to a Buyer without such Buyer's consent,
the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality with respect to, or a duty not
to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries
nor any Buyer 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 Buyer, to make 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 Buyer 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 Buyer which may be granted or withheld in such Buyer’s sole discretion), the Company shall not
(and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing (other than the
8-K Filing or as required by applicable law and regulations), announcement, release or otherwise. Notwithstanding anything contained
in this Agreement to the contrary and without implication that the contrary would otherwise be true, the Company expressly acknowledges
and agrees that no Buyer has had, and no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof
in a written definitive and binding agreement executed by the Company and such particular Buyer (it being understood and agreed
that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a duty not to trade
on the basis of, any material, non-public information regarding the Company or any of its Subsidiaries.

 

(m)         
Additional Issuance of Securities.

 

(i)          The
Company agrees that for the period commencing on the date hereof and ending on the date immediately following the ninety (90) day
anniversary of the Closing Date (provided that such period shall be extended by the number of days during such period and any extension
thereof contemplated by this proviso on which the Registration Statement is not effective or any prospectus contained therein is
not available for use) (the “Restricted Period”), neither the Company nor any of its Subsidiaries shall
directly or indirectly issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce any issuance,
offer, sale, grant of any option or right to purchase or other disposition of) any equity security or any equity-linked or related
security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated
under the 1933 Act), any Convertible Securities, any debt, any preferred stock or any purchase rights) (any such issuance, offer,
sale, grant, disposition or announcement (each a “Subsequent Placement”). Notwithstanding the foregoing, this
Section 4(m)(i) shall not apply to the issuance of Excluded Securities (as defined below).

   

    	19

    	 

    

 

(ii)         For
the purpose of this Agreement,

 

(A)        “Excluded
Securities” means (A) shares of Common Stock or standard options to purchase Common Stock to directors, officers or employees
of the Company in their capacity as such pursuant to an Approved Stock Plan (as defined below), provided that the exercise price
of any such options is not lowered, none of such options are amended to increase the number of shares issuable thereunder and none
of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects any of the
Buyers; (B) shares of Common Stock issued upon the conversion or exercise of Convertible Securities (other than standard options
to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (A) above) issued prior to the date
hereof, provided that the conversion price of any such Convertible Securities (other than standard options to purchase Common Stock
issued pursuant to an Approved Stock Plan that are covered by clause (A) above) is not lowered, none of such Convertible Securities
(other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by clause (A)
above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such Convertible
Securities (other than standard options to purchase Common Stock issued pursuant to an Approved Stock Plan that are covered by
clause (A) above) are otherwise materially changed in any manner that adversely affects any of the Buyers; (C) the Conversion Shares,
(D) the Warrant Shares, (E) shares of Common Stock issuable pursuant to that certain Purchase Agreement, dated September 19, 2014,
by and between the Company and Lincoln Park Capital Fund, LLC (as in effect as of the date hereof, the “Equity Line Agreement”),
(F) shares of Common Stock issuable pursuant to that certain Equity Distribution Agreement, dated November 18, 2014, by and between
the Company and Roth Capital Partners, LLC (as in effect as of the date hereof, the “Equity Distribution Agreement”);
provided that with respect to the issuance of shares of Common Stock pursuant to the Equity Distribution Agreement, such issuances
shall not occur until after sixty (60) days from the date hereof; (G) $2 million of shares of Common Stock, including any offering
in which affiliates of the Company may participate; and (H) any borrowing that the Company may undertake as secured by its intellectual
property.

 

(B)         “Approved
Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to
or subsequent to the date hereof pursuant to which shares of Common Stock and standard options to purchase Common Stock may be
issued to any employee, officer or director for services provided to the Company or any of its Subsidiaries in their capacity as
such.

 

(C)         “Convertible
Securities” means any capital stock or other security of the Company or any of its Subsidiaries that is at any time and
under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the
holder thereof to acquire, any capital stock or other security of the Company (including, without limitation, Common Stock) or
any of its Subsidiaries.

 

(n)         
Reservation of Shares. So long as any of the Preferred Shares or Warrants remain outstanding, the Company shall take all
action necessary to at all times have authorized, and reserved for the purpose of issuance, shares of Common Stock in an amount
no less than the Required Reserve Amount. If at any time the number of shares of Common Stock authorized and reserved for issuance
is not sufficient to meet the Required Reserved Amount, the Company will promptly take all corporate action necessary to authorize
and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize
additional shares to meet the Company's obligations pursuant to the Transaction Documents, in the case of an insufficient number
of authorized shares, obtaining stockholder approval of an increase in such authorized number of shares, and voting the management
shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares
is sufficient to meet the Required Reserved Amount. 

 

    	20

    	 

    

 

(o)          
Conduct of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance
or regulation of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually
or in the aggregate, in a Material Adverse Effect.

 

(p)          
Variable Rate Transaction. So long as any Preferred Shares or Warrants remain outstanding, the Company and each Subsidiary
shall be prohibited from effecting or entering into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction
(excluding (i) issuances pursuant to the Equity Distribution Agreement after sixty (60) days from the date hereof and (ii) issuances
pursuant to the Equity Line Agreement) without the prior written consent of the Buyers (which consent may be withheld, delayed
or conditioned in the Buyers’ sole discretion). “Variable Rate Transaction” means a transaction in which
the Company or any Subsidiary (i) issues or sells any Convertible Securities either (A) at a conversion, exercise or exchange rate
or other price that is based upon and/or varies with the trading prices of, or quotations for, the shares of Common Stock at any
time after the initial issuance of such Convertible Securities, or (B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of such Convertible Securities or upon the occurrence of specified
or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock, other than
pursuant to a customary “weighted average” anti-dilution provision or (ii) enters into any agreement (including, without
limitation, an “equity line of credit” or an “at-the-market offering” other than the Equity Line Agreement
or the Equity Distribution Agreement) whereby the Company or any Subsidiary may sell securities at a future determined price (other
than standard and customary “preemptive” or “participation” rights). Each Buyer shall be entitled to obtain
injunctive relief against the Company and its Subsidiaries to preclude any such issuance, which remedy shall be in addition to
any right to collect damages.

 

(q)          
Participation Right. From the date hereof through the second anniversary of the Closing Date, neither the Company nor any
of its Subsidiaries shall, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied
with this Section 4(q). The Company acknowledges and agrees that the right set forth in this Section 4(q) is a right granted by
the Company, separately, to each Buyer.

 

(i)          At
least one (1) Trading Day prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Buyer 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: (i) if the proposed Offer Notice (as defined below) constitutes or contains
material, non-public information, a statement asking whether the Buyer is willing to accept material non-public information or
(ii) if the proposed Offer Notice does not constitute or contain material, non-public information, (A) a statement that the Company
proposes or intends to effect a Subsequent Placement, (B) a statement that the statement in clause (A) above does not constitute
material, non-public information and (C) a statement informing such Buyer 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 Buyer within three
(3) Trading Days after the Company’s delivery to such Buyer of such Pre-Notice, and only upon a written request by such Buyer,
the Company shall promptly, but no later than one (1) Trading Day after such request, deliver to such Buyer 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
(w) identify and describe the Offered Securities, (x) 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, (y) identify the Persons (if
known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (z) offer to issue and sell
to or exchange with such Buyer in accordance with the terms of the Offer 100% of the Offered Securities, provided that the number
of Offered Securities which such Buyer shall have the right to subscribe for under this Section 4(q) shall be (a) based on such
Buyer’s pro rata portion of the aggregate number of Preferred Shares purchased hereunder by all Buyers (the “Basic
Amount”), and (b) with respect to each Buyer that elects to purchase its Basic Amount, any additional portion of the
Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall indicate it will purchase or acquire should
the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription Amount”).

 

    	21

    	 

    

 

(ii)         To
accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company not later than 5:30 p.m. (New York
City time) on the fifth (5th ) Business Day after such Buyer’s receipt of the Offer Notice (the “Offer
Period”), setting forth the portion of such Buyer’s Basic Amount that such Buyer elects to purchase and, if such
Buyer shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase
(in either case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all Buyers are less than
the total of all of the Basic Amounts, then such Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance
shall be entitled to purchase, in addition to the Basic Amount 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”), such Buyer 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 Buyer bears to the total Basic Amounts of all Buyers 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
Buyer a new Offer Notice and the Offer Period shall expire on the fifth (5th ) Business Day after such Buyer’s
receipt of such new Offer Notice. If the Company does not receive a Notice of Acceptance from such Buyer in accordance with the
terms herein, such Buyer shall be deemed to have notified the Company that it does not elect to participate in the Offer.

 

(iii)        The
Company shall have ten (10) Business Days from the expiration of the Offer Period above (i) 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 Buyer (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 (ii) to publicly announce (a) the execution of such Subsequent Placement
Agreement, and (b) either (x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) 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(q)(iii) above), then such Buyer 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 Buyer elected to purchase pursuant to Section 4(q)(ii) above 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 Buyers pursuant to this Section 4(q) prior to such reduction) and
(ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer 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
Buyers in accordance with Section 4(q)(i) above.

 

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

 

    	22

    	 

    

 

(vi)        Any
Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(q) may not be issued, sold or exchanged
until they are again offered to such Buyer under the procedures specified in this Agreement.

 

(vii)       The
Company and each Buyer agree that if any Buyer 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 Buyer 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 without
the prior written consent of such Buyer.

 

(viii)      Notwithstanding
anything to the contrary in this Section 4(q) and unless otherwise agreed to by such Buyer, the Company shall either confirm in
writing to such Buyer 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 Buyer will not be in possession of
any material, non-public information, by the tenth (10th) Business Day following delivery of the Offer Notice. If by
such tenth (10th) 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 Buyer, such transaction shall
be deemed to have been abandoned and such Buyer 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
following an abandonment or a deemed abandonment of such transaction, the Company shall provide such Buyer with another Offer Notice
in accordance with, and subject to, the terms of this Section 4(q) and such Buyer will again have the right of participation set
forth in this Section 4(q).

 

(ix)         The
restrictions contained in this Section 4(q) shall not apply in connection with the issuance of any Excluded Securities. The Company
shall not circumvent the provisions of this Section 4(q) by providing terms or conditions to one Buyer that are not provided to
all.

 

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

 

(s)          
Restriction on Redemption and Cash Dividends. So long as any Preferred Shares remain outstanding, the Company shall not,
directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, any securities of the Company without the
prior express written consent of the Buyers (other than as required pursuant to the Certificate of Designations).

 

(t)          
Corporate Existence. So long as any Preferred Shares remain outstanding, the Company shall not be party to any Fundamental
Transaction (as such term is defined in the Certificate of Designations) unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Certificate of Designations and the Warrants.

 

(u)         
Stock Splits. So long as any Preferred Shares remain outstanding, the Company shall not effect any stock splits, stock dividends,
stock combinations, recapitalizations or other similar transactions (or make any public announcement or disclosure with respect
to any of the foregoing) without the prior written consent of the holders thereof.

 

(v)         
No Frustration. So long as the Buyer holds any Securities, neither the Company nor any of its affiliates or Subsidiaries,
nor any of its or their respective officers, employees, directors, agents or other representatives, will, without the prior written
consent of the Buyer (which consent may be withheld, delayed or conditioned in the sole discretion of such Buyer), effect, enter
into, announce or recommend to its stockholders any agreement, plan, arrangement or transaction (or issue, amend or waive any security)
that would or would reasonably be expected to restrict, delay, conflict with or impair the ability or right of the Company to timely
perform its obligations under this Agreement, the Certificate of Designations or the Warrants, including, without limitation, the
obligation of the Company to timely deliver shares of Common Stock to the Buyers (or a designee thereof, if applicable) in accordance
with this Agreement, the Certificate of Designations or the Warrants.

 

    	23

    	 

    

 

(w)         
Exclusivity. During the period commencing on the date hereof and for so long as any Preferred Shares remain outstanding,
neither the Company nor any of its affiliates or Subsidiaries, nor any of its or their respective officers, employees, directors,
agents or other representatives, will, without the prior written consent of the Buyer (which consent may be withheld, delayed or
conditioned in the Buyer’s sole discretion), directly or indirectly: (a) solicit, initiate, encourage or accept any other
inquiries, proposals or offers from any Person (other than the Buyer) relating to any exchange (i) of any security of the Company
or any of its Subsidiaries for any other security of the Company or any of its Subsidiaries, except to the extent (x) consummated
pursuant to an exchange registered under a registration statement of the Company filed pursuant to the 1933 Act and declared effective
by the SEC or (y) such exchange is exempt from registration pursuant to an exemption provided under the 1933 Act (other than Section
3(a)(10) of the 1933 Act) or (ii) of any indebtedness or other securities of, or claim against, the Company or any of its Subsidiaries
relying on the exemption provided by Section 3(a)(10) of the 1933 Act (any such transaction described in clauses (i) or (ii), an
“Exchange Transaction”); (b) enter into, effect, alter, amend, announce or recommend to its stockholders any
Exchange Transaction with any Person (other than the Buyer); or (c) participate in any discussions, conversations, negotiations
or other communications with any Person (other than the Buyer) regarding any Exchange Transaction, or furnish to any Person (other
than the Buyer) any information with respect to any Exchange Transaction, or otherwise cooperate in any way, assist or participate
in, facilitate or encourage any effort or attempt by any Person (other than the Buyer) to seek an Exchange Transaction involving
the Company or any of its Subsidiaries. Notwithstanding the foregoing or anything contained herein to the contrary, for so long
as any Preferred Shares remain outstanding, neither the Company nor any of its affiliates or Subsidiaries, nor any of its or their
respective officers, employees, directors, agents or other representatives, will, without the prior written consent of the Buyer
(which consent may be withheld, delayed or conditioned in the Buyer’s sole discretion), directly or indirectly, cooperate
in any way, assist or participate in, facilitate or encourage any effort or attempt by any Person (other than the Buyer) to effect
any acquisition of securities or indebtedness of, or claim against, the Company by such Person from an existing holder of such
securities, indebtedness or claim in connection with a proposed exchange of such securities or indebtedness of, or claim against,
the Company (whether pursuant to Section 3(a)(9) or 3(a)(10) of the 1933 Act or otherwise) (a “Third Party Exchange Transfer”).
The Company, its affiliates and Subsidiaries, and each of its and their respective officers, employees, directors, agents or other
representatives shall immediately cease and cause to be terminated all existing discussions, conversations, negotiations and other
communications with any Persons (other than the Buyer) with respect to any of the foregoing. The Company shall promptly (and in
no event later than 24 hours after receipt) notify (which notice shall be provided orally and in writing and shall identify the
Person making the inquiry, request, proposal or offer and set forth the material terms thereof) the Buyer after receipt of any
inquiry, request, proposal or offer relating to any Exchange Transaction or Third Party Exchange Transfer, and shall promptly (and
in no event later than 24 hours after receipt) provide copies to the Buyer of any written inquiries, requests, proposals or offers
relating thereto.  The Company agrees that it and its affiliates and Subsidiaries, and each of its and their respective officers,
employees, directors, agents or other representatives will not enter into any agreement with any Person subsequent to the date
hereof which prohibits the Company from providing any information to the Buyer in accordance with this provision. For all purposes
of this Agreement, violations of the restrictions set forth in this Section 4(w) by any Subsidiary or affiliate of the Company,
or any officer, employee, director, agent or other representative of the Company or any of its Subsidiaries or affiliates shall
be deemed a direct breach of this Section 4(w) by the Company.

 

(x)          
Conversion and Exercise Procedures. Each of the form of Notice of Exercise included in the Warrants and the form of Notice
of Conversion included in the Certificate of Designations set forth the totality of the procedures required of the Buyers in order
to exercise the Warrants or convert the Preferred Shares. No legal opinion, other information or instructions shall be required
of the Buyers to exercise their Warrants or convert their Preferred Shares. The Company shall honor exercises of the Warrants and
conversions of the Preferred Shares and shall deliver the Conversion Shares and Warrant Shares in accordance with the terms, conditions
and time periods set forth in the Certificate of Designations and Warrants.

 

    	24

    	 

    

 

(y)          
No Net Short Sales. From the date of this Agreement until such time as the Buyer no longer holds any Securities, neither
the Buyer nor any of its agents, representatives or affiliates nor any entity managed or controlled by the Buyer (collectively,
the “Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”)
shall maintain, in the aggregate, a Net Short Position.  For purposes hereof, a “Net Short Position” by
a Restricted Person means a position whereby such Restricted Person has executed one or more sales of Common Stock that is marked
as a short sale (but not including any sale marked “short exempt”) and that is executed at a time when such Restricted
Person does not have an equivalent offsetting long position in the Common Stock (or is deemed to have a long position hereunder
or otherwise in accordance with Regulation SHO under the 1934 Act); provided, further that no “short sale” shall be
deemed to exist as a result of any failure by the Company (or its agents) to deliver Conversion Shares or Warrant Shares, respectively,
upon conversion of the Preferred Shares or exercise of the Warrants, respectively, to any Restricted Person exercising such Preferred
Shares or Warrants, as applicable. For purposes of determining whether a Restricted Person has an equivalent offsetting long position
in the Common Stock, such Restricted Person shall be deemed to hold “long” all Common Stock that is either (i) then
owned by such Restricted Person, if any, (ii) then issuable to such Restricted Person as Conversion Shares pursuant to the terms
of the Certificate of Designations with respect to the Preferred Shares then held by such Restricted Person, if any, (without regard
to any limitations on conversion set forth in the Certificate of Designations and giving effect to any conversion price adjustments
that would take effect given only the passage of time) or (iii) then issuable to such Restricted Person upon exercise of the Warrants
then held by such Restricted Person, if any, (without regard to any limitation on exercise set forth in the Warrants and giving
effect to any exercise price adjustments that would take effect given only the passage of time). Notwithstanding the foregoing,
nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person
from selling “long” (as defined under Rule 200 promulgated under Regulation SHO under the 1934 Act) the Securities
or any other Common Stock then owned by such Restricted Person.

 

(z)          
Closing Documents. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or
cause to be delivered, to each Buyer and Greenberg Traurig, LLP executed copies of the Transaction Documents, Securities and other
documents required to be delivered to any party pursuant to Section 6 hereof.

 

(aa)        
Certain Transfer Restrictions. The Warrants and the Warrants Shares constitute “restricted securities” as such
term is defined in Rule 144(a)(3) and may only be disposed of in compliance with U.S. federal securities laws and applicable state
securities or “Blue Sky” laws.  Without limiting the generality of the foregoing, except for a transfer to
an affiliate of a Buyer or a bona fide pledge of the Warrants or the Warrant Shares, the Warrants and the Warrant Shares may not
be offered for sale, sold, transferred, assigned, pledged or otherwise distributed unless (i) such offer, sale, transfer, assignment,
pledge or distribution is subsequently registered under the 1933 Act, (ii) a Buyer shall have delivered to the Company an opinion
of counsel reasonably acceptable to the Company, in a form generally acceptable to the Company, to the effect that such Warrants
or Warrant Shares to be offered for sale, sold, transferred, assigned, pledged or otherwise distributed may be offered for sale,
sold, transferred, assigned, pledged or otherwise distributed pursuant to an exemption from such registration, or (iii) such Warrants
or Warrant Shares can be offered for sale, sold, transferred, assigned, pledged or otherwise distributed pursuant to Rule 144 or
Rule 144A promulgated under the 1933 Act, as applicable. In furtherance of the foregoing, except as otherwise provided below and
elsewhere in this Agreement, certificates for the Warrant Shares shall bear a legend which shall be in substantially the following
form until such shares are covered by an effective registration statement filed with the SEC:

 

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

 

The applicable Warrant shall
bear substantially the following legend:

 

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

 

    	25

    	 

    

 

(bb)          
Stockholder Approval. At the next special or annual meeting of stockholders of the Company with a record date after the
date of this Agreement (the “First Stockholder Meeting”), the Company shall take all action necessary
to obtain the approval of its stockholders, in accordance with NASDAQ Listing Rule 5635(d), the DGCL, the Certificate of Incorporation
and the Bylaws, of the issuance of (i) all of the securities issued and sold to 31 Group pursuant to that certain Securities Purchase
Agreement, dated as of December 30, 2014, and the related transaction documents (as applicable), including, without limitation,
all of the shares of Common Stock issued as commitment shares pursuant thereto, all of the shares of Common Stock issuable upon
conversions of the Series A Preferred Stock issued pursuant thereto pursuant to the Certificate of Designations for such Series
A Preferred Stock (without regard to any limitations on conversion set forth in such Certificate of Designations for such Series
A Preferred Stock and giving effect to any conversion price adjustments that would take effect given only the passage of time),
and all of the shares of Common Stock issuable upon exercise of the warrants issued pursuant thereto pursuant to the terms of such
warrants (without regard to any limitations on exercise set forth in such warrants and giving effect to any conversion price adjustments
that would take effect given only the passage of time), (ii) all of the Securities issued and sold to 31 Group pursuant to this
Agreement, the Preferred Shares and the Warrants, including, without limitation, all of the Commitment Shares issued pursuant hereto,
all of the Conversion Shares issuable upon conversions of the Preferred Shares issued pursuant hereto pursuant to the Certificate
of Designations (without regard to any limitations on conversion set forth in the Certificate of Designations and giving effect
to any conversion price adjustments that would take effect given only the passage of time), and all of the Warrant Shares issuable
upon exercise of the Warrants issued pursuant hereto pursuant to the terms of the Warrants (without regard to any limitations on
exercise set forth in the Warrants and giving effect to any conversion price adjustments that would take effect given only the
passage of time), and (iii) all of the Common Stock, Preferred Shares and warrants, and all of the shares of Common Stock issuable
upon conversions of such Preferred Shares or exercise of such warrants, that may be issued and sold to 31 Group pursuant to any
future agreements between the Company and 31 Group (such affirmative approval being referred to herein as the “Stockholder
Approval”, and the date such Stockholder Approval is obtained, the “Stockholder Approval Date”).
In connection therewith, the Company shall provide each stockholder entitled to vote at the First Stockholder Meeting a proxy statement
soliciting the affirmative vote of the Company’s stockholders necessary to obtain the Stockholder Approval at the First Stockholder
Meeting, and the Company shall use its best efforts to solicit and obtain the Stockholder Approval at the First Stockholder Meeting
and to cause the Board of Directors of the Company to recommend, to the extent possible consistent with its fiduciary duties under
Delaware law, to the Company’s stockholders that they vote to approve the Stockholder Approval proposal at the First Stockholder
Meeting. If, despite the Company's best efforts, the Stockholder Approval is not obtained at the First Stockholder Meeting, the
Company shall seek to obtain the Stockholder Approval at each special or annual meeting of stockholders of the Company convened
after the First Stockholder Meeting (each such meeting, a “Subsequent Stockholder Meeting”). In connection
therewith, the Company shall provide each stockholder entitled to vote at a Subsequent Stockholder Meeting a proxy statement soliciting
the affirmative vote of the Company’s stockholders necessary to obtain the Stockholder Approval at such Subsequent Stockholder
Meeting, and the Company shall use its best efforts to solicit and obtain the Stockholder Approval at such Subsequent Stockholder
Meeting and to cause the Board of Directors of the Company to recommend, to the extent possible consistent with its fiduciary duties
under Delaware law, to the Company’s stockholders that they vote to approve the Stockholder Approval proposal at such Subsequent
Stockholder Meeting.

 

5.            
REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

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

 

    	26

    	 

    

 

(b)          Transfer Agent Instructions. The Company shall issue irrevocable instructions to Continental Stock Transfer & Trust
(together with any subsequent transfer agent, the “Transfer Agent”) in the form previously provided to the Company
(the “Irrevocable Transfer Agent Instructions”) to issue certificates or credit shares to the applicable balance
accounts at Depository Trust Company (“DTC”), as applicable, registered in the name of each Buyer or its respective
nominee(s), for the Preferred Shares, the Commitment Shares, the Conversion Shares and the Warrant Shares in such amounts as specified
from time to time by each Buyer to the Company upon delivery of the Preferred Shares, conversion of the Preferred Shares, issuance
pursuant to the Certificate of Designations or the exercise of the Warrants (as the case may be). The Company represents and warrants
that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b) will be given by the
Company to the Transfer Agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on
the books and records of the Company. If a Buyer effects a sale, assignment or transfer of the Securities, the Company shall permit
the transfer and shall promptly instruct the Transfer Agent to issue one or more certificates or credit shares to the applicable
balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to each Buyer. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that each Buyer shall
be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required. The
Company shall cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Transfer
Agent to the extent required or requested by the Transfer Agent. Any fees (with respect to the Transfer Agent, counsel to the Company
or otherwise) associated with the issuance of such opinion shall be borne by the Company.

 

(c)          
Legends. Certificates and any other instruments evidencing the Preferred Shares, the Conversion Shares and the Commitment
Shares shall not bear any restrictive or other legend. Certificates and any other instruments evidencing the Warrants and the Warrant
Shares shall bear the restrictive legend as set forth in Section 4(aa).

 

6.           
ADDITIONAL CLOSING DELIVERIES OF THE COMPANY.

 

(a)         
Deliveries. The Company shall deliver to each Buyer on the Closing Date each of the following:

 

(i)          The
opinion of Robinson Brog Leinwand Greene Genovese & Gluck P.C., the Company’s counsel, dated as of the Closing Date,
in the form previously provided to the Company.

 

(ii)         A
copy of the Irrevocable Transfer Agent Instructions, in the form previously provided to the Company, that have been delivered to
and acknowledged in writing by the Transfer Agent.

 

(iii)        A
certificate evidencing the formation and good standing of the Company and each of its Subsidiaries in each 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.

 

(iv)        A
certificate evidencing the Company’s qualification as a foreign corporation and good standing issued by the Secretary of
State (or comparable office) of each jurisdiction, if any, in which the Company conducts business and is required to so qualify,
as of a date within ten (10) days of the Closing Date.

 

(v)         A
certified copy of the Certificate of Incorporation and the Certificate of Designations as certified by the Secretary of State of
Delaware within two (2) days of the Closing Date.

 

(vi)        A
certificate, in the form previously provided to the Company, executed by the Secretary of the Company and dated as of the Closing
Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s board of directors in a form reasonably
acceptable to such Buyer, (ii) the Certificate of Incorporation and the Certificate of Designations and (iii) the Bylaws, each
as in effect at the Closing.

 

    	27

    	 

    

 

(vii)       A
letter from the Transfer Agent certifying the number of shares of Common Stock outstanding on the Closing Date immediately prior
to the Closing.

 

(viii)      Such
other documents, instruments or certificates relating to the transactions contemplated by this Agreement as such Buyer or its counsel
may reasonably request.

 

7.           
TERMINATION.

 

In the event that the
Closing shall not have occurred with respect to a Buyer within three (3) Trading Days after the date hereof, then either the Company
or such Buyer, by written notice, shall have the right to terminate its obligations under this Agreement with respect to itself
at any time on or after the close of business on such date without liability of any party to any other party; provided, however,
(i) the right to terminate this Agreement under this Section 7 shall not be available to any party if the failure of the transactions
contemplated by this Agreement to have been consummated by such date is the result of such party’s breach of this Agreement
and (ii) the abandonment of the sale and purchase of the Preferred Shares and the Warrants shall be applicable only to such Buyer
providing such written notice; provided further that no such termination shall affect any obligation of the Company under this
Agreement to reimburse such Buyer for the expenses described in Section 4(j) above. Nothing contained in this Section 7 shall be
deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the
other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations
under this Agreement or the other Transaction Documents.

 

8.           
MISCELLANEOUS.

 

(a)          
Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State 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 under any of the other Transaction Documents or with any transaction contemplated hereby or thereby,
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 brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. 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 to such party at the address
for such 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 manner permitted
by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER
TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

(b)          
Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one
and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.
In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page 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 signature page were an original thereof.

 

(c)          
Headings; Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include
the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,”
“include” and words of like import shall be construed broadly as if followed by the words “without limitation.”
The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found.

 

    	28

    	 

    

 

(d)          
Severability; Maximum Payment Amount. If any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity
or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this
Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject
matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially
impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would
otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid
or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained in this Agreement or any other Transaction
Document (and without implication that the following is required or applicable), it is the intention of the parties that in no
event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may be), or payable to or received
by any of the Buyers, under the Transaction Documents (including without limitation, any amounts that would be characterized as
“interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation
to pay, payment made to any Buyer, or collection by any Buyer pursuant to the Transaction Documents is finally judicially determined
to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual
mistake of such Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with retroactive
effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such
adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of interest
or any other amounts which would constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction
Documents. For greater certainty, to the extent that any interest, charges, fees, expenses or other amounts required to be paid
to or received by such Buyer under any of the Transaction Documents or related thereto are held to be within the meaning of “interest”
or another applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time
to which they relate.

 

(e)          
Entire Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto
and thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the
Buyers, the Company, their affiliates and Persons acting on their behalf solely with respect to the matters contained herein and
therein, and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein
and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed
to) (i) have any effect on any agreements any Buyer has entered into with the Company or any of its Subsidiaries prior to the date
hereof with respect to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or amend in any respect
any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in any
agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Buyer and all
such agreements shall continue in full force and effect. Except as specifically set forth herein or the other Transaction Documents,
neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For
clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and each of the Buyers. No waiver shall be effective unless it is in writing and signed
by an authorized representative of the waiving party. No consideration shall be offered or paid to any Person to amend or consent
to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered
to all of the parties to the Transaction Documents, all holders of Preferred Shares or all holders of the Warrants (as the case
may be). The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of
the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the
foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has
any other obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement for each Buyer
to enter into this Agreement, the Company expressly acknowledges and agrees that (i) no due diligence or other investigation or
inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s right to rely on,
or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties contained
in this Agreement or any other Transaction Document, (ii) nothing contained in the Registration Statement, the Prospectus or the
Prospectus Supplement shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception
to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document and
(iii) unless a provision of this Agreement or any other Transaction Document is expressly preceded by the phrase “except
as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall affect such Buyer’s right to
rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and warranties
contained in this Agreement or any other Transaction Document.

 

    	29

    	 

    

 

(f)          
Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on
file by the sending party); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery
specified, in each case, properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications
shall be:

 

If to the Company:

 

With a copy (for informational
purposes only) to:

 

If to the Transfer Agent:

 

If to a Buyer, to its address and facsimile
number set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,

 

with a copy (for informational
purposes only) to:

 

or to such other address and/or facsimile
number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other
party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an
overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.

 

(g)          
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including, as contemplated below, any assignee of any of the Securities. The Company shall not assign this
Agreement or any rights or obligations hereunder without the prior written consent of each of the Buyers, including, without limitation,
by way of a Fundamental Transaction (as defined in the Warrants) (unless the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Warrants) or a Fundamental Transaction (as defined in the Certificate of Designations)
(unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Certificate
of Designations). A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Securities
without the consent of the Company, provided that such assignee agrees in writing to be bound with respect to the transferred Securities,
in which event such assignee shall be deemed to be a “Buyer” hereunder with respect to such assigned rights.

 

(h)          
No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than
the Indemnitees referred to in Section 8(k).

 

    	30

    	 

    

 

(i)          Survival. The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible
only for its own representations, warranties, agreements and covenants hereunder.

 

(j)          Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.

 

(k)         
Indemnification.

 

(i)          In
consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and all of its stockholders, partners, members, officers, directors, employees and direct
or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation
or warranty made by the Company or any Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant, agreement
or obligation of the Company or any Subsidiary contained in any of the Transaction Documents or (iii) any cause of action, suit,
proceeding or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee that arises out of or results from
(A) the execution, delivery, performance or enforcement of any of the Transaction Documents, (B) any transaction financed or to
be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, (C) any disclosure
properly made by such Buyer pursuant to Section 4(l), or (D) the status of such Buyer either as an investor in the Company
pursuant to the transactions contemplated by the Transaction Documents or as a party to this Agreement (including, without limitation,
as a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief); provided, however, that
the indemnity contained in clause (iii) above shall not apply to any Indemnified Liabilities which directly and primarily result
from the fraud, gross negligence or willful misconduct of an Indemnitee. To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.

 

(ii)         Promptly
after receipt by an Indemnitee under this Section 8(k) of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is
to be made against the Company under this Section 8(k), deliver to the Company a written notice of the commencement thereof, and
the Company shall have the right to participate in, and, to the extent the Company so desires, to assume control of the defense
thereof with counsel mutually satisfactory to the Company and the Indemnitee; provided, however, that an Indemnitee shall have
the right to retain its own counsel with the fees and expenses of such counsel to be paid by the Company if: (i) the Company has
agreed in writing to pay such fees and expenses; (ii) the Company shall have failed after a reasonable period of time to assume
the defense of such Indemnified Liability and to employ counsel reasonably satisfactory to such Indemnitee in any such Indemnified
Liability; or (iii) the named parties to any such Indemnified Liability (including any impleaded parties) include both such Indemnitee
and the Company, and such Indemnitee shall have been advised by counsel, in its reasonable opinion, that a material conflict of
interest on any material issue is likely to exist if the same counsel were to represent such Indemnitee and the Company (in which
case, if such Indemnitee notifies the Company in writing that it elects to employ separate counsel at the expense of the Company,
then the Company shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Company);
provided further, that in the case of clauses (i), (ii) and (iii) above the Company shall not be responsible for the reasonable
fees and expenses of more than one (1) separate legal counsel for such Indemnitee. The Indemnitee shall reasonably cooperate with
the Company in connection with any negotiation or defense of any such action or Indemnified Liability by the Company and shall
furnish to the Company all information reasonably available to the Indemnitee which relates to such action or Indemnified Liability.
The Company shall keep the Indemnitee reasonably apprised at all times as to the status of the defense or any settlement negotiations
with respect thereto. The Company shall not be liable for any settlement of any action, claim or proceeding effected without its
prior written consent, provided, however, that the Company shall not unreasonably withhold, delay or condition its consent. The
Company shall not, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter into any settlement
or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee
of a release from all liability in respect to such Indemnified Liability or litigation, and such settlement shall not include any
admission as to fault on the part of the Indemnitee. Following indemnification as provided for hereunder, the Company shall be
subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written notice to the Company within a reasonable time of the commencement
of any such action shall not relieve the Company of any liability to the Indemnitee under this Section 8(k), except to the extent
that the Company is materially and adversely prejudiced in its ability to defend such action.

 

    	31

    	 

    

 

(iii)        The
indemnification required by this Section 8(k) 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 Indemnified Liabilities are incurred.

 

(iv)        The
indemnity agreement contained herein shall be in addition to (A) any cause of action or similar right of the Indemnitee against
the Company or others, and (B) any liabilities the Company may be subject to pursuant to the law.

 

(l)          
Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall
limit the generality or applicability of a more general representation or warranty. Each and every reference to share prices, shares
of Common Stock and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for any
stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions that occur with respect to the
Common Stock after the date of this Agreement. It is expressly understood and agreed that for all purposes of this Agreement, and
without implication that the contrary would otherwise be true, neither transactions nor purchases nor sales shall include the location
and/or reservation of borrowable shares of Common Stock.

 

(m)        
Remedies. Each Buyer, and in the event of assignment by Buyer of its rights and obligations hereunder, each assignee of
Securities, shall have all rights and remedies set forth in the Transaction Documents and all of the rights which such holders
have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it or any Subsidiary
fails to perform, observe, or discharge any or all of its or such Subsidiary’s (as the case may be) obligations under the
Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that the
Buyers shall be entitled to seek specific performance and/or temporary, preliminary and permanent injunctive or other equitable
relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without posting
a bond or other security. The remedies provided in this Agreement and the other Transaction Documents shall be cumulative and in
addition to all other remedies available under this Agreement and the other Transaction Documents, at law or in equity (including
a decree of specific performance and/or other injunctive relief).

 

(n)         
Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the
Company does not timely perform its related obligations within the periods therein provided, then such Buyer 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.

 

    	32

    	 

    

 

(o)         
Payment Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant
to any of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or 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, foreign,
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. Unless otherwise expressly indicated, all dollar amounts referred to
in this Agreement and the other Transaction Documents are in United States Dollars (“U.S. Dollars”), and all
amounts owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in
other currencies (if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the
date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into U.S.
Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date
of calculation.

 

(p)         
Judgment Currency.

 

(i)          If
for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction
Document in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter
in this Section 8(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement,
the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:

 

(A)        the
date actual payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or

 

(B)         the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as
of which such conversion is made pursuant to this Section 8(p)(i)(B) being hereinafter referred to as the “Judgment Conversion
Date”).

 

(ii)         If
in the case of any proceeding in the court of any jurisdiction referred to in Section 8(p)(i)(B) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of U.S. Dollars which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment
Conversion Date.

 

(iii)        Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other Transaction Document.

 

    	33

    	 

    

 

(q)          
Independent Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents
are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance
of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges
that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create
a presumption that the Buyers are in any way acting in concert or as a group or entity with respect to such obligations or the
transactions contemplated by the Transaction Documents, and the Company shall not assert any such claim with respect to such obligations
or the transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the
Transaction Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer
has acted as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be
acting as agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights
under the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated with the Company
in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be
entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement
or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party
in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated
hereby was solely in the control of the Company, not the action or decision of any Buyer, and was done solely for the convenience
of the Company and not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that each
provision contained in this Agreement and in each other Transaction Document is between the Company and a Buyer, solely, and not
between the Company and the Buyers collectively and not between and among the Buyers.

 

[signature pages follow]

 

    	34

    	 

    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above. 

 

	 	COMPANY:
	 	 
	 	xG Technology, Inc.
	 	 	 
	 	By:	/s/  Roger G. Branton
	 	 	Name: Roger G. Branton
	 	 	Title: Chief Financial Officer

 

    	35

    	 

    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first
written above.

 

	 	BUYER:
	 	 
	 	31 GROUP, LLC
	 	 	 
	 	By:	/s/  Joshua Sason
	 	 	Name: Joshua Sason
	 	 	Title: Managing Member

    	36

    	 

    

 

Schedule 3(mm)

 

Management

 

None.

 

    	 

    	 

    

 

SCHEDULE OF BUYERS

 

	(1)	 	 	(2)		 	 	(3)		 	 	(4)		 	 	(5)		 	 	(6)		 	 	(7)	 
	Buyer	 	 	Address
                                         and Facsimile
 Number	 	 	 	Number
                                         of 
 Preferred

                                         Shares	 	 	 	Number
                                         of 
 Warrant

                                         Shares	 	 	 	Purchase

                                         Price	 	 	 	Commitment

                                         Shares	 	 	 	Legal
                                         Representative’s
 Address
                                         and Facsimile
 Number	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	31 Group, LLC	 	 	 	 	 	 	350,000	 	 	 	175,000	 	 	$	350,000	 	 	 	24,619	 	 	 		 

 

    	 

    	 

    

 

Exhibit A

 

Form of Certificate of Designations

 

    	 

    	 

    

 

Exhibit B

 

Form of WarrantLicense Agreement

LICENSE AGREEMENT

This Agreement is made and entered into between Revolutionary Concepts, Inc., a corporation established under Nevada law (hereinafter called Licensor) having its principle office at 1914 JN Pease Place, Charlotte, NC 28262, and Eyetalk365, LLC a for-profit limited liability corporation organized under the laws of North Carolina (hereinafter called Licensee), having its principle office at 9923 Willow Leaf Lane, Cornelius, NC 28031.

1.

Whereas, Licensor owns and/or controls certain patents (“the Patents”) and the associated intellectual property rights pertaining thereto;

2.

Whereas, Licensor wishes to license the commercial exploitation of the Patents; and

3.

Whereas Licensee wishes to engage in the business of developing and marketing products and services protected by the Patents.

Now, therefore, for and in consideration of the premises, the faithful performance of the covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed as follows.

Article I - DEFINITIONS

For the purpose of this Agreement, the following definitions shall apply:

1. Licensed Patent Rights:  Shall mean:

a.         Patent Application Serial Nos.:

1. US 8,164,614 B2 Dated Apr. 24 2012, Communication And Monitoring

2. US 8,154,581 B2 Dated Apr. 10 2012, Audio-Video Communication System For Receiving Person At Entrance

3. US 8,144,184 B2 Dated Mar. 27, 2012, Detection And Viewing System

4. US 8,144,183 B2, Dated Mar 27, 2012, Two-Way Audio-Video Communication Method For Receiving Person At Entrance

5. US 8,13,9098 B2, Dated Mar. 20, 2012, Video Communication Method For Receiving Person At Entrance

6. US 7,192,644 B2 Dated Mar. 20, 2007, Automated Audio Video Messaging And Answering System

7. US Patent Pending USPA 13/453,100

b.         Any and all improvements developed by Licensor or any other, whether patentable or not, relating or in any way pertaining to the Licensed Patent Rights, which Licensor may now or may hereafter develop, own or control.

c.         Any or all patents, which may issue on patent rights and improvements thereof, developed by Licensor or any other and any and all divisions, continuations, continuations-in-part, reissues and extensions of such patents.

2.     Product(s):  Shall mean any materials including, techniques, devices, methods or inventions relating to or based upon the Licensed Patent Rights.

3.      Gross Sales:  Shall mean total US dollar amount generated from sale, licensing, sub-licensing, or other exploitation of the Patents pursuant to these Licensed Patent Rights being authorized.

4.      Confidential Proprietary Information:   Shall mean with respect to any Party all scientific, business or financial information relating to such Party, its subsidiaries or affiliates or their respective businesses, except when such information:

a.           Becomes known to the other Party prior to receipt from such first Party;

b.           Becomes publicly known through sources other than such first Party;

c.           Is lawfully received by such other Party from a party other than the first Party; or

d.           Is approved for release by written authorization from such first Party.

5.      Exclusive License:  Shall mean a license, including the right to sublicense, whereby Licensee’s rights are sole and entire and operate to exclude all others, including Licensor and its affiliates except as otherwise expressly provided herein.

6.      Know-how:  Shall mean any and all technical data, information, materials, trade secrets, technology, formulas, processes, and ideas, including any improvements thereto, in any form in which the foregoing may exist, now owned or co-owned by or exclusively, semi-exclusively or non-exclusively licensed to any party prior to the date of this Agreement or hereafter acquired by any party during the term of this agreement.

7.       Intellectual Property Rights: Shall mean any and all inventions, materials, Know-how, trade secrets, technology, formulas, processes, market applications, ideas or other discoveries conceived or reduced to practices, whether patentable or not.

8.       Royalty(ies): Shall mean revenues received in the form of cash and/or equity from holdings from Licensees as a result of licensing and using, selling, making, having made, sublicensing or leasing of Licensed Patent Rights.

ARTICLE II- GRANT OF EXCLUSIVE LICENSE

1.       Licensor hereby grants to Licensee the exclusive worldwide license with the right to sublicense others, to make, have made, use, lease and exploit the Patents and Products described in the Licensed Patent Rights at Licensee’s sole discretion.

ARTICLE III- LICENSE PAYMENTS

1.       Initial payment and royalty rate. For the license herein granted:

a.         Licensee agrees to pay a sign-up fee of Nine Hundred Thousand Dollars ($900,000) in cash or equivalent agreed upon consideration and a 40% Membership Interest in Eyetalk365, LLC.

b.         Licensee shall pay an earned royalty of Forty percent (40%) of Licensee’s Gross Sales of Products and all other revenues not included in Licensed Patent Rights.

c.

Licensee agrees to pay all ongoing and future costs associated with the Patents described in the Licensed Patent Rights, as outlined in Article X and XI of this agreement.

2.      Sublicenses. The granting and terms of all sublicenses is within Licensee’s discretion, provided that all sublicenses shall be subjected to the terms and conditions of this Agreement.

3.       When a sale is made: A sale of Licensed Patent Rights shall be regarded as being made upon the delivery of any Products produced pursuant to the Licensed Patent Rights or the sale of Patents authorized in this Agreement.

4.       Payments: All sums payable by Licensee hereunder shall be paid to Licensor in United States and in the currency of the United States or in U.S. dollars.

5.       Interest: In the event any royalty is not paid as specified herein, then a compound interest of eighteen percent per annum (18%) shall be due and payable, in addition to the royalties accrued during the period of default.

ARTICLE IV - REPORTS, BOOKS AND RECORDS

1.      Reports. Within thirty (30) days after the end of each calendar quarter during the term of  this Agreement, or any renewal thereof, Licensee shall prepare and deliver a written report to Licensor setting forth the Gross Sales of Licensed Patent Rights sold, leased, licensed or used by Licensee and the total sublicensing receipts generated the period. If there are no Gross Sales or sublicensing receipts, a written statement to that effect shall be delivered by Licensee to Licensor on or before the specified date. At the time each report is made, Licensee shall pay to Licensor the royalties and other payments then due and payable.

2.      Books and records. Licensee shall keep books and records in such  reasonable detail as will permit the reports provided for in Paragraph 1. hereof to be audited.  Licensee further agrees to permit such books and reports to be inspected and audited by a representative or representatives of Licensor to the extent that Licensor, it its sole discretion, determines to be necessary to verify the reports provided for in paragraph 1. hereof; provided, however, that such representative or representatives shall indicate to Licensor only whether the reports and royalty paid are correct, if not, the reasons why not.

ARTICLE V - MARKING

Licensee shall cause all Products made, used or leased by it or its sublicensees under this Agreement to be marked to reflect that the item is a patented product, protected by the applicable U.S. Patent.

ARTICLE VI - DILIGENCE

1.      Licensee shall use its best efforts to bring Licensed Patent Rights to market through a thorough, vigorous and diligent program and to continue active, diligent marketing efforts throughout the life of this agreement.

ARTICLE VII - FINAL JUDGMENT WITH RESPECT TO VALIDITY OF PATENTS

If a judgment or decree shall be entered in any proceeding in which the validity or infringement of any claim of any patent under which the License is granted hereunder shall be in issue, which judgment or decree shall become final, and if a final judgment shall have determined the specific claim to be invalid, Licensee shall be relived thereafter from including in its reports hereunder that portion of the royalties due under ARTICLE III payable only because of such claim or any broader claim to which such final judgment shall be applicable, and from the performance of any other acts required by this Agreement and pertaining to such claims.

ARTICLE VIII - TERMINATION OR CONVERSION TO NON-EXCLUSIVE LICENSE

1.      Termination by Licensee.

Option of Licensee:  Licensee may terminate the license granted by this Agreement, provided Licensee shall not be in default hereunder, by giving Licensor one hundred eighty (180) day notice to its intention to do so. If such notice shall be given, then upon the expiration of such one hundred eighty (180) days the termination shall become effective; but such termination shall not operate to relieve Licensee from its obligation to pay royalties or to satisfy any other obligations, accrued hereunder prior to the date of such termination.

2.     Termination by Licensor.

Option of Licensor:  Licensor may, in its sole discretion, terminate this agreement by written notice to Licensee in case of:

a.         Default in the payment of any royalties required to be paid by Licensee to Licensor hereunder

b.         Default in the making of any reports required hereunder and such default shall continue for a period of thirty (30) days after Licensor shall have given to Licensee a written notice of such default.

c.         Default by Licensee in the performance of any obligation contained in this Agreement, and such default shall continue for a period of thirty (30) days after Licensor shall have given to Licensee written notice of such default.

d.         Adjudication that Licensee is bankrupt or insolvent.

e.         The filling by Licensee of a petition of bankruptcy, or a petition or answer seeking reorganization, readjustment or rearrangement of its business or affairs under any law or governmental regulation relating to bankruptcy or insolvency.

f.          The appointment of a receiver of the business or for all or substantially all of the property of Licensee; or the making by Licensee of assignment or an attempted assignment for the benefit of its creditors; or the institution by Licensee of any proceedings for the liquidation or winding up of its business or affairs.

3       Effect of termination.

Termination of this agreement shall not impair or destroy Licensee’s or Licensor’s rights or remedies, either at law  or in equity, or relieve Licensee of its obligation to pay royalties or to comply with any other of the obligations hereunder, accrued prior to the effective date of termination.

4.     Effect of delay, etc.

Failure or delay by Licensor to exercise its right of termination hereunder shall not operate to prejudice Licensor’s right of termination for any default by Licensee.

5.      Option of Licensee to convert to non-exclusive license.

Licensee shall have the right to convert this License at the same royalty rate as for the exclusive Licensee, without right to sublicense and minimum royalties under ARTICLE III, Paragraph 3. shall not be due  thereafter.

ARTICLE IX – TERM

Unless previously terminated as hereinbefore provided, the term of this Agreement shall be from and after the date hereof until the expiration of the last to expire of the licensed issued patents or patents to issue under the Licensed Patent Rights under ARTICLE I.  Licensee shall not be required to pay royalties due only by reason of its use, sale, licensing, lease or sublicensing under issued patents licensed by this Agreement that have expired or have been held to be invalid by a Final Judgment, where there are no other such patents valid and unexpired covering the Licensee’s use, sale, licensing, lease or sublicensing; provided, however, that such non-payment of royalties shall not extend to royalty payments already made to Licensor more than six (6) months prior to Licensee’s discovery of expiration or a Final  Judgment.

ARTICLE X - PATENT LITIGATION

1.      Expenses and proceeds of litigation.  Where a suit or suits have been brought by Licensee, Licensee shall maintain the litigation at its own expense and shall retain any judgments or awards derived from the litigations except that the portion of any judgment attributable to royalties from the infringer shall be paid based on the Membership interest distributions to Licensor and Licensee after deducting any and all expenses of such litigation.

ARTICLE XI - PATENT FILINGS AND PROSECUTING

1.      Licensee shall pay future costs of the prosecution of the patent applications pending as set forth in ARTICLE I, Paragraph 2. Which are reasonably necessary to obtain a patent. Furthermore, Licensee will pay for the costs of filling, prosecuting and maintaining foreign counterpart applications to such pending patent applications, such foreign applications to be filed within ten (10) months prior to the filling date of the corresponding United States patent application.

2.      Licensor shall own improvements by the inventors. Licensee shall pay future costs of preparation, filling, prosecuting and maintenance of patents and applications on patentable improvements made by inventors. Licensee shall retain all rights to future improvements by the inventors as expressed in this agreement for current assets and rights described herein.

3.      Preparation and maintenance of patent applications and patents undertaken at Licensee’s cost shall be performed by patent attorneys selected by Licensee and due diligence and care shall be used in preparing, filling, prosecuting, and maintaining such applications on patentable subject matter.

4.      Licensee shall have the right to, on thirty (30) days written notice to Licensor, discontinue payment of its share of the prosecution and/or maintenance costs of any of said patents and/or patent applications. Upon receipt of such written notice, Licensor shall have the right to continue such prosecution and/or maintenance in its own name at its own expense in which event the License shall be automatically terminated as to the subject matter claimed in said patents and/or applications.

5.      Notwithstanding the aforegoing paragraph of this ARTICLE XI,  Licensee’s obligations under such paragraphs shall continue only so long as Licensee continues to have an Exclusive License under the Licensed Patent Rights and, in the event of conversion of the License to non-exclusive in accordance with ARTICLE VIII, paragraph 1. (b), after the date of such conversion:

a.         Licensee shall have a non-exclusive License without right to sublicense under those of such patents and applications under which Licensee had an Exclusive License prior to the conversion.

ARTICLE XII - NOTICES, ASSIGNEES

1.       Notices. Notices and payments required hereunder shall be deemed properly given if duly sent by first class mail and addressed to the parties at the addresses set forth above. The parties hereto will keep each other advised of address changes.

2.      Assignees, etc.  This Agreement shall be binding upon and shall inure to the benefit of the assigns of Licensor and upon and to the benefit of the successors of the entire business of Licensor, but neither this agreement nor any of the benefits thereof nor any rights thereunder shall, directly or indirectly, without the prior written consent of Licensor, be assigned, divided, or shared by the Licensor to or with any other party or parties (except a successor of the entire business of the Licensor).

ARTICLE XIII - MISCELLANEOUS

1.      This agreement is executed and delivered in the United States and shall be constructed in accordance with the laws of North Carolina.

2.      No other understanding. This agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and merges all prior discussions between them.

3.      No representations or warranties regarding patents of third parties. No representations or warranty is made by Licensor that the Licensed Patent Rights manufactured, used, sold or leased under the Exclusive License granted herein is or will be free of claims of infringement of patent rights of any other person or persons. The Licensor warrants that it has title to the Licensed Patent Rights from the inventors.

4.      Indemnity.   Licensee shall indemnify, hold harmless, and defend Licensor and its trustees, officers, employees and agents against any and all allegations and actions for death, illness, personal injury, property damage, and improper business practices arising out of the use of the Licensed Patent Rights.

5.      Insurance. During the term of this agreement, Licensee shall, maintain the following insurance coverage:

a.         Commercial general liability with a limit of no less than one million dollars ($1,000,000.00, option) each occurrence. Such insurance shall be written on a standard ISO occurrence form or substitute form providing equivalent coverage, unless waived in writing by Licensor.

b.         Professional liability of no less than one million dollars ($1,000,000.00, option) each occurrence, unless waived in writing by Licensor.

c.         Workers’ compensation consistent with statutory requirements. Certificates of insurance shall be provided to Licensor upon request and shall include the provision for 30-day notification to the certificate holder of any cancellation or material alteration in the coverage.

6.      Advertising.  Licensee agrees that Licensee may not use in any way the name of Licensor or any logotypes or symbols associated with Licensor or the names of any researchers without the express written permission of Licensor.

7.      Confidentiality. The parties agree to maintain discussions and proprietary information revealed pursuant to this agreement in confidence, to disclose them only to persons within their respective organizations having a need to know, and to furnish assurances to the other party that such persons understand this duty on confidentiality.

8.      Disclaimer of Warranty.  Licensed Patent Rights is experimental in nature and it is provided WITHOUT WARRANTY OR REPRESENTATIONS OF ANY SORT, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OF NON-INFRINGEMENT. Licensor makes no representations and provides no warranty that the use of the Licensed Patent Rights will not infringe any patent or proprietary rights of third parties.

In witness whereof, the parties hereto have caused this agreement to be executed by  their duly authorized representatives.

The effective date of this agreement is ___February 10____, 2014.

Licensor ____/s/ Ronald E. Carter_________

Name: Ronald E. Carter

Title: President / CEO

Licensee ____/s/ Ross Helfer____

Name: Ross Helfer

Title: Member Manager

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