JetPay Corp (Form: 8-K, Received: 05/07/2014 16:10:27)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 1, 2014

JETPAY CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	001-35170	90-0632274
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)

1175 Lancaster Avenue, Suite 100

Berwyn, PA 19312

(Address of Principal Executive Offices) (Zip Code)

(484) 324-7980

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))

Item 1.01. Entry into a Material Definitive Agreement

On May 1, 2014, JetPay Corporation (the “Company”) entered into a Securities Purchase Agreement with Ithan Creek Master Investors (Cayman) L.P. (“Wellington”) pursuant to which the Company agreed to sell to Wellington, upon the satisfaction of certain conditions, up to 9,000 shares of Series A-1 Convertible Preferred Stock, par value $0.001 (“Series A-1Preferred”) for an aggregate purchase price of up to $2,700,000. In addition, the Series A-1 Preferred will be convertible into shares of the Company’s common stock, par value $0.001 (“Common Stock”) or, in certain circumstances, Series A-2 Convertible Preferred Stock, par value $0.001 per share (“Series A-2 Preferred”). The conversion into Common Stock would be equal to the number of shares of Series A-1 Preferred being converted multiplied by $300 and divided by the then-applicable conversion price, which initially will be $3.00. The conversion price of the Series A-1 Preferred is subject to downward adjustment in the future upon the occurrence of certain dilutive events, should they occur. The following discussion of the Securities Purchase Agreement provides only a summary of the material terms and conditions of the Securities Purchase Agreement and is qualified in its entirety to the full text of the Securities Purchase Agreement Company which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.

The Preferred Stock Purchase

Following the initial purchase and sale of 2,250 shares of Series A-1 Preferred, at any time when Flexpoint Fund II, L.P. (“Flexpoint”) purchases Series A Preferred Stock, par value $0.001 per share (“Series A Preferred”), Wellington will have the option, but not the obligation, to purchase up to the number of shares of Series A-1 Preferred equal to 6.75% of the number of shares of Series A Preferred purchased by Flexpoint. All shares of Series A-1 Preferred Stock have a purchase price of $300 per share. As a result of the purchase by Flexpoint of $1.4 million of Series A Preferred on April 14, 2014, Wellington exercised its option to purchase an additional 315 shares of Series A-1 Preferred Stock at the initial closing, which such amount represented 6.75% of the Flexpoint’s purchase on April 14, 2014.

Restrictions on Transfer

Subject to certain exceptions, Wellington is prohibited from transferring any shares of Series A-1 Preferred, shares of Series A-2 Preferred or shares of Common Stock, into which such shares of Series A-1 Preferred or Series A-2 Preferred are converted, until January 1, 2015.

Representations and Warranties

The Securities Purchase Agreement contains representations and warranties by the Company relating to, among other things, the Company’s corporate organization and capitalization, the due authorization of the Securities Purchase Agreement and the transactions contemplated thereby, the Company’s filings with the Securities and Exchange Commission, including the financial statements included therein, litigation, environmental compliance, taxes, insurance, employee benefits, the absence of undisclosed liabilities, the absence of a material adverse change in the Company’s business since December 31, 2012, internal controls, compliance with laws and permits and the absence of conflicts and third party approval rights in connection with the transactions contemplated by the Securities Purchase Agreement.

Survival and Indemnification

Other than certain fundamental representations which survive for the applicable statute of limitations, Wellington’s and the Company’s representations and warranties survive for 18 months after the applicable closing in which such representations and warranties were made. The Company has agreed to indemnify Wellington for any breaches of the Company’s representations and warranties, certain specified matters and for any breaches of the Company’s covenants in the Securities Purchase Agreement. Other than with respect to breaches of certain fundamental representations, Wellington is only entitled to indemnification for breaches of the Company’s representations and warranties if the cumulative damages from any breaches exceed greater of $100,000, and Wellington is not entitled to indemnification for any damages in excess of the aggregate purchase price for Series A-1 Preferred purchased pursuant to the Securities Purchase Agreement. Any amounts that Wellington is entitled to as a result of the Company’s indemnification obligations are structured as a reduction in the conversion price of the Series A-1 Preferred based on the diminution in pre-money equity value of the Common Stock as a result of the breach, other than with respect to breaches of the Company’s covenants, with respect to which Wellington can elect to receive in cash.

Registration Rights

In connection with the consummation of the Securities Purchase Agreement, the Company granted the holders of the Series A-1 Preferred unlimited “piggy-back” registration rights, subject to certain exceptions. In all cases, the Company is obligated to reimburse the holders of Series A-1 Preferred for their expenses incurred with such registration.

Certificate of Designation of Preferred Stock

General

The Series A-1 Preferred will be convertible into shares of the Company’s Common Stock at the ratio described below. The Series A-1 Preferred has no stated maturity; however, the shares of Series A-1 Preferred are subject to redemption by the Company and may be required to be redeemed by the holders in certain circumstances as described below. The following description of the Certificate of Designation of Series A-1 Preferred Stock is qualified in its entirety by reference to the full text of the form of Certificate of Designation of Series A-1 Preferred Stock, which is attached as an Exhibit 3.1 and is incorporated by reference herein.

Ranking

The Series A-1 Preferred will have an initial liquidation preference of $600 per share and will rank senior to the Company’s Common Stock and pari passu with the Series A Preferred purchased by Flexpoint with respect to distributions of assets upon the Company’s liquidation, dissolution or winding up. The shares of Series A-1 Preferred will be equity interests and will not constitute indebtedness. In the event of bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to us, indebtedness will effectively rank senior to the Series A-1 Preferred, and the holders of indebtedness will be entitled to the satisfaction of any amounts owed to them prior to the payment of the then applicable liquidation preference of any capital stock, including the Series A-1 Preferred.

Liquidation Rights

If the Company voluntarily or involuntarily liquidates, dissolves or winds up its affairs or undergoes a change of control, each holder of the Series A-1Preferred will be entitled to receive out of the Company’s assets available for distribution to stockholders, after satisfaction of liabilities to creditors, if any, and before any distribution of assets is made on the Common Stock or any of the Company’s other shares of stock ranking junior as to such a distribution to the Series A-1 Preferred, a liquidating distribution in the amount that is the greater of (a) the aggregate liquidation preference of all such holder’s shares of Series A-1 Preferred plus any accrued but unpaid dividends thereon and (b) the amount such holder would receive as a holder of Common Stock assuming the prior conversion of each of its shares of Series A-1 Preferred.

In any such distribution, if the Company’s assets are not sufficient to pay the liquidation preferences in full to all holders of the Series A-1 Preferred, the amounts paid to the holders of Series A-1 Preferred and Series A Preferred will be paid pro rata in accordance with the respective aggregate liquidation preferences of those holders. In any such distribution, the “liquidation preference” of any holder of Series A-1 Preferred means the initial liquidation preference of $600 subject to certain adjustments. If the liquidation preference has been paid in full to all holders of the Series A-1 Preferred and Series A Preferred, then the holders of the Company’s other stock shall be entitled to receive all of the Company’s remaining assets according to their respective rights and preferences.

Conversion; Anti-Dilution Adjustments

Any holder of Series A-1 Preferred may at any time convert such holder’s shares of Series A-1 Preferred into that number of shares of Common Stock equal to the number of shares of Series A-1 Preferred being converted multiplied by $300 and divided by the then-applicable conversion price, which initially will be $3.00. Additionally, at any time a holder of Series A Preferred elects to convert any shares of Series A Preferred into shares of Common Stock, the holders of the Series A-1 Preferred shall be required to convert that number of shares of Series A-1 Preferred equal to the product of (i) the number of shares of Series A-1 Preferred held by such holder and (ii) a fraction, the numerator of which is the number of shares of Series A Preferred being converted and the denominator of which is the aggregate amount of Series A Preferred then outstanding. Notwithstanding the above, no holder of the Series A-1 Preferred can convert if the as a result of such conversion, such holder would beneficially own 9.9% or more of the Company’s Common Stock. If at any time, no shares of Series A Preferred remain outstanding and shares of Series A-1 Preferred remain outstanding because of the limitation in the preceding sentence, all shares of Series A-1 Preferred shall automatically convert into shares of Series A-2 Preferred at a 1:1 ratio.

If at any time after the Initial Closing, subject to certain exceptions, the Company issues shares of Common Stock or securities convertible or exercisable into Common Stock below the then-applicable conversion price, the conversion price will be adjusted downward to equal the issue price of such stock or exercise or conversion price of such securities for so long as secured convertible notes issued under the Company’s $10 million Secured Convertible Promissory Note Agreement (the “Note Agreement”) remain outstanding. Thereafter, any issuances of Common Stock or securities convertible or exercisable into Common Stock below the then-applicable conversion price will result in a downward adjustment of the then-applicable conversion price based on a weighted average calculation. Additionally, the conversion price is subject to adjustment for any stock split, stock dividend or other similar proportionate reduction or increase of the authorized number of shares of Common Stock.

Redemption

Holders of the Series A-1 Preferred will have the right to request redemption of any shares of Series A-1 Preferred issued at least five years prior to the date of such request by delivering written notice to the Company at the then applicable liquidation value per share, unless holders of a majority of the outstanding Series A-1 Preferred and Series A Preferred (which much include a majority of the Series A Preferred) elect to waive such redemption request on behalf of all holders of Series A-1 Preferred. Additionally, at any time a holder of Series A Preferred elects to redeem any shares of Series A Preferred, the holders of the Series A-1 Preferred shall be required to redeem that number of shares of Series A-1 Preferred equal to the product of (i) the number of shares of Series A-1 Preferred held by such holder and (ii) a fraction, the numerator of which is the number of shares of Series A Preferred being redeemed and the denominator of which is the aggregate amount of Series A Preferred then outstanding, unless the holders of the Series A-1 Preferred exercise their right to convert the Series A-1 Preferred into Common Stock before such redemption by the holder(s) of the Series A Preferred. The liquidation value will initially be $600 per share and will be subject to adjustment for any stock split, stock dividend or other similar proportionate reduction or increase of the authorized number of shares of Common Stock.

Voting Rights

The holders of the Series A-1 Preferred will be entitled to vote upon all matters upon which holders of common stock have the right to vote, such votes to be counted together with all other shares of capital stock having general voting powers and not separately as a class. The holders of the Series A-1 Preferred will be entitled to the number of votes as the number of shares of common stock as the Series A-1 Preferred is convertible into assuming a conversion price of $3.00 per share.

Events of Noncompliance

An “Event of Noncompliance” shall have occurred if:

the Company fails to make any required redemption payment with respect to the Series A-1 Preferred;

the Company breaches the Securities Purchase Agreement after the Initial Closing, and such breach has not been cured with thirty days after receipt of notice thereof;

the Company or any subsidiary makes an assignment for the benefit of creditors, admits its insolvency or is the subject of an order, judgment or decree adjudicating such entity as insolvent, among other similar actions;

a final judgment in excess of $5,000,000 is rendered against the Company or any subsidiary that is not discharged within 60 days thereafter; or

an event of default has occurred under either the Note Agreement or the Loan and Security Agreement, dated as of December 28, 2012, by and among ADC, PTFS and Metro Bank and such event of default has not been cured within thirty days after receipt of notice thereof.

Upon the occurrence of an Event of Noncompliance, the holders of a majority of the Series A-1 Preferred may demand immediate redemption of all or a portion of the Series A-1 Preferred at the then-applicable liquidation value. Such right to control a minimum majority of the Board would exist for so long as the Event of Noncompliance was continuing.

Certificate of Designation of Series A-2

General

The Series A-2 Preferred will be convertible into shares of the Company’s Common Stock at the ratio described below. The Series A-2 Preferred has no stated maturity are not redeemable. The following description of the Certificate of Designation of Series A-2 Preferred is qualified in its entirety by reference to the full text of the form of Certificate of Designation of Series A-2 Preferred, which is attached as an Exhibit 3.2 and is incorporated by reference herein.

Ranking

The Series A-2 Preferred will rank pari passu to the Company’s Common Stock with respect to distributions of assets upon the Company’s liquidation, dissolution or winding up. The shares of Series A-2 Preferred will be equity interests and will not constitute indebtedness. In the event of bankruptcy, liquidation, dissolution, reorganization or similar proceeding with respect to us, indebtedness will effectively rank senior to the Series A-2 Preferred, and the holders of indebtedness will be entitled to the satisfaction of any amounts owed to them prior to the payment of any amounts on any capital stock, including the Series A-2 Preferred.

Liquidation Rights

If the Company voluntarily or involuntarily liquidates, dissolves or winds up its affairs or undergoes a change of control, each holder of the Series A-2 Preferred will be entitled to receive out of the Company’s assets available for distribution to stockholders, after satisfaction of liabilities to creditors and any shares of Series A-1 Preferred and Series A Preferred, if any, pari passu with any holder of Common Stock, a liquidating distribution in the amount such holder would receive as a holder of Common Stock assuming the prior conversion of each of its shares of Series A-2 Preferred into Common Stock.

Conversion; Anti-Dilution Adjustments

Any holder of Series A-2 Preferred may at any time convert such holder’s shares of Series A-2 Preferred into that number of shares of Common Stock equal to the number of shares of Series A-2 Preferred being converted multiplied by $300 and divided by the then-applicable conversion price, which initially will be $3.00. Notwithstanding the above, no holder of the Series A-2 Preferred can convert if the as a result of such conversion, such holder would beneficially own 9.9% or more of the Company’s Common Stock.

If at any time after the Initial Closing, subject to certain exceptions, the Company issues shares of Common Stock or securities convertible or exercisable into Common Stock below the then-applicable conversion price, the conversion price will be adjusted downward to equal the issue price of such stock or exercise or conversion price of such securities for so long as secured convertible notes issued under the Note Agreement remain outstanding. Thereafter, any issuances of Common Stock or securities convertible or exercisable into Common Stock below the then-applicable conversion price will result in a downward adjustment of the then-applicable conversion price based on a weighted average calculation. Additionally, the conversion price is subject to adjustment for any stock split, stock dividend or other similar proportionate reduction or increase of the authorized number of shares of Common Stock.

Voting Rights

The holders of the Series A-2 Preferred will be entitled to vote upon all matters upon which holders of common stock have the right to vote, such votes to be counted together with all other shares of capital stock having general voting powers and not separately as a class. The holders of the Series A-2 Preferred will be entitled to the number of votes as the number of shares of common stock as the Series A-2 Preferred is convertible into assuming a conversion price of $3.00 per share.

Item 3.02. Unregistered Sales of Equity Securities

On May 5, 2014, the Company issued 2,565 shares of Preferred Stock to Wellington for an aggregate of $769,500, less certain agreed-upon reimbursable expenses of Wellington. The information set forth in Item 1.01 above is incorporated by reference herein.

Based upon certain representations of Wellington made in the Securities Purchase Agreement, the issuance of the Series A-1 Preferred to Wellington was consummated in reliance upon Rule 506 of Regulation D of the Securities Act of 1933, as amended.

Item 5.03 Amendments to Articles of Incorporation or Bylaws

On May 5, 2014, the Company filed the Certificate of Designation of Series A-1 Convertible Preferred Stock and the Certificate of Designation of Series A-2 Convertible Preferred Stock with the Secretary of State of the State of Delaware, copies of which are attached hereto as Exhibits 3.1 and 3.2, respectively and incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Description

3.1		Certificate of Designation of Series A-1 Convertible Preferred Stock

3.2		Certificate of Designation of Series A-2 Convertible Preferred Stock

4.1		Securities Purchase Agreement, dated as of May 1, 2014, by and between the Company and Wellington.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: May 7, 2014

	JETPAY CORPORATION

	By:	/s/ Gregory M. Krzemien
	Name:	Gregory M. Krzemien
	Title:	Chief Financial Officer

Exhibit 3.1

CERTIFICATE OF DESIGNATION OF

SERIES A-1 CONVERTIBLE PREFERRED STOCK

JETPAY CORPORATION

_______________________

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

_______________________

JETPAY CORPORATION (f/k/a Universal Business Payment Solutions Acquisition Corporation), a corporation organized and existing under the laws of the State of Delaware (the “ Corporation ”), certifies that, pursuant to authority conferred upon the board of directors of the Corporation (the “ Board ”) by the FOURTH Article of the Amended and Restated Certificate of Incorporation of the Corporation, as amended from time to time (the “ Certificate of Incorporation ”), and pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “ DGCL ”), the Board adopted and approved the following resolution by written consent on March 31, 2014 providing for the designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions of the Series A-1 Convertible Preferred Stock:

WHEREAS, the Certificate of Incorporation provides for two classes of shares of capital stock known as (i) common stock, par value $0.001 per share, and (ii) preferred stock, par value $0.001 per share (the “ Preferred Stock ”);

WHEREAS, the Certificate of Incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock; and

WHEREAS, the Board is authorized by the Certificate of Incorporation as permitted by the DGCL to provide for the issuance of the shares of Preferred Stock in series and to establish from time to time the number of shares to be included in such series and to fix the voting powers, designations, preferences and relative, participating, optional and other rights of the shares of each such series and the qualifications, limitations and restrictions thereof.

NOW, THEREFORE, BE IT RESOLVED, that the Board deems it advisable to, and hereby does, designate a Series A-1 Convertible Preferred Stock and fixes and determines the voting powers, designations, preferences, rights, qualifications, limitations and restrictions relating to the Series A-1 Convertible Preferred Stock as follows:

Section 1. Designation . The designation of the series of Preferred Stock of the Corporation is “Series A-1 Convertible Preferred Stock,” par value $0.001 per share (the “ Series A-1 Preferred ”).

Section 2. Number of Series A-1 Preferred Shares . The authorized number of shares of Series A-1 Preferred is 9,000.

Section 3. Defined Terms and Rules of Construction .

(a) Definitions . As used herein with respect to the Series A-1 Preferred:

“ ADC Loan Agreement ” means that certain Loan and Security Agreement, dated as of December 28, 2012, by and among AD Computer Corporation, Payroll Tax Filing Services, Inc., each as borrowers, the Corporation, as guarantor, and Metro Bank, as lender, as may be amended from time to time, and any agreement with respect to the refinancing of any indebtedness thereunder.

“ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.

“ Board ” shall have the meaning set forth in the preamble hereto.

“ Business Day ” means any day, other than a Saturday, Sunday, or any other date in which banks located in Philadelphia, Pennsylvania are closed for business as a result of federal, state or local holiday.

“ Bylaws ” shall mean the Bylaws of the Corporation in effect on the date hereof and as amended from time to time in accordance with the terms therein and herein.

“ Capital Stock ” shall mean any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (in each case, however designated) stock issued by the Corporation.

“ Certificate of Designation ” shall mean this Certificate of Designation relating to the Series A-1 Preferred, as it may be amended from time to time in accordance with the terms hereof.

“ Certificate of Incorporation ” shall have the meaning set forth in the preamble hereto.

“ Change of Control ” shall mean, other than with respect to the transactions contemplated by the Flexpoint SPA (including thereafter, any transfers of Capital Stock between or among Flexpoint or any of its Affiliates), (a) any sale or other disposition of all or substantially all of the assets of the Corporation and its Subsidiaries on a consolidated basis in any transaction or series of related transactions, (b) any sale, transfer or issuance or series of related sales, transfers and/or issuances of shares of the Capital Stock by the Corporation or any holder thereof, which results in any single Person or group (as defined in Rule 13d-5 of the Exchange Act) becoming the beneficial owners of Capital Stock of the Corporation representing (x) 50% or more of the voting power of all outstanding voting Capital Stock of the Corporation or (y) the power to elect a majority of the Board (under ordinary circumstances, by contract or otherwise), or (c) any merger or consolidation to which the Corporation is a party; provided that the foregoing clause (c) shall not apply to any merger in which (i) the Corporation is the surviving entity, (ii) the terms of the Series A-1 Preferred are not changed and the Series A-1 Preferred is not exchanged for any cash, securities or other property and (iii) the holders of the Corporation’s outstanding capital stock possessing the voting power (under ordinary circumstances) to elect a majority of the Corporation’s Board immediately prior to the merger continue to own the Corporation’s outstanding capital stock possessing the voting power (under ordinary circumstances) to elect a majority of the Corporation’s Board immediately after the merger.

“ Common Stock ” means, collectively, the Corporation’s common stock, par value $0.001 per share, and any capital stock of any class of the Corporation hereafter authorized which is not limited to a fixed sum or percentage of par or stated value in respect to the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Corporation.

“ Common Stock Deemed Outstanding ” shall mean, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to Section 9(c)(1) and Section 9(c)(2) hereof, whether or not the Options or Convertible Securities are actually exercisable at such time.

“ Conversion Price ” shall mean $3.00, but as it may be adjusted from time to time in accordance with Section 9 and/or Section 10.2(d) of the Securities Purchase Agreement. For the avoidance of doubt, with respect to Series A-1 Preferred Shares issued after the initial issuance of Series A-1 Preferred Shares, the initial conversion price for such later issued shares will be the Conversion Price as the same may have adjusted in accordance Section 10.2(d) of the Securities Purchase Agreement or with Section 9 for any issuances or deemed issuances from and after the date hereof to the date of issuance of such later issued shares.

“ Conversion Stock ” means shares of Common Stock; provided that if there is a change such that the securities issuable upon conversion of the Series A-1 Preferred are issued by an entity other than the Corporation or there is a change in the type or class of securities so issuable (including, without limitation, the Series A-2 Preferred), then the term “Conversion Stock” shall mean one share of the security issuable upon conversion of the Series A-1 Preferred if such security is issuable in shares, or shall mean the smallest unit in which such security is issuable if such security is not issuable in shares.

“ Convertible Securities ” shall mean any stock or debt or equity securities (other than Options) directly or indirectly convertible into or exchangeable for Common Stock.

“ Corporation ” shall have the meaning set forth in the preamble hereto.

“ Deemed Liquidation ” shall have the meaning ascribed to it in Section 5(b) .

“ Eligible Shares ” shall have the meaning set forth in Section 6(a) .

“ Event of Noncompliance ” shall mean have the meaning set forth in Section 12 .

“ Exchange Act ” shall mean shall mean the Securities Exchange Act of 1934, as amended.

“ Exchange Property ” shall have the meaning set forth in Section 9(e)(1) .

“ Excluded Issuance ” shall mean, any issuances of (1) Common Stock to any employee, officer or director of the Corporation pursuant to any Qualified Incentive Plan, (2) Common Stock of the Corporation as consideration for the acquisition of assets or securities of another unaffiliated business or Person approved by the Board by means of merger, purchase of securities, purchase of all or substantially all of the assets of such business or Person or reorganization resulting in the ownership by the Corporation directly or indirectly of not less than a majority of the voting power of such business or Person, (3) Series A Preferred issued pursuant to the Flexpoint SPA and Series A-1 Preferred issued pursuant to the Securities Purchase Agreement, (4) securities pursuant to a broadly-marketed underwritten public offering, to be offered and sold to the public at an issue price of not less than 90% of the closing price of the Common Stock immediately prior to the pricing of such offering, (5) Common Stock by the Corporation pursuant to options, warrants, notes or other rights to acquire Common Stock of the Corporation outstanding on the date hereof or issued pursuant to an Excluded Issuance under clauses (1) through (3) above, and (6) Conversion Stock issued by the Corporation upon conversion of the Series A-1 Preferred.

“ Existing Secured Convertible Notes ” means the Corporation’s secured convertible promissory notes issued pursuant to that certain Secured Convertible Note Agreement, dated as of December 28, 2012, by and among the Corporation and the purchasers of such notes.

“ Flexpoint ” shall mean Flexpoint Fund II, L.P.

“ Flexpoint SPA ” shall mean that certain Securities Purchase Agreement, dated as of August 22, 2013, by and among the Corporation and Flexpoint (including thereafter, any transfers of Capital Stock between or among Flexpoint or any of its Affiliates), as amended from time to time in accordance with its terms.

“ GAAP ” shall mean United States generally accepted accounting principles, consistently applied.

“ Incentive Plans ” means stock option, stock purchase plans or other equity incentive plans approved by the Board.

“ Junior Securities ” shall mean any class or series of Capital Stock other than the Series A-1 Preferred or the Series A Preferred.

“ Liquidation Preference ” shall have the meaning ascribed to it in Section 5(a) .

“ Liquidation Value ” shall mean, with respect to each share of Series A Preferred or Series A-1 Preferred, as applicable, $600.00 (subject to a proportionate adjustment for any stock split, stock dividend, combination, recapitalization or other proportionate reduction or increase in the Corporation’s Capital Stock).

“ Options ” shall mean any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

“ Organic Change ” shall have the meaning ascribed to it in Section 9(e) .

“ Original Issue Price ” means $300.00 per Series A-1 Preferred Share.

“ Person ” or “ person ” shall mean an individual, corporation, limited liability company, association, partnership, group (as such term is used in Section 13(d)(3) of the Exchange Act), trust, joint venture, business trust or unincorporated organization, or a government or any agency or political subdivision thereof.

“ Preferred Series Majority Holders ” shall mean, as of any time of determination, the holders of a majority of the Series A Preferred Shares and Series A-1 Preferred Shares outstanding as of such time of determination, treating for this purpose only as though all such shares are a single class.

“ Preferred Shares ” shall mean the Series A Preferred Shares and the Series A-1 Preferred Shares.

“ Preferred Stock ” shall have the meaning set forth in the recitals hereto.

“ Purchasers ” shall mean the purchasers identified on the signature pages of the Securities Purchase Agreement.

“ Qualified Incentive Plan ” means any Incentive Plan that is (i) in existence as of the SPA Date and has not been modified or amended, except as approved by the Board after the initial issuance of the Series A-1 Preferred or (ii) approved by the Board after the initial issuance of the Series A-1 Preferred.

“ Redemption Date ” shall mean, as to any Series A-1 Preferred Share, the date specified in the notice provided by the holder or the Corporation, as applicable; provided , that no such date shall be a Redemption Date unless the amount payable to such Series A-1 Preferred Share hereunder is actually paid in full on such date, and if not so paid in full, the Redemption Date shall be the date on which such amount is fully paid.

“ Securities and Exchange Commission ” means the United States Securities and Exchange Commission, or any governmental entity succeeding to the functions thereof.

“ Securities Purchase Agreement ” shall mean that certain Securities Purchase Agreement by and between the Corporation and the Purchasers, dated as of May 1, 2014, as amended.

“ Series A Preferred ” means shares of the Corporation’s Series A Convertible Preferred Stock, par value $0.001.

“ Series A Preferred Share ” means a share of Series A Preferred.

“ Series A Preferred Majority Holders ” shall mean, as of any time of determination, the holders of a majority of the Series A Preferred Shares outstanding as of such time of determination.

“ Series A-1 Preferred Majority Holders ” shall mean, as of any time of determination, the holders of a majority of the Series A-1 Preferred Shares outstanding as of such time of determination.

“ Series A-1 Preferred ” shall have the meaning ascribed to it in Section 1 .

“ Series A-1 Preferred Share ” means a share of Series A-1 Preferred.

“ Series A-2 Preferred ” means shares of the Corporation’s Series A-2 Convertible Preferred Stock, par value $0.001.

“ SPA Date ” means May 1, 2014.

“ Subsidiary ” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall control any board of managers, managing member, managing director or general partner or similar governing body of such limited liability company, partnership, association or other business entity.

“ Taxes ” means any federal, state, local or foreign income, gross receipts, branch profits, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, escheat, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, ad valorem, value added, alternative or add-on minimum or estimated tax or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person by law, by contract or otherwise.

“ Underlying Common Stock ” means (i) the Common Stock issued or issuable upon conversion of the Preferred Stock and (ii) any Common Stock or other securities issued or issuable with respect to the securities referred to in clause (i) above by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular shares of Underlying Common Stock, such shares shall cease to be Underlying Common Stock when they have been (a) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (b) distributed to the public through a broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or any similar provision then in force) or (c) repurchased by the Corporation or any Subsidiary.

(b) Rules of Construction . Unless the context otherwise requires: (i) words in the singular include the plural, and in the plural include the singular; (ii) “including” means including without limitation; (iii) references to any Section or clause refer to the corresponding Section or clause, respectively, of this Certificate of Designation; (iv) any reference to a day or number of days, unless expressly referred to as a Business Day, shall mean the respective calendar day or number of calendar days; (v) references to Sections of or Rules under the Exchange Act shall be deemed to include substitute, replacement or successor Sections or Rules, and any term defined by reference to a Section of or Rule under the Exchange Act shall include the Securities and Exchange Commission and judicial interpretations of such Section or Rule; and (vi) headings are for convenience of reference only.

For purposes of this Certificate of Designation, all holdings of Series A-1 Preferred Shares and Underlying Common Stock by Persons who are Affiliates of each other shall be aggregated for purposes of meeting any threshold tests under this Certificate of Designation.

Section 4. Dividends . In addition to any other dividends accruing, accumulating or declared hereunder, in the event that the Corporation declares or pays any dividends upon the Common Stock (whether payable in cash, securities or other property), other than dividends payable solely in shares of Common Stock, the Corporation shall also declare and pay to the holders of the Series A-1 Preferred at the same time that it declares and pays such dividends to the holders of the Common Stock the dividends which would have been declared and paid with respect to the Common Stock issuable upon conversion of the outstanding Series A-1 Preferred Shares had all (i.e., without regard to any restrictions or limitations on conversion contained in this Certificate of Designation) of such outstanding Series A-1 Preferred Shares been converted immediately prior to the record date for such dividend, or if no record date is fixed, the date as of which the record holders of Common Stock entitled to such dividends are to be determined.

Section 5. Liquidation .

(a) Normal Liquidation . Upon any liquidation, dissolution or winding up of the Corporation (whether voluntary or involuntary), each holder of Series A-1 Preferred shall be entitled to be paid, on a pari passu basis with the Series A Preferred and before any distribution or payment is made upon any Junior Securities, an amount in cash equal to the greater of (i) the aggregate Liquidation Value of all Series A-1 Preferred Shares held by such holder and (ii) the amount to which such holder would be entitled to receive upon such liquidation, dissolution or winding up if all (without regard to any restrictions or limitations on conversion contained in this Certificate of Designation) of such holder’s Series A-1 Preferred was converted into Conversion Stock immediately prior to such event (such greater amount, the “ Liquidation Preference ”). Following any liquidation, dissolution or winding up of the Corporation, upon payment of the Liquidation Preference, the holders of Series A-1 Preferred shall not be entitled to any further payment with respect to their Series A-1 Preferred Shares. If, upon any liquidation, dissolution or winding up of the Corporation, the Corporation’s assets to be distributed among the holders of the Series A Preferred and Series A-1 Preferred are insufficient to permit payment to such holders of the aggregate amount which they are entitled to be paid under this Section 5(a) , then the entire assets available to be distributed to the Corporation’s stockholders shall be distributed pro rata among the holders of shares of Series A Preferred and Series A-1 Preferred based upon the aggregate Liquidation Value of the Series A Preferred and Series A-1 Preferred held by each such holder. Not less than 30 days prior to the payment date stated therein (or such lesser period as may be agreed by the Preferred Series Majority Holders (so long as such period is not less than such similar period for the holders of Series A Preferred)), the Corporation shall deliver written notice of any such liquidation, dissolution or winding up (or any event of which would constitute a Deemed Liquidation) to each record holder of Series A-1 Preferred, setting forth in reasonable detail the amount of proceeds to be paid with respect to each Series A-1 Preferred Share and each Junior Security in connection with such liquidation, dissolution or winding up.

(b) Deemed Liquidation . Unless otherwise determined by the Preferred Series Majority Holders (provided that the Series A Preferred is treated in an identical manner in connection with such Change of Control), the occurrence of a Change of Control shall be deemed to be a liquidation, dissolution and winding up of the Corporation for purposes of this Section 5(b) (a “ Deemed Liquidation ”), and the holders of the Series A-1 Preferred shall be entitled to receive from the Corporation the Liquidation Preference with respect to the Series A-1 Preferred upon such occurrence after which payment the holders of the Series A-1 Preferred Shares shall not be entitled to any further payment with respect to their Series A-1 Preferred Shares. The Corporation shall mail written notice of any proposed Change of Control to each record holder of Series A-1 Preferred Shares not less than 30 days nor more than 90 days prior to the date on which such Change of Control is consummated.

Section 6. Redemption .

(a) Redemptions at the Option of the Holder . Any holder of Series A-1 Preferred may, at any time and from time to time, request redemption of all or any portion of the Series A-1 Preferred Shares held by such holder that were originally issued not less than five years prior to such redemption request (“ Eligible Shares ”) by delivering written notice of such request to the Corporation specifying the number of Eligible Shares to be so redeemed and the date of such redemption (which may not be earlier than 30 days after delivery of such redemption notice). Within five days after the receipt of such request, the Corporation shall give written notice to all other holders of Series A-1 Preferred Shares, and such holders may request redemption of all or any portion of their Eligible Shares by delivering written notice to the Corporation within ten days after receipt of the Corporation’s notice. The Corporation shall promptly, but in any event within five days after its receipt of a redemption request by a holder of Series A-1 Preferred Shares notify the holders of the Series A Preferred of such redemption request. The Corporation shall be required to redeem on the date so specified in the initiating holder’s written notice delivered to the Corporation all of the Eligible Shares with respect to which such redemption requests have been made at a price per Series A-1 Preferred Share in cash equal to the Liquidation Value thereof. Notwithstanding the foregoing, the Preferred Series Majority Holders may, on behalf of all holders of Series A-1 Preferred Shares, waive such redemption request upon written notice to the Corporation prior to the consummation of such redemption (but only if the Series A Preferred Majority Holders are also waiving optional redemption with respect to the Series A Preferred).

(b) Mandatory Redemption . In the event any holder of Series A Preferred requests redemption of any shares of Series A Preferred, then within five days after the receipt of such request, the Corporation shall give written notice to all holders of Series A-1 Preferred of such redemption (which notice shall include the percentage of Series A-1 Preferred Shares to be redeemed and the date of redemption, which date shall not be earlier than 25 days after delivery of such notice and shall be the same date as the redemption of the Series A Preferred), and the Corporation shall automatically redeem from each holder that number of shares of Series A-1 Preferred equal to the product of (x) the number of Series A-1 Preferred held by such holder and (y) a fraction, the numerator of which is the number of shares of Series A Preferred requested to be redeemed and the denominator of which is the aggregate number of shares of Series A Preferred then outstanding, except to the extent, subject to Section 8(g), such holder of Series A-1 Preferred Shares has, after receipt of such notice, converted shares of Series A-1 Preferred (up to that number as calculated above) in accordance with the terms and provisions of Section 8(a) prior to redemption. Unless the redemption of the Series A Preferred has been waived by the Series A Preferred Majority Holders in accordance with Section 6(a) of the Certificate of Designation for the Series A Preferred, the Corporation shall be required to redeem the number of shares of Series A-1 Preferred as calculated above (less any shares of Series A-1 Preferred converted pursuant to this Section 8(b)) on the date so specified in the Corporation’s written notice delivered to the holders of the Series A-1 Preferred at a price per Series A-1 Preferred Share in cash equal to the Liquidation Value thereof. If, following the Corporation’s notice to the holders of Series A-1 Preferred of mandatory redemption under this Section 8(b), the redemption of the Series A Preferred is waived by the Series A Preferred Majority Holders in accordance with Section 6(a) of the Certificate of Designation for the Series A Preferred, then any conversions of shares of Series A-1 Preferred that occurred in connection with such proposed redemption in accordance with this Section 8(b) shall be void ab initio, unless otherwise elected by the holders thereof.

(c) Redemption Payments . For each Series A-1 Preferred Share to be redeemed hereunder, the Corporation shall be obligated on the date specified in the notice of redemption delivered by the holder(s) of Series A-1 Preferred Shares pursuant to Section 6(a) or the Corporation pursuant to Section 6(b) to pay to the holder thereof (upon surrender by such holder at the Corporation’s principal office of the certificate representing such Series A-1 Preferred Share) in immediately available funds the amount required pursuant to Sections 6(a) or 6(b) , as applicable. If the funds of the Corporation legally available for redemption of Series A-1 Preferred Shares pursuant to Sections 6(a) or 6(b) , and if applicable, any Series A Preferred Shares, on any Redemption Date are insufficient to redeem the total number of Series A-1 Preferred Shares and Series A Preferred Shares to be redeemed on such date, then without limiting any rights or remedies herein or otherwise, those funds which are legally available shall be used to redeem the maximum possible number of Series A-1 Preferred Shares and Series A Preferred Shares, pro rata, among the holders of the Series A-1 Preferred Shares and Series A Preferred Shares, as applicable, to be redeemed pursuant to Sections 6(a) or 6(b) , as applicable (or, with respect to the Series A Preferred, Section 6(a) of the Certificate of Designation for the Series A Preferred), based upon the aggregate Liquidation Value of such Series A-1 Preferred Shares and Series A Preferred Shares held by each such holder. At any time thereafter when additional funds of the Corporation are legally available for the redemption of Series A-1 Preferred Shares pursuant to Sections 6(a) or 6(b) and Series A Preferred Shares, as applicable, such funds shall immediately be used to redeem the balance of the Series A-1 Preferred Shares and Series A Preferred Shares which the Corporation has become obligated to redeem on any Redemption Date but which it has not redeemed. For the avoidance of doubt, references to “legally available” funds herein shall mean the amount of assets of the Corporation that may be used for a redemption of shares under Section 160 of the DGCL. For the avoidance of doubt, the Corporation shall be in breach of its obligations under this Certificate of Designation if it fails to pay in cash all amounts required to be paid by the Corporation pursuant to Sections 6(a) or 6(b) , as applicable, on the redemption date specified in any redemption notice delivered in accordance with Sections 6(a) or 6(b) , as applicable.

(d) Reissuances of Certificates . In case fewer than the total number of Series A-1 Preferred Shares represented by any certificate are redeemed, the Corporation shall cause its transfer agent to issue a new certificate representing the number of unredeemed Series A-1 Preferred Shares to the holder thereof without cost to such holder within five Business Days after surrender of the certificate representing the redeemed Series A-1 Preferred Shares.

(e) Redeemed or Otherwise Acquired Series A-1 Preferred Shares . Any Series A-1 Preferred Shares which are redeemed or otherwise acquired by the Corporation shall be canceled and retired to authorized but unissued shares and shall not be reissued, sold or transferred.

Section 7. [RESERVED]

Section 8. Conversion .

(a) Conversion at the Option of the Holder . Subject to the provisions of Section 8(g) , each Series A-1 Preferred Share may be converted, at any time and from time to time, at the option of the holder thereof into the number of fully paid and nonassessable shares of Conversion Stock equal to the quotient determined by dividing (i) the Original Issue Price, by (ii) the Conversion Price then in effect.

(b) Mandatory Conversion into Conversion Stock . In addition to the conversion rights set forth in Section 8(a) , subject to the provisions of Section 8(g) , upon the Corporation’s receipt of a written election of any holder of Series A Preferred (or, if so specified in such written election, upon the occurrence of such later event or date), (A) the Corporation shall provide written notice to the holders of shares of Series A-1 Preferred of such conversion, the percentage of Series A-1 Preferred subject to automatic conversion and the conversion date and (B) the number of shares of Series A-1 Preferred of each holder of Series A-1 Preferred equal to the product of (i) the number of Series A-1 Preferred held by such holder and (ii) a fraction, the numerator of which is the number of shares of Series A Preferred requested to be converted and the denominator of which is the aggregate number of shares of Series A Preferred then outstanding, shall be converted automatically, without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation, into shares of Conversion Stock on the date of the conversion of the shares of Series A Preferred Stock causing such automatic conversion, and the holders of Series A-1 Preferred shall surrender stock certificates representing such automatically converted Series A-1 Preferred in exchange for certificates representing the number of shares of Conversion Stock then issuable upon conversion of such Series A-1 Preferred in accordance with this Section 8 .

(c) Conversion Procedure . In the case of a conversion pursuant to Section 8(a) hereof, the conversion date shall be the date on which the certificate(s) representing such Series A-1 Preferred Shares and a duly signed and completed notice of conversion of such Series A-1 Preferred Share is received by the Corporation. In the case of a conversion pursuant to Section 8(b) hereof, the conversion date shall be the date of automatic conversion as described in Section 8(b). As soon as possible (but in any event within five Business Days) after a conversion of Series A-1 Preferred Shares has been effected, the Corporation shall cause its transfer agent to deliver to the converting holder, a certificate or certificates representing the number of shares of Conversion Stock issuable by reason of such conversion in such names or names and such denominations as the converting holder has specified. In case fewer than the total number of Series A-1 Preferred Shares represented by any certificate are converted, a new certificate representing the number of Series A-1 Preferred Shares not converted shall be issued to the holder thereof without cost to such holder within five Business Days after surrender of the certificate representing the redeemed Series A-1 Preferred Shares. From and after the date of conversion, the shares of Series A-1 Preferred Stock converted on such date will no longer be deemed to be outstanding, and all rights of the holder thereof as a holder of Series A-1 Preferred Stock (except as expressly contemplated hereby and except for the right to receive from the Corporation the Common Stock and any other property receivable upon conversion) shall cease and terminate with respect to such Series A-1 Preferred Shares.

(d) Cooperation . Subject to compliance with the Securities Act, the Corporation shall not close its books against the transfer of Series A-1 Preferred Shares or of Conversion Stock issued or issuable upon conversion of Series A-1 Preferred Shares in any manner which interferes with the timely conversion of the Series A-1 Preferred Shares. Without limiting anything in the Securities Purchase Agreement, the Corporation shall assist and cooperate with any holder of Series A-1 Preferred Shares required to make any governmental filings or obtain any governmental approval prior to or in connection with any conversion of Series A-1 Preferred Shares hereunder (including, without limitation, making any governmental filings required to be made by the Corporation).

(e) Conversion Stock Reserved for Issuance . The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Conversion Stock, solely for the purpose of issuance upon the conversion of the Series A-1 Preferred Shares, the number of shares of Conversion Stock that would be issuable upon the conversion of all outstanding Series A-1 Preferred Shares and all Series A-1 Preferred that could potentially be issued in the future pursuant to Section 2 of the Securities Purchase Agreement, without regard to any restrictions or limitations on conversion contained in this Certificate of Designation. All shares of Conversion Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens, charges and encumbrances. The Corporation shall take all such actions as may be necessary to ensure that all such shares of Conversion Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange or market upon which shares of Conversion Stock may be listed (except for official notice of issuance and change in the number of shares of Common Stock outstanding, each of which shall be immediately delivered by the Corporation upon each such issuance). The Corporation shall not take any action which would cause the number of authorized but unissued shares of Conversion Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the Series A-1 Preferred Shares in accordance with this Section 8 .

(f) Taxes . The Corporation shall pay any and all issuance or transfer Taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of the Series A-1 Preferred Shares.

(g) Conversion Limitation . Notwithstanding anything to the contrary contained in this Certificate of Designation, the shares of Series A-1 Preferred held by a holder thereof shall not be convertible by such holder to the extent (but only to the extent) that such holder and/or any of its Affiliates would beneficially own in excess of 9.9% (the “ Maximum Percentage ”) of the Common Stock. To the extent the above limitation applies, the determination of whether the shares of Series A-1 Preferred held by such holder shall be convertible (vis-à-vis other convertible, exercisable or exchangeable securities owned by such holder or any of its Affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as among all such securities owned by such holder and its Affiliates) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Corporation for conversion, exercise or exchange (as the case may be). No prior inability of a holder of Series A-1 Preferred to convert shares of Series A-1 Preferred pursuant to this Section 8(g) shall have any effect on the applicability of the provisions of this Section 8(g) with respect to any subsequent determination of convertibility. For purposes of this Section 8(g), beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. The provisions of this Section 8(g) shall be implemented in a manner otherwise than in strict conformity with the terms of this Section 8(g) to correct this Section 8(g) (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this Section 8(g) shall apply to a successor holder of shares of Series A-1 Preferred. The holders of Common Stock (including the holders of Series A Preferred as deemed holders thereof) shall be third party beneficiaries of this Section 8(g) and the Corporation may not amend or waive this Section 8(g) without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or oral request of a holder of Series A-1 Preferred, the Corporation shall within one (1) Business Day confirm orally and in writing to such holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock.

(h) Mandatory Conversion into Series A-2 Preferred .

(1) At such time that there are no longer any shares of Series A Preferred outstanding, to the extent there are any shares of Series A-1 Preferred outstanding because they cannot be converted into Conversion Stock due to the provisions of Section 8(g) or otherwise, each share of Series A-1 Preferred shall be converted automatically, without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation, into one share of Series A-2 Preferred (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization) on the date there are no longer any shares of Series A Preferred outstanding, and the holders of Series A-1 Preferred shall surrender stock certificates representing such automatically converted Series A-1 Preferred in exchange for certificates representing the number of shares of Series A-2 Preferred then issuable upon conversion of such Series A-1 Preferred in accordance with this Section 8 (h).

(2) In the case of a conversion pursuant to Section 8(h)(1) hereof, the conversion date shall be the date of automatic conversion as described in Section 8(h)(1). As soon as possible (but in any event within five Business Days) after a conversion of Series A-1 Preferred Shares has been effected, the Corporation shall cause its transfer agent to deliver to the converting holder, a certificate or certificates representing the number of shares of Series A-1 Preferred issuable by reason of such conversion in such names or names and such denominations as the converting holder has specified. From and after the date of such conversion, the shares of Series A-1 Preferred will no longer be deemed to be outstanding, and all rights of the holder thereof as a holder of Series A-1 Preferred (except as expressly contemplated hereby and except for the right to receive from the Corporation the Series A-2 Preferred) shall cease and terminate with respect to such Series A-1 Preferred Shares.

(3) The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Series A-2 Preferred, solely for the purpose of issuance upon the conversion of the Series A-1 Preferred Shares, the number of shares of Series A-2 Preferred that would be issuable upon the conversion of all outstanding Series A-1 Preferred Shares and all Series A-1 Preferred that could potentially be issued in the future pursuant to Section 2 of the Securities Purchase Agreement. All shares of Series A-2 Preferred which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens, charges and encumbrances. The Corporation shall take all such actions as may be necessary to ensure that all such shares of Series A-2 Preferred may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange or market upon which shares of Common Stock may be listed. The Corporation shall not take any action which would cause the number of authorized but unissued shares of Series A-2 Preferred to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the Series A-1 Preferred Shares in accordance with this Section 8(h) .

Section 9. Adjustments .

(a) General . The Conversion Price shall be adjusted from time to time pursuant to this Section 9 and Section 10.2(d) of the Securities Purchase Agreement.

(b) Anti-Dilution . Other than with respect to Excluded Issuances, if and whenever the Corporation issues or sells, or in accordance with Section 9(c) is deemed to have issued or sold, any shares of Common Stock for a consideration per share less than the Conversion Price in effect immediately prior to the time of such issue or sale, then immediately upon such issue or sale or deemed issue or sale the Conversion Price shall be reduced to the Conversion Price determined by dividing (x) the sum of (1) the product derived by multiplying the Conversion Price in effect immediately prior to such issue or sale by the number of shares of Common Stock Deemed Outstanding immediately prior to such issue or sale, plus (2) the consideration, if any, received by the Corporation upon such issue or sale, by (y) the number of shares of Common Stock Deemed Outstanding immediately after such issue or sale. Notwithstanding the foregoing, there shall be no adjustment in the Conversion Price as a result of any issue or sale (or deemed issue or sale) of shares of Common Stock issued upon the exercise or conversion of Convertible Securities outstanding as of the SPA Date. Notwithstanding the foregoing, so long as any of the Existing Secured Convertible Notes are outstanding, if at any time the Corporation shall have issued shares of Common Stock or securities issuable or convertible into shares of Common Stock at a price below $3.00 per share (which for the avoidance of doubt shall be measured by taking into account any transfers of Common Stock from existing holders of Common Stock to the recipient of such issuances at a price below $3.00 per share), as adjusted for any stock split, stock dividend, combination, recapitalization or other proportionate reduction or increase in the Corporation’s Capital Stock, the Conversion Price shall be automatically adjusted to such lower price and shall be the basis for any further adjustments as set forth herein. For the avoidance of doubt, any such downward adjustment in the Conversion Price shall not be thereafter readjusted upward, notwithstanding that following such downward adjustment the Existing Secured Convertible Notes may thereafter no longer be outstanding or otherwise.

(c) Effect on Conversion Price of Certain Events . For purposes of determining the adjusted Conversion Price under Section 9(b) , the following shall be applicable:

(1) Issuance of Rights or Options . If the Corporation in any manner grants or sells any Options and the price per share for which Common Stock is issuable upon the exercise of such Options, or upon conversion or exchange of any Convertible Securities issuable upon exercise of such Options, is less than the Conversion Price in effect immediately prior to the time of the granting or sale of such Options, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the granting or sale of such Options for such price per share. For purposes of this Section 9(c)(1) , the “price per share for which Common Stock is issuable” shall be determined by dividing (i) the total amount, if any, received or receivable by the Corporation as consideration for the granting or sale of such Options, plus the aggregate amount of additional consideration payable to the Corporation upon exercise of all such Options assuming exercise as of the date of issuance of such Options, plus in the case of such Options which relate to Convertible Securities, the aggregate amount of additional consideration, if any, payable to the Corporation upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof assuming exercise as of the date of issuance of such Convertible Securities, by (ii) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No further adjustment of the Conversion Price shall be made when Convertible Securities are actually issued upon the exercise of such Options or when Common Stock is actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

(2) Issuance of Convertible Securities . If the Corporation in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon conversion or exchange thereof is less than the Conversion Price in effect immediately prior to the time of such issue or sale, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 9(c)(2) , the “price per share for which Common Stock is issuable” shall be determined by dividing (i) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (ii) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment of the Conversion Price shall be made when Common Stock is actually issued upon the conversion or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Conversion Price had been or are to be made pursuant to other provisions of this Section 9 , no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

(3) Change in Option Price or Conversion Rate . If the purchase price provided for in any Options, the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities or the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be immediately adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold.

(4) Treatment of Expired Options and Unexercised Convertible Securities . Upon the expiration of any Option or the termination of any right to convert or exchange any Convertible Security without the exercise of any such Option or right, the Conversion Price then in effect hereunder shall be adjusted immediately to the Conversion Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Security, to the extent outstanding immediately prior to such expiration or termination, never been issued.

(5) Calculation of Consideration Received . If any Common Stock, Option or Convertible Security is issued or sold or deemed to have been issued or sold for cash, the consideration received therefor shall be deemed to be the amount received by the Corporation therefor. If any Common Stock, Option or Convertible Security is issued or sold for consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be the fair value of such consideration. If any Common Stock, Option or Convertible Security is issued to the owners of the non-surviving entity in connection with any merger in which the Corporation is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair value of the portion of the net assets of the non-surviving entity that is attributable to such Common Stock, Option or Convertible Security, as the case may be. The fair value of any consideration or net assets other than cash and securities (and, if applicable, the portions thereof attributable to any such stock or securities) shall be determined jointly by the Corporation and the Preferred Series Majority Holders (provided the Series A Preferred is treated in an identical manner with respect to such consideration or net assets). If such parties are unable to reach agreement within a reasonable period of time, the fair value of such consideration shall be determined by an independent appraiser experienced in valuing such type of consideration jointly selected by the Corporation and the Preferred Series Majority Holders. The determination of such appraiser shall be final and binding upon the parties. The fees, costs and expenses of such appraiser shall be borne by the Corporation and Preferred Series Majority Holders, on behalf of all holders of the Series A Preferred and the Series A-1 Preferred, based on the inverse of the percentage that the appraiser’s determination (before such allocation) bears to the total amount of the total items in dispute as originally submitted to the appraiser. For example, should the items in dispute total in amount to $1,000 and the appraiser awards $600 in favor of the Corporation’s position, 60% of the costs of its review would be borne by Preferred Series Majority Holders and 40% of the costs would be borne by the Corporation.

(6) Integrated Transactions . In case any Option is issued in connection with the issue or sale of other securities of the Corporation, together comprising one integrated transaction in which no specific consideration is allocated to such Option by the parties thereto, the Option shall be deemed to have been issued for a consideration of $0.01.

(7) Treasury Shares . The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Corporation or any Subsidiary, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock.

(8) Record Date . If the Corporation takes a record of the holders of Common Stock for the purpose of entitling them (a) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (b) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or upon the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(d) Subdivision or Combination of Common Stock . If the Corporation at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision shall be proportionately reduced, and if the Corporation at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall be proportionately increased.

(e) Reorganizations, Mergers, Consolidation, Merger or Sale .

(1) Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Corporation’s assets or other transaction, in each case which is effected in such a manner that the holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, is referred to herein as an “ Organic Change ”. Prior to the consummation of any Organic Change each share of Series A-1 Preferred Stock outstanding immediately prior to such Organic Change shall remain outstanding and upon the consummation of such Organic Change: (A) if the Organic Change results in a Change of Control and is a Deemed Liquidation, the provisions of Section 5 shall apply and each such share shall thereafter (subject to prior redemption, including pursuant to Section 6(a) , or conversion) remain outstanding until the Liquidation Preference thereon has been paid in full; (B) if the Organic Change results in a Change of Control but the Preferred Series Majority Holders have determined that such Change of Control will not constitute a Deemed Liquidation (provided the Series A Preferred is treated in an identical manner with respect to such Change of Control), such share shall thereafter (subject to prior redemption, including pursuant to Section 6(a) , or conversion), without the consent of the holder thereof, become convertible into the cash, securities and other property that the holder would have received in such Organic Change had such holder owned a number of shares of Conversion Stock immediately theretofore acquirable and receivable upon the conversion of such holder’s Series A-1 Preferred Shares (without regard to any restrictions or limitations on conversion contained in this Certificate of Designation) as of the record date fixed for determination of stockholders entitled to receive such cash, securities or other property (such cash, securities and other property having a value equal to its fair market value is referred to herein as the “ Exchange Property ”) and all other rights pursuant to this Certificate of Designation with respect to the shares of Series A-1 Preferred Stock shall immediately terminate; and (C) if the Organic Change does not result in a Change of Control, the surviving corporation shall exchange in such transaction for each share of Series A-1 Preferred Stock outstanding immediately prior to such Organic Change, preferred shares of the surviving corporation with substantially the same terms and conditions as the Series A-1 Preferred Stock, which terms are no less beneficial to the holders thereof, except that such preferred shares shall, upon conversion, be converted into, in lieu of the Conversion Stock, the Exchange Property.

(2) In the event that holders of the shares of the Common Stock have the opportunity to elect the form of consideration to be received in the Organic Change, the “Exchange Property” that holders of the Series A-1 Preferred Stock shall be entitled to receive shall be determined by the Series A-1 Preferred Majority Holders, who shall make such determination from among the choices made available to the holders of the Common Stock.

(3) The above provisions of this Section 9(e) shall similarly apply to successive Organic Changes.

(f) Certain Events . If any event occurs of the type contemplated by the provisions of this Section 9 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Board shall make an appropriate adjustment in the Conversion Price so as to protect the rights of the holders of Series A-1 Preferred Shares; provided that no such adjustment shall increase the Conversion Price as otherwise determined pursuant to this Section 9 or decrease the number of shares of Conversion Stock issuable upon conversion of each Series A-1 Preferred Share.

(g) Notices . Immediately upon any adjustment of the Conversion Price, the Corporation shall give written notice thereof to all holders of Series A-1 Preferred Shares, setting forth in reasonable detail and certifying the calculation of such adjustment. The Corporation shall give written notice to all holders of Series A-1 Preferred Shares at least 20 days prior to the date on which the Corporation closes its books or takes a record (i) with respect to any dividend or distribution upon Common Stock, (ii) with respect to any pro rata subscription offer to holders of Common Stock or (iii) for determining rights to vote with respect to any Organic Change, dissolution or liquidation. The Corporation shall also give written notice to the holders of Series A-1 Preferred Shares at least 20 days prior to the date on which any Organic Change shall take place.

Section 10. Voting Rights . Without limiting any rights provided to the holders of shares of Series A-1 Preferred under the DGCL or the Securities Purchase Agreement, the holders of shares of Series A-1 Preferred shall be entitled to vote as a single class with the holders of the Common Stock on all matters submitted to a vote (or action by written consent, if available) of stockholders of the Corporation. Each holder of shares of the Series A-1 Preferred shall be entitled to the number of votes equal to the largest number of full shares of Common Stock into which all shares of Preferred Stock held of record by such holder could then be converted (taking into account, for the avoidance of doubt, any Conversion Price adjustments made pursuant to Sections 9 (d) and 9(e) , but without regard to any restrictions or limitations on conversion contained in this Certificate of Designation) at the record date for the determination of the stockholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is first executed; provided, however, that solely for purposes of calculating the number of votes that each holder of shares of Series A-1 Preferred is entitled to pursuant to this Section 10 , the Conversion Price shall be assumed to equal $3.00, prior to any adjustment to the Conversion Price pursuant to Sections 9 (d) and 9(e) . The holders of Series A-1 Preferred Shares shall be entitled to notice of any meeting of stockholders, which such notice shall be made in accordance with the Bylaws of the Corporation. Notwithstanding anything to the contrary in Article VII of the Certificate of Incorporation, any action required or permitted to be taken at an annual or special meeting of the holders of Series A-1 Preferred Shares may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of Series A-1 Preferred Shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

In accordance with the provisions of § 242(b)(2) of the DGCL, the number of authorized shares of any class or classes of stock may be increased or decreased by the affirmative vote of the holders of a majority of the issued and outstanding shares of stock of the Corporation entitled to vote thereon irrespective of the class vote requirements set forth in § 242(b)(2) of the DGCL (but, in the case of any decrease, not below the number of outstanding shares of any such class or classes); provided, however, that for purposes of voting, the Series A Preferred and Series A-1 Preferred shall be considered a single class.

Section 11. Consent Rights . In addition to any rights that the holders of Series A-1 Preferred Shares may have pursuant to the DGCL or as provided in the Securities Purchase Agreement, the Corporation will not, without first obtaining the written consent or affirmative vote of the Preferred Series Majority Holders, voting separately as a class, take any of the following actions: (i) amend, modify, supplement or repeal any provision of the Certificate of Incorporation, this Certificate of Designation, or the Bylaws in a manner that would have a material adverse effect on any right, preference, privilege or voting power of the Preferred Shares or the holders thereof (it being understood that, for the avoidance of doubt, any amendment, modification or supplement to the Certificate of Incorporation (including as a result of any new certificate of designation) to create, authorize, designate or issue any equity securities of the Corporation senior to or pari passu with the Preferred Shares would have a material adverse effect on the rights, preferences, privileges and/or voting power of the Preferred Shares or the holders thereof) or (ii) agree to take any of the foregoing actions; provided, however, that if any such amendment, modification, supplement or repeal would affect the Series A-1 Preferred Shares in a manner different from the Series A Preferred Shares, then such amendment, modification, supplement or repeal, as applicable, shall require the written consent or affirmative vote of the Series A-1 Preferred Majority Holders, voting separately as a class.

Section 12. Events of Noncompliance .

(a) Definition . An Event of Noncompliance shall have occurred if:

(1) the Corporation fails to make any redemption payment with respect to the Series A-1 Preferred which it is required to make hereunder, whether or not such payment is legally permissible or is prohibited by any agreement to which the Corporation is subject;

(2) the Corporation breaches or otherwise fails to perform or observe any other covenant or agreement set forth herein or in the Securities Purchase Agreement required to be performed or observed by the Corporation after the initial closing of the transactions contemplated by the Securities Purchase Agreement;

(3) the Corporation or any Subsidiary makes an assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due; or an order, judgment or decree is entered adjudicating the Corporation or any Subsidiary bankrupt or insolvent; or any order for relief with respect to the Corporation or any Subsidiary is entered under the Federal Bankruptcy Code; or the Corporation or any Subsidiary petitions or applies to any tribunal for the appointment of a custodian, trustee, receiver or liquidator of the Corporation or any Subsidiary or of any substantial part of the assets of the Corporation or any Subsidiary, or commences any proceeding (other than a proceeding for the voluntary liquidation and dissolution of a Subsidiary) relating to the Corporation or any Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction; or any such petition or application is filed, or any such proceeding is commenced, against the Corporation or any Subsidiary and either (a) the Corporation or any such Subsidiary by any act indicates its approval thereof, consent thereto or acquiescence therein or (b) such petition, application or proceeding is not dismissed within 60 days.

(4) a judgment in excess of $5,000,000 is rendered against the Corporation or any Subsidiary and, within 60 days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within 60 days after the expiration of any such stay, such judgment is not discharged;

(5) an event of default has occurred under any of the Existing Secured Convertible Notes; or

(6) an event of default has occurred under the ADC Loan Agreement.

The foregoing shall constitute Events of Noncompliance whatever the reason or cause for any such Event of Noncompliance and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body and regardless of the effects of any subordination provisions; provided, that with respect to the occurrence of any event listed in clauses (2), (5) and (6) above, the Corporation shall first be entitled to a 30-day period in which to cure such event before the occurrence of such event is considered an Event of Noncompliance. Notwithstanding anything herein to the contrary, the Preferred Series Majority Holders may waive on behalf of all holders of Series A Preferred and Series A-1 Preferred any Event of Noncompliance (provided that any such waiver applies to both the Series A Preferred and the Series A-1 Preferred).

(b) If an Event of Noncompliance has occurred (and has not been waived by the Preferred Series Majority Holders), the Series A-1 Preferred Majority Holders may demand (by written notice delivered to the Corporation) immediate redemption of all or any portion of the Series A-1 Preferred owned by such holder or holders at a price per share equal to the Liquidation Value. The Corporation shall give prompt written notice of such election to the other holders of Series A-1 Preferred (but in any event within five days after receipt of the initial demand for redemption), and each such other holder may demand immediate redemption of all or any portion of such holder’s Series A-1 Preferred Shares by giving written notice thereof to the Corporation within seven days after receipt of the Corporation’s notice. The Corporation shall redeem all Series A-1 Preferred Shares as to which rights under this Section 12(b) have been exercised within 15 days after receipt of the initial demand for redemption. Such special right shall continue until such time as there is no longer any Event of Noncompliance in existence, at which time such special right, if not theretofore exercised by the Series A-1 Preferred Majority Holders, shall terminate, subject to revesting upon the occurrence and continuation of any Event of Noncompliance which gives rise to such special right hereunder. For the avoidance of doubt, if the Series A-1 Preferred Majority Holders have made a redemption demand, the fact that an Event of Noncompliance has subsequently ceased to exist shall not relieve the Corporation of its obligations, nor deprive the holders of Series A-1 Preferred Shares of their rights, under this Section 12(b) .

Section 13. Other Rights . If any Event of Noncompliance exists, each holder of Series A-1 Preferred Shares shall also have any other rights which such holder is entitled to under any contract or agreement at any time and any other rights which such holder may have pursuant to applicable law.

Section 14. Corporate Opportunities . To the fullest extent permitted by Section 122 of the DGCL, the Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, business opportunities that are presented to its officers, directors or stockholders, other than those officers, directors or stockholders who are employees of the Corporation or any of its Subsidiaries. No amendment or repeal of this Section 14 shall apply to or have any effect on the liability or alleged liability of any officer, director or stockholder of the Corporation for or with respect to any opportunities of which such officer, director or stockholder becomes aware prior to such amendment or repeal.

Section 15. Registration of Transfer . The Corporation shall keep at its principal office a register for the registration of Series A-1 Preferred Shares. Upon the surrender of any certificate representing Series A-1 Preferred Shares at such place, the Corporation shall, at the request of the record holder of such certificate, execute and cause its transfer agent to deliver (at the Corporation’s expense) a new certificate or certificates in exchange therefor representing in the aggregate the number of Series A-1 Preferred Shares represented by the surrendered certificate. Each such new certificate shall be registered in such name and shall represent such number of Series A-1 Preferred Shares as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate, and dividends shall accrue on the Series A-1 Preferred Shares represented by such new certificate from the date to which dividends have been fully paid on such Series A-1 Preferred Shares represented by the surrendered certificate.

Section 16. Replacement . Upon receipt of evidence reasonably satisfactory to the Corporation (it being understood that an affidavit of the registered holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing Series A-1 Preferred Shares, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Corporation shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of Series A-1 Preferred Shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate, and dividends shall accrue on the Series A-1 Preferred Shares represented by such new certificate from the date to which dividends have been fully paid on such lost, stolen, destroyed or mutilated certificate.

Section 17. Written Consents . The Preferred Series Majority Holders, the Series A-1 Preferred Majority Holders, the holders of Series A Preferred and the holders of Series A-1 Preferred may act by written consent in any instance provided herein where a vote of such holders or group of holders is contemplated.

Section 18. Notices . Except as otherwise expressly provided hereunder, all notices referred to herein shall be given in writing and shall be deemed effectively given (a) if given by personal delivery, upon actual delivery, (b) if given by facsimile, telex or telecopier, upon receipt of confirmation of a completed transmittal, (c) if given by mail, upon the earlier of (i) actual receipt of such notice by the intended recipient or (ii) five Business Days after such notice is deposited in first class mail, postage prepaid, and (d) if by an internationally recognized overnight courier for overnight delivery, one Business Day after delivery to such courier for overnight delivery, in each case, (i) to the Corporation, at its principal executive offices and (ii) to any stockholder, at such holder’s address as it appears in the stock records of the Corporation (unless otherwise indicated by any such holder).

IN WITNESS WHEREOF , the Corporation has caused this Certificate of Designation to be duly executed and acknowledged by its undersigned duly authorized officer this 5th day of May, 2014.

JETPAY CORPORATION

By: /s/ Bipin C. Shah ______________________

Name: Bipin C. Shah

Title: Chief Executive Officer

[Signature Page to Series A-1 Preferred Certificate of Designation]

Exhibit 3.2

CERTIFICATE OF DESIGNATION OF

SERIES A-2 CONVERTIBLE PREFERRED STOCK

JETPAY CORPORATION

_______________________

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

_______________________

JETPAY CORPORATION (f/k/a Universal Business Payment Solutions Acquisition Corporation), a corporation organized and existing under the laws of the State of Delaware (the “ Corporation ”), certifies that, pursuant to authority conferred upon the board of directors of the Corporation (the “ Board ”) by the FOURTH Article of the Amended and Restated Certificate of Incorporation of the Corporation, as amended from time to time (the “ Certificate of Incorporation ”), and pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “ DGCL ”), the Board adopted and approved the following resolution at a meeting of the Board duly held on March 31, 2014 providing for the designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions of the Series A-2 Convertible Preferred Stock:

WHEREAS, the Certificate of Incorporation authorizes the issuance of 1,000,000 shares of Preferred Stock; and

NOW, THEREFORE, BE IT RESOLVED, that the Board deems it advisable to, and hereby does, designate a Series A-2 Convertible Preferred Stock and fixes and determines the voting powers, designations, preferences, rights, qualifications, limitations and restrictions relating to the Series A-2 Convertible Preferred Stock as follows:

Section 1. Designation . The designation of the series of Preferred Stock of the Corporation is “Series A-2 Convertible Preferred Stock,” par value $0.001 per share (the “ Series A-2 Preferred ”).

Section 2. Number of Series A-2 Preferred Shares . The authorized number of shares of Series A-2 Preferred is 9,000.

Section 3. Defined Terms and Rules of Construction .

(a) Definitions . As used herein with respect to the Series A-2 Preferred:

“ Board ” shall have the meaning set forth in the preamble hereto.

“ Bylaws ” shall mean the Bylaws of the Corporation in effect on the date hereof and as amended from time to time in accordance with the terms therein and herein.

“ Certificate of Designation ” shall mean this Certificate of Designation relating to the Series A-2 Preferred, as it may be amended from time to time in accordance with the terms hereof.

“ Certificate of Incorporation ” shall have the meaning set forth in the preamble hereto.

“ Change of Control ” shall mean, other than with respect to the transactions contemplated by the Flexpoint SPA (including thereafter, any transfers of Capital Stock between or among Flexpoint or any of its Affiliates), (a) any sale or other disposition of all or substantially all of the assets of the Corporation and its Subsidiaries on a consolidated basis in any transaction or series of related transactions, (b) any sale, transfer or issuance or series of related sales, transfers and/or issuances of shares of the Capital Stock by the Corporation or any holder thereof, which results in any single Person or group (as defined in Rule 13d-5 of the Exchange Act) becoming the beneficial owners of Capital Stock of the Corporation representing (x) 50% or more of the voting power of all outstanding voting Capital Stock of the Corporation or (y) the power to elect a majority of the Board (under ordinary circumstances, by contract or otherwise), or (c) any merger or consolidation to which the Corporation is a party; provided that the foregoing clause (c) shall not apply to any merger in which (i) the Corporation is the surviving entity, (ii) the terms of the Series A-2 Preferred are not changed and the Series A-2 Preferred is not exchanged for any cash, securities or other property and (iii) the holders of the Corporation’s outstanding capital stock possessing the voting power (under ordinary circumstances) to elect a majority of the Corporation’s Board immediately prior to the merger continue to own the Corporation’s outstanding capital stock possessing the voting power (under ordinary circumstances) to elect a majority of the Corporation’s Board immediately after the merger.

“ Conversion Price ” shall mean $3.00, but as it may be adjusted from time to time in accordance with Section 9 .

“ Conversion Stock ” means shares of Common Stock; provided that if there is a change such that the securities issuable upon conversion of the Series A-2 Preferred are issued by an entity other than the Corporation or there is a change in the type or class of securities so issuable, then the term “Conversion Stock” shall mean one share of the security issuable upon conversion of the Series A-2 Preferred if such security is issuable in shares, or shall mean the smallest unit in which such security is issuable if such security is not issuable in shares.

“ Corporation ” shall have the meaning set forth in the preamble hereto.

“ Exchange Act ” shall mean shall mean the Securities Exchange Act of 1934, as amended.

“ Exchange Property ” shall have the meaning set forth in Section 9(c)(1) .

“ Flexpoint ” shall mean Flexpoint Fund II, L.P.

“ GAAP ” shall mean United States generally accepted accounting principles, consistently applied.

“ Liquidation Amount ” shall have the meaning ascribed to it in Section 5 .

“ Liquidation Value ” shall mean, with respect to each share of Series A-2 Preferred, $600.00 (subject to a proportionate adjustment for any stock split, stock dividend, combination, recapitalization or other proportionate reduction or increase in the Corporation’s Capital Stock).

“ Organic Change ” shall have the meaning ascribed to it in Section 9(c) .

“ Original Issue Price ” means $300.00 per Series A-2 Preferred Share.

“ Preferred Stock ” shall have the meaning set forth in the recitals hereto.

“ Securities and Exchange Commission ” means the United States Securities and Exchange Commission, or any governmental entity succeeding to the functions thereof.

“ Series A-2 Preferred Majority Holders ” shall mean, as of any time of determination, the holders of a majority of the Series A-2 Preferred Shares outstanding as of such time of determination.

“ Series A-2 Preferred ” shall have the meaning ascribed to it in Section 1 .

“ Series A-2 Preferred Share ” means a share of Series A-2 Preferred.

For purposes of this Certificate of Designation, all holdings of Series A-2 Preferred Shares and Underlying Common Stock by Persons who are Affiliates of each other shall be aggregated for purposes of meeting any threshold tests under this Certificate of Designation.

Section 4. Dividends . In the event that the Corporation declares or pays any dividends upon the Common Stock (whether payable in cash, securities or other property), other than dividends payable solely in shares of Common Stock, the Corporation shall also declare and pay to the holders of the Series A-2 Preferred at the same time that it declares and pays such dividends to the holders of the Common Stock the dividends which would have been declared and paid with respect to the Common Stock issuable upon conversion of the outstanding Series A-2 Preferred Shares had all (i.e., without regard to any restrictions or limitations on conversion contained in this Certificate of Designation) of such outstanding Series A-2 Preferred Shares been converted immediately prior to the record date for such dividend, or if no record date is fixed, the date as of which the record holders of Common Stock entitled to such dividends are to be determined.

Section 5. Liquidation . Upon any liquidation, dissolution or winding up of the Corporation (whether voluntary or involuntary), each holder of Series A-2 Preferred shall be entitled to be paid, on a pari passu basis with the Common Stock, an amount in cash equal to the amount to which such holder would be entitled to receive upon such liquidation, dissolution or winding up if all (without regard to any restrictions or limitations on conversion contained in this Certificate of Designation) of such holder’s Series A-2 Preferred was converted into Conversion Stock immediately prior to such event (the “ Liquidation Amount ”). Upon any liquidation, dissolution or winding up of the Corporation, the entire assets available to be distributed to the holders of shares of Series A-2 Preferred and Common Stock shall be distributed pro rata among such holders on an as-converted basis.

Section 6. Redemption . Except to the extent a liquidation under Section 5 may be deemed a redemption, the Series A-2 Preferred will not be redeemable at the option of the Corporation or any holder of Series A-2 Preferred at any time other than by mutual consent of the Corporation and the holder therof.

Section 7. [RESERVED]

Section 8. Conversion .

(a) Conversion at the Option of the Holder . Subject to the provisions of Section 8(f) , each Series A-2 Preferred Share may be converted, at any time and from time to time, at the option of the holder thereof into the number of fully paid and nonassessable shares of Conversion Stock equal to the quotient determined by dividing (i) the Original Issue Price, by (ii) the Conversion Price then in effect.

(b) Conversion Procedure . In the case of a conversion pursuant to Section 8(a) hereof, the conversion date shall be the date on which the certificate(s) representing such Series A-2 Preferred Shares and a duly signed and completed notice of conversion of such Series A-2 Preferred Share is received by the Corporation. As soon as possible (but in any event within five Business Days) after a conversion of Series A-2 Preferred Shares has been effected, the Corporation shall cause its transfer agent to deliver to the converting holder, a certificate or certificates representing the number of shares of Conversion Stock issuable by reason of such conversion in such names or names and such denominations as the converting holder has specified. In case fewer than the total number of Series A-2 Preferred Shares represented by any certificate are converted, a new certificate representing the number of Series A-2 Preferred Shares not converted shall be issued to the holder thereof without cost to such holder within five Business Days after surrender of the certificate representing the redeemed Series A-2 Preferred Shares. From and after the date of conversion, the shares of Series A-2 Preferred Stock converted on such date will no longer be deemed to be outstanding, and all rights of the holder thereof as a holder of Series A-2 Preferred Stock (except as expressly contemplated hereby and except for the right to receive from the Corporation the Common Stock and any other property receivable upon conversion) shall cease and terminate with respect to such Series A-2 Preferred Shares.

(c) Cooperation . Subject to compliance with the Securities Act, the Corporation shall not close its books against the transfer of Series A-2 Preferred Shares or of Conversion Stock issued or issuable upon conversion of Series A-2 Preferred Shares in any manner which interferes with the timely conversion of the Series A-2 Preferred Shares. The Corporation shall assist and cooperate with any holder of Series A-2 Preferred Shares required to make any governmental filings or obtain any governmental approval prior to or in connection with any conversion of Series A-2 Preferred Shares hereunder (including, without limitation, making any governmental filings required to be made by the Corporation).

(d) Conversion Stock Reserved for Issuance . The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Conversion Stock, solely for the purpose of issuance upon the conversion of the Series A-2 Preferred Shares, the number of shares of Conversion Stock that would be issuable upon the conversion of all outstanding Series A-2 Preferred Shares, without regard to any restrictions or limitations on conversion contained in this Certificate of Designation. All shares of Conversion Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens, charges and encumbrances. The Corporation shall take all such actions as may be necessary to ensure that all such shares of Conversion Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange or market upon which shares of Conversion Stock may be listed (except for official notice of issuance and change in the number of shares of Common Stock outstanding, each of which shall be immediately delivered by the Corporation upon each such issuance). The Corporation shall not take any action which would cause the number of authorized but unissued shares of Conversion Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the Series A-2 Preferred Shares in accordance with this Section 8 .

(e) Taxes . The Corporation shall pay any and all issuance or transfer Taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of the Series A-2 Preferred Shares.

(f) Conversion Limitation . Notwithstanding anything to the contrary contained in this Certificate of Designation, the shares of Series A-2 Preferred held by a holder thereof shall not be convertible by such holder to the extent (but only to the extent) that such holder and/or any of its Affiliates would beneficially own in excess of 9.9% (the “ Maximum Percentage ”) of the Common Stock. To the extent the above limitation applies, the determination of whether the shares of Series A-2 Preferred held by such holder shall be convertible (vis-à-vis other convertible, exercisable or exchangeable securities owned by such holder or any of its Affiliates) and of which such securities shall be convertible, exercisable or exchangeable (as among all such securities owned by such holder and its Affiliates) shall, subject to such Maximum Percentage limitation, be determined on the basis of the first submission to the Corporation for conversion, exercise or exchange (as the case may be). No prior inability of a holder of Series A-2 Preferred to convert shares of Series A-2 Preferred pursuant to this Section 8(f) shall have any effect on the applicability of the provisions of this Section 8(f) with respect to any subsequent determination of convertibility. For purposes of this Section 8(f), beneficial ownership and all determinations and calculations (including, without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. The provisions of this Section 8(f) shall be implemented in a manner otherwise than in strict conformity with the terms of this Section 8(f) to correct this Section 8(f) (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage limitation. The limitations contained in this Section 8(f) shall apply to a successor holder of shares of Series A-2 Preferred. The holders of Common Stock shall be third party beneficiaries of this Section 8(f) and the Corporation may not amend or waive this Section 8(f) without the consent of holders of a majority of its Common Stock. For any reason at any time, upon the written or oral request of a holder of Series A-2 Preferred, the Corporation shall within one (1) Business Day confirm orally and in writing to such holder the number of shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of convertible or exercisable securities into Common Stock.

Section 9. Adjustments .

(a) General . The Conversion Price shall be adjusted from time to time pursuant to this Section 9 .

(b) Subdivision or Combination of Common Stock . If the Corporation at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision shall be proportionately reduced, and if the Corporation at any time combines (by reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall be proportionately increased.

(1) Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Corporation’s assets or other transaction, in each case which is effected in such a manner that the holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, is referred to herein as an “ Organic Change ”. Prior to the consummation of any Organic Change each share of Series A-2 Preferred Stock outstanding immediately prior to such Organic Change shall remain outstanding and upon the consummation of such Organic Change: (A) if the Organic Change results in a Change of Control, such share shall thereafter (subject to prior conversion), without the consent of the holder thereof, become convertible into the cash, securities and other property that the holder would have received in such Organic Change had such holder owned a number of shares of Conversion Stock immediately theretofore acquirable and receivable upon the conversion of such holder’s Series A-2 Preferred Shares (without regard to any restrictions or limitations on conversion contained in this Certificate of Designation) as of the record date fixed for determination of stockholders entitled to receive such cash, securities or other property (such cash, securities and other property having a value equal to its fair market value is referred to herein as the “ Exchange Property ”) and all other rights pursuant to this Certificate of Designation with respect to the shares of Series A-2 Preferred Stock shall immediately terminate; and (B) if the Organic Change does not result in a Change of Control, the surviving corporation shall exchange in such transaction for each share of Series A-2 Preferred Stock outstanding immediately prior to such Organic Change, preferred shares of the surviving corporation with substantially the same terms and conditions as the Series A-2 Preferred Stock, which terms are no less beneficial to the holders thereof, except that such preferred shares shall, upon conversion, be converted into, in lieu of the Conversion Stock, the Exchange Property.

(2) In the event that holders of the shares of the Common Stock have the opportunity to elect the form of consideration to be received in the Organic Change, the “Exchange Property” that holders of the Series A-2 Preferred Stock shall be entitled to receive shall be determined by the Series A-2 Preferred Majority Holders, who shall make such determination from among the choices made available to the holders of the Common Stock.

(3) The above provisions of this Section 9(c) shall similarly apply to successive Organic Changes.

(d) Certain Events . If any event occurs of the type contemplated by the provisions of this Section 9 but not expressly provided for by such provisions, then the Board shall make an appropriate adjustment in the Conversion Price so as to protect the rights of the holders of Series A-2 Preferred Shares; provided that no such adjustment shall increase the Conversion Price as otherwise determined pursuant to this Section 9 or decrease the number of shares of Conversion Stock issuable upon conversion of each Series A-2 Preferred Share.

(e) Notices . Immediately upon any adjustment of the Conversion Price, the Corporation shall give written notice thereof to all holders of Series A-2 Preferred Shares, setting forth in reasonable detail and certifying the calculation of such adjustment. The Corporation shall give written notice to all holders of Series A-2 Preferred Shares at least 20 days prior to the date on which the Corporation closes its books or takes a record (i) with respect to any dividend or distribution upon Common Stock, (ii) with respect to any pro rata subscription offer to holders of Common Stock or (iii) for determining rights to vote with respect to any Organic Change, dissolution or liquidation. The Corporation shall also give written notice to the holders of Series A-2 Preferred Shares at least 20 days prior to the date on which any Organic Change shall take place.

Section 10. Voting Rights . Without limiting any rights provided to the holders of shares of Series A-2 Preferred under the DGCL, the holders of shares of Series A-2 Preferred shall be entitled to vote as a single class with the holders of the Common Stock on all matters submitted to a vote (or action by written consent, if available) of stockholders of the Corporation. Each holder of shares of the Series A-2 Preferred shall be entitled to the number of votes equal to the largest number of full shares of Common Stock into which all shares of Series A-2 Preferred held of record by such holder could then be converted (taking into account, for the avoidance of doubt, any Conversion Price adjustments made pursuant to Section 9 (b) and 9(c) , but without regard to any restrictions or limitations on conversion contained in this Certificate of Designation) at the record date for the determination of the stockholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is first executed; provided, however, that solely for purposes of calculating the number of votes that each holder of shares of Series A-2 Preferred is entitled to pursuant to this Section 10 , the Conversion Price shall be assumed to equal $3.00, prior to any adjustment to the Conversion Price pursuant to Section 9 (b) and 9(c) . The holders of Series A-2 Preferred Shares shall be entitled to notice of any meeting of stockholders, which such notice shall be made in accordance with the Bylaws of the Corporation. Notwithstanding anything to the contrary in Article VII of the Certificate of Incorporation, any action required or permitted to be taken at an annual or special meeting of the holders of Series A-2 Preferred Shares may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of Series A-2 Preferred Shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

Section 11. [RESERVED] .

Section 12. [RESERVED] .

Section 13. [RESERVED] .

Section 15. Registration of Transfer . The Corporation shall keep at its principal office a register for the registration of Series A-2 Preferred Shares. Upon the surrender of any certificate representing Series A-2 Preferred Shares at such place, the Corporation shall, at the request of the record holder of such certificate, execute and cause its transfer agent to deliver (at the Corporation’s expense) a new certificate or certificates in exchange therefor representing in the aggregate the number of Series A-2 Preferred Shares represented by the surrendered certificate. Each such new certificate shall be registered in such name and shall represent such number of Series A-2 Preferred Shares as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate, and dividends shall accrue on the Series A-2 Preferred Shares represented by such new certificate from the date to which dividends have been fully paid on such Series A-2 Preferred Shares represented by the surrendered certificate.

Section 16. Replacement . Upon receipt of evidence reasonably satisfactory to the Corporation (it being understood that an affidavit of the registered holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing Series A-2 Preferred Shares, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the holder is a financial institution or other institutional investor its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Corporation shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of Series A-2 Preferred Shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate, and dividends shall accrue on the Series A-2 Preferred Shares represented by such new certificate from the date to which dividends have been fully paid on such lost, stolen, destroyed or mutilated certificate.

Section 17. Written Consents . The Series A-2 Preferred Majority Holders and the holders of Series A-2 Preferred may act by written consent in any instance provided herein where a vote of such holders or group of holders is contemplated.

IN WITNESS WHEREOF , the Corporation has caused this Certificate of Designation to be duly executed and acknowledged by its undersigned duly authorized officer this 5th day of May, 2014.

JETPAY CORPORATION

By: /s/ Bipin C. Shah ______________________

Name: Bipin C. Shah

Title: Chief Executive Officer

[Signature Page to Series A-2 Preferred Certificate of Designation]

Exhibit 4.1

JETPAY CORPORATION

SECURITIES PURCHASE AGREEMENT

May 1, 2014

TABLE OF CONTENTS

		Page

Section 1.	Definitions	1

Section 2.	Authorization and Closing	10
2.1.	Authorization of the Preferred Stock and the Common Stock	10
2.2.	Purchase and Sale of the Preferred Stock	11
2.3.	The Closings	11

Section 3.	Conditions of Purchaser’s Obligation at the Initial Closing	12
3.1.	Representations and Warranties; Covenants	12
3.2.	Certificate of Designation	12
3.3.	Intentionally Omitted.	13
3.4.	Intentionally Omitted	13
3.5.	Securities Law Compliance	13
3.6.	Opinion of the Company’s Counsel	13
3.7.	Closing Documents	13
3.8.	Proceedings	14
3.9.	No Material Adverse Effect	14
3.10.	Compliance with Applicable Laws; Card Association	14
3.11.	Authorization; Listing	14
3.12.	Expenses	14

Section 4.	Conditions of Purchaser’s Obligations at Additional Closings	14
4.1.	Representations and Warranties; Covenants	14
4.2.	Certificate of Designation	15
4.3.	Company Documents	15
4.4.	Securities Law Compliance	15
4.5.	Opinion of the Company’s Counsel	15
4.6.	Closing Documents	15
4.7.	No Material Adverse Effect	16
4.8.	Compliance with Applicable Laws	16
4.9.	No Judgments or Settlements	16
4.10.	Authorization; Listing	17
4.11.	Expenses	17

Section 5.	Conditions to the Company’s Obligations at Closing	17
5.1.	Representations and Warranties	17
5.2.	Performance	17

Section 6.	Covenants	17
6.1.	Compliance with Agreements	17
6.2.	Reservation of Common Stock and Series A-2 Preferred Stock	17

6.3.	Use of Proceeds	18
6.4.	Listing	18
6.5.	Section 203 of the Delaware General Corporation Law	18
6.6.	Conversion of Preferred Stock	19
6.7.	Public Disclosures	19
6.8.	Restrictions on Transfer	19
6.9.	Piggyback Registrations.	20
6.10.	Further Assurances; Cooperation	21

Section 7.	Transfer of Restricted Securities	21
7.1.	General Provisions	21
7.2.	Opinion Delivery	21
7.3.	Legend; Legend Removal	22
7.4.	Rule 144A	22

Section 8.	Representations and Warranties of the Company	23
8.1.	Organization and Corporate Power	23
8.2.	Capital Stock and Related Matters	23
8.3.	Subsidiaries; Investments	24
8.4.	Authorization	24
8.5.	No Breach	25
8.6.	Licenses	25
8.7.	Company Filings; Financial Statements	25
8.8.	Internal Controls	26
8.9.	Absence of Undisclosed Liabilities	26
8.10.	No Material Adverse Change	27
8.11.	Absence of Certain Developments	27
8.12.	Property	28
8.13.	Tax Matters	28
8.14.	Contracts and Commitments	29
8.15.	Intellectual Property Rights	30
8.16.	Litigation, etc.	30
8.17.	Brokerage	30
8.18.	Governmental Consent, etc.	30
8.19.	Insurance	31
8.20.	Employees	31
8.21.	Employee Benefits	31
8.22.	Compliance with Laws; Card Associations	32
8.23.	Affiliated Transactions	32
8.24.	Private Placement	32
8.25.	Application of Takeover Protections	32
8.26.	Customers and Suppliers	33
8.27.	Disclosure.	33

Section 9.	Representations and Warranties of Purchaser	33
9.1.	Organization and Existence	33
9.2.	Authorization	33

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9.3.	Private Placement	34
9.4.	No Conflict, Breach, Violation or Default	34
9.5.	No Reliance	35
9.6.	Financial Capability	35
9.7.	Brokers and Finders	35

Section 10.	Survival of Representations and Warranties; Indemnification	35
10.1.	Survival of Representations and Warranties	35
10.2.	Indemnification	36

Section 11.	Termination Prior to the Initial Closing	37

Section 12.	General Provisions	38
12.1.	Expenses	38
12.2.	Amendments and Waivers	39
12.3.	Severability	39
12.4.	Remedies	39
12.5.	Successors and Assigns	40
12.6.	Notices	40
12.7.	Business Days	41
12.8.	Governing Law	41
12.9.	Mutual Waiver of Jury Trial	41
12.10.	Consent to Jurisdiction and Service of Process	41
12.11.	Effective Date	42
12.12.	Descriptive Headings; Interpretation	42
12.13.	No Strict Construction	42
12.14.	Electronic Delivery	42
12.15.	Entire Agreement	42
12.16.	Counterparts	42
12.17.	Capital and Surplus; Special Reserves	43
12.18.	Treatment of the Preferred Stock and Series A-2 Preferred Stock	43
12.19.	Generally Accepted Accounting Principles	43
12.20.	Third Party Beneficiaries	43

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LIST OF EXHIBITS

Exhibit A	-	Series A-1 Certificate of Designation

Exhibit B	-	Series A-2 Certificate of Designation

Exhibit C	-	Opinion of Counsel

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LIST OF SCHEDULES

Capitalization Schedule

Subsidiary Schedule

Restrictions Schedule

Liabilities Schedule

Adverse Change Schedule

Developments Schedule

Contracts Schedule

Leased Real Property Schedule

Taxes Schedule

Litigation Schedule

Brokerage Schedule

Consents Schedule

Insurance Schedule

Employees Schedule

Employee Benefits Schedule

Compliance Schedule

Affiliated Transactions Schedule

Customers Schedule

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JETPAY CORPORATION

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “ Agreement ”) is made as of May 1, 2014, among JetPay Corporation (f/k/a Universal Business Payment Solutions Acquisition Corporation), a Delaware corporation (the “ Company ”), and each purchaser identified on the signature pages hereto (each, a “ Purchaser ” and collectively, the “ Purchasers ”). Except as otherwise indicated herein, all capitalized terms used are defined in Section 1 .

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

Section 1. Definitions . For the purposes of this Agreement, the following capitalized terms have the meanings set forth below:

“ Additional Closing ” has the meaning set forth in Section 2.3(b) .

“ Additional Preferred Stock ” has the meaning set forth in Section 2.3(b) .

“ Agreement ” has the meaning set forth in the preamble.

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

“ Capital Stock ” means (i) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock of such corporation (whether voting or nonvoting and whether common or preferred) and (ii) with respect to any Person that is not a corporation, individual or governmental entity, any and all partnership, membership, limited liability company or other equity interests of such Person that confer on the holder thereof the right to receive a share of the profits and losses of, or the distribution of assets of, the issuing Person, including in each case any and all warrants, rights or options to purchase any of the foregoing.

“ Card Association ” means MasterCard International, Inc., VISA U.S.A., Inc., VISA International, Inc., Discover, JCB, American Express, Diners Club, Voyager, Carte Blanche and any other material card association, debit card network or similar entity with whom the Company and/or any of its Subsidiaries may directly or indirectly have a sponsorship agreement.

“ Certificate of Designation ” has the meaning set forth in Section 3.2 .

“ Certificate of Incorporation ” means the Company’s Amended and Restated Certificate of Incorporation dated as of December 28, 2012, as amended.

“ Closing ” has the meaning set forth in Section 2.3(b) .

“ Closing Price ” means the closing price published by NASDAQ.

“ Code ” means the Internal Revenue Code of 1986, as amended, and any reference to any particular Code section shall be interpreted to include any revision of or successor to that section regardless of how numbered or classified.

“ Common Stock ” has the meaning set forth in Section 2.1 .

“ Company ” has the meaning set forth in the preamble.

“ Company Filings ” has the meaning set forth in Section 8.7(a) .

“ Deemed Common Equity Value ” means $34,587,282.

“ Derivative Securities ” means any securities or rights convertible into, or exercisable or exchangeable for, Common Stock.

“ Designated Assets ” means those funds being held as of the date hereof by Merrick belonging to the Company’s JetPay, LLC Subsidiary in each case in the amounts and pursuant to the agreements as set forth on Schedule 1 hereto.

“ Direct Air Matter ” means the cessation of operations of Southern Sky Air & Tours, LLC d/b/a Direct Air and a/k/a Myrtle Beach Direct Air and Tours and any chargebacks from customers arising therefrom or related thereto and any obligations or liabilities to Merrick Bank Corporation or its Affiliates or insurers arising therefrom or related thereto (whether pursuant to a sponsorship agreement or otherwise), together with all costs, expenses and fees arising out of, related to, or sustained in connection with any of the foregoing, including, without limitation any fees and expenses incurred by Merrick Bank Corporation and any fees and expenses of counsel related thereto.

“ Disclosure Schedules ” shall mean, collectively, the Capitalization Schedule, the Subsidiary Schedule, the Restrictions Schedule, the Liabilities Schedule, the Adverse Change Schedule, the Developments Schedule, the Contracts Schedule, the Leased Real Property Schedule, the Taxes Schedule, the Intellectual Property Schedule, the Litigation Schedule, the Brokerage Schedule, the Consents Schedule, the Insurance Schedule, the Employees Schedule, the Employee Benefits Schedule, the Compliance Schedule, the Affiliated Transactions Schedule and the Customers Schedule.

“ Employee Benefit Plan ” has the meaning set forth in Section 8.21 .

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“ Environmental and Safety Requirements ” means all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of Law, all judicial and administrative orders and determinations, all contractual obligations and all common law, in each case concerning public health and safety, worker health and safety and pollution or protection of the environment (including, without limitation, all those relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, Release, threatened Release, control or cleanup of any hazardous or otherwise regulated materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation).

“ ERISA ” means the U.S. Employee Retirement Income Security Act of 1974 and the rules and regulations promulgated thereunder, in each case as amended from time to time, and judicial rulings and interpretations thereof.

“ Escrowed Shares ” means 3,333,333 shares of the Company’s Common Stock held as of the date hereof in escrow pursuant to the JetPay Escrow Agreement.

“ Event of Noncompliance ” has the meaning set forth in the Certificate of Designation.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any similar federal Law then in force.

“ Existing Secured Convertible Notes ” means the Company’s secured convertible promissory notes issued pursuant to that certain Secured Convertible Note Agreement, dated as of December 28, 2012, by and among the Company and the purchasers of such notes.

“ Flexpoint ” means Flexpoint Fund II, L.P.

“ Flexpoint SPA ” means that certain Securities Purchase Agreement, dated as of August 22, 2013, by and between the Company and Flexpoint, as amended from time to time in accordance with its terms.

“ Fundamental Representations ” means the representations and warranties set forth in Sections 8.1 , 8.2 , 8.4 , 8.5 , 8.25 , 9.1 , 9.2 , 9.3(a) and 9.4 .

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

“ Governmental Entity ” means a domestic (federal, state, municipal or local) or foreign government or governmental, regulatory, political, judicial or quasi-judicial authority or administrative subdivision, department, agency, commission, board, bureau, court or instrumentality thereof.

“ Implied Value ” means as to each Escrowed Share, the deemed value of such share used by the parties to the JetPay Escrow Agreement for purposes of satisfying a claim thereunder; provided, however, that if such parties do not specify or otherwise agree upon a deemed value of such share, the deemed value for purposes of this Agreement shall be the fair market value.

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“ Incentive Plan ” means any stock option plan, employee stock ownership plan, stock appreciation plan or phantom stock plan of the Company that is approved by the Board.

“ Indebtedness ” means at a particular time, without duplication, (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or other debt security, (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current liabilities incurred in the ordinary course of business which are not more than six months past due), (iv) any commitment by which a Person assures a creditor against loss (including, without limitation, contingent reimbursement obligations with respect to letters of credit), (v) any indebtedness guaranteed in any manner by a Person (including, without limitation, guarantees in the form of an agreement to repurchase or reimburse), (vi) any obligations under capitalized leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss, (vii) any indebtedness secured by a Lien on a Person’s assets and (viii) any unsatisfied obligation for “withdrawal liability” to a “multiemployer plan” as such terms are defined under ERISA.

“ Indemnified Liabilities ” means any and all actions, causes of action, suits, claims, losses, diminutions in value, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements.

“ Indemnitees ” has the meaning set forth in Section 10.2(a) .

“ Initial Closing ” has the meaning set forth in Section 2.3(a) .

“ Intellectual Property Rights ” means all (i) patents, patent applications, patent disclosures and inventions, (ii) trademarks, service marks, trade dress, trade names, logos and corporate names and registrations and applications for registration thereof together with all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software, data, databases and documentation thereof, (vi) trade secrets and other confidential information (including, without limitation, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial and marketing plans and customer and supplier lists and information) and (vii) copies and tangible embodiments thereof (in whatever form or medium).

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“ Investment ” as applied to any Person means (i) any direct or indirect purchase or other acquisition by such Person of any notes, obligations, instruments, stock, securities or ownership interest (including partnership interests and joint venture interests) of any other Person and (ii) any capital contribution by such Person to any other Person.

“ IRS ” means the United States Internal Revenue Service.

“ JetPay Escrow Agreement ” means that certain Escrow Agreement, dated as of December 28, 2012, by and among Merrick, the Company, JetPay, LLC, WLES and JPMorgan Chase Bank, N.A., as may be amended from time to time

“ JetPay Merger Agreement ” means that certain Agreement and Plan of Merger, dated as of July 6, 2012, by and among the Company, JP Merger Sub, LLC, JetPay, LLC, WLES and Trent Voigt.

“ Knowledge ” of the Company and its Subsidiaries shall mean the actual knowledge or awareness of Bipin C. Shah, Peter Davidson, Nick Antich, Trent Voigt and Gregory Krzemien after due inquiry of their direct reports who would reasonably be expected to have knowledge of the relevant subject matter.

“ Latest Balance Sheet ” means the Company’s unaudited consolidated balance sheet included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.

“ Law ” shall mean any national, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, order, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity.

“ Leased Real Property ” means all leasehold or subleasehold estates and all other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by the Company or any of its Subsidiaries pursuant to any Lease.

“ Leases ” means all leases, subleases, licenses, concessions and other contracts pursuant to which the Company or any of its Subsidiaries holds any Leased Real Property (including the rights to all security deposits and other amounts and instruments deposited by or on behalf of the Company and/or and of its Subsidiaries thereunder) and all material amendments, extensions, renewals, guaranties and other agreements with respect thereto.

“ Liens ” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against the Company, any Subsidiary or any Affiliate, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute other than to reflect ownership by a third party of property leased to the Company or any Subsidiaries under a lease which is not in the nature of a conditional sale or title retention agreement, any subordination arrangement in favor of another Person (other than any subordination arising in the ordinary course of business) or any restriction on transfer.

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“ Material Adverse Effect ” means any change, event, development or effect that is, has been or would reasonably be expected to be materially adverse to the business, assets, liabilities, operations, condition (financial or otherwise), operating results, employee relations, customer relations or supplier relations of the Company and its Subsidiaries, taken as a whole, or on the ability of the Company to consummate timely the transactions contemplated hereby (regardless of whether or not such adverse change, event, development or effect can be or has been cured at any time or whether Purchaser has knowledge of such change, event, development or effect on the date hereof); provided, however, that the term “Material Adverse Effect” shall not include, alone or in combination, and no change, event, development or effect arising from or relating to any of the following shall be taken into account in determining whether there has been a “Material Adverse Effect”: (i) general conditions affecting the industries in which the Company or any of its Subsidiaries operates or participates, the U.S. economy or financial markets or any foreign markets or any foreign economy or financial markets in any location where the Company or any of its Subsidiaries has material operations or sales, (ii) any national or international political or social conditions, including an outbreak or escalation of hostilities, acts of terrorism, military acts or other national or international calamity, crisis or emergency, or any governmental or other response to the foregoing, in each case whether or not involving the United States, (iii) the public announcement or pendency of this Agreement or any transactions contemplated by this Agreement, (iv) changes in GAAP or applicable Law after the date of this Agreement, (v) any hurricane, earthquake, flood or other natural disaster, (vi) actions or omissions of the Company and its Subsidiaries taken with Purchaser’s express written consent, or (vii) any failure, in and of itself, by the Company or any of its Subsidiaries to meet any internal or published projections, forecasts or revenue or earnings predictions for any period ending (or for which revenues or earnings are released) on or after the date of this Agreement; provided, further, that any effect, change, event, occurrence, circumstance, state of facts or development arising from or relating to the matters set forth in clauses (i), (ii), (iv) and (v) may be taken into account in determining whether a “Material Adverse Effect” has occurred or would reasonably be expected to occur to the extent that such matter has had or would reasonably be expected to have, individually or in the aggregate, a disproportionate effect on the Company and its Subsidiaries, taken as a whole, relative to other similarly situated entities in the industries in which the Company and its Subsidiaries operate; provided, further, that the underlying causes of any failure described in clause (vii), to the extent not otherwise excluded from the definition of “Material Adverse Effect” shall be taken into account in determining whether a “Material Adverse Effect” has occurred or would reasonably be expected to occur.

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“ Material Contract ” means any (i) pension, profit sharing, stock option, employee stock purchase or other plan or arrangement providing for deferred or other material compensation to employees, or any collective bargaining agreement or any other agreement with any labor union, or severance agreements, programs, policies or arrangements, in each case, other than an employment or consulting agreement; (ii) agreement for the employment of any officer, employee or other individual on a full-time, part-time, consulting or other basis providing annual compensation in excess of $100,000 or agreement relating to loans to officers, directors or Affiliates; (iii) agreement under which the Company or Subsidiary has advanced or loaned any other Person amounts in the aggregate exceeding $100,000; (iv) agreement or indenture relating to borrowed money or other Indebtedness or the mortgaging, pledging or otherwise placing a Lien on any material asset or material group of assets of the Company and its Subsidiaries; (v) agreement with any holder of Existing Secured Convertible Notes; (vi) agreement with any current or, within the past three years, prior sponsoring bank; (vii) agreement with any Card Association; (viii) guarantee of any obligation (other than by the Company of a Wholly-Owned Subsidiary’s debts or a guarantee by a Subsidiary of the Company’s debts or another Subsidiary’s debts); (ix) lease or agreement under which the Company or any Subsidiary is lessee of or holds or operates any personal property, owned by any other party, except for any lease of personal property under which the aggregate annual rental payments do not exceed $100,000; (x) lease or agreement under which the Company or any Subsidiary is lessor of or permits any third party to hold or operate any personal property, owned or controlled by the Company or any Subsidiary; (xi) agreement or group of related agreements with the same party or group of affiliated parties the performance of which involves consideration in excess of $500,000; (xii) assignment, license, indemnification or agreement with respect to any intangible property (including, without limitation, any Intellectual Property Rights); (xiii) software license with an annual license or maintenance fee in excess of $100,000; (xiv) agreement under which it has granted any Person any registration rights (including, without limitation, demand and piggyback registration rights); (xv) agreement with a term of more than six months which is not terminable by the Company or any Subsidiary upon less than 30 days’ notice without penalty greater than $250,000; (xvi) agreement prohibiting it from freely engaging in any business or competing anywhere in the world; or (xvii) any other agreement which is material to its operations or business prospects or the listing of its securities on NASDAQ or involves a consideration in excess of $250,000 annually.

“ NASDAQ ” means The NASDAQ Stock Market LLC.

“ Officer’s Certificate ” means a certificate signed by the Company’s president or its chief financial officer, stating that (i) the officer signing such certificate has made or has caused to be made such investigations as are reasonably necessary in order to permit him to verify the accuracy of the information set forth in such certificate and (ii) such certificate does not misstate any material fact and does not omit to state any fact necessary to make the certificate not misleading.

“ Organizational Documents ” means, with respect to any entity, (i) the certificate or articles of incorporation and the bylaws, the certificate of formation and partnership agreement or operating agreement, as applicable, and (ii) any documents comparable to those described above as may be applicable to such entity pursuant to any applicable Law or by contract.

“ Permitted Liens ” means (a) mechanics’, materialman’s, workmens’, repairmen’s, warehousemen’s, supplier’s, vendor’s, carrier’s and other similar Liens arising or incurred in the ordinary course of business by operation of Law securing amounts that are not yet due and payable, (b) Liens for Taxes, assessments and other charges of Governmental Entities not yet due and payable or which are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established in accordance with GAAP on the books and financial statements of the Company and its Subsidiaries, (c) pledges or deposits to secure obligations under workers or unemployment compensation Laws or to secure other statutory obligations, (d) easements, covenants, conditions and restrictions of record affecting Leased Real Property which do not or would not materially impair the use or occupancy of any Leased Real Property in the operation of the business conducted thereon, and (e) any zoning, or other governmentally established restrictions of encumbrances which are not violated by the current use or occupancy of any Leased Real Property or the operation of the business of the Company or any of its Subsidiaries conducted thereon.

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“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a Governmental Entity.

“ Per Share Purchase Price ” has the meaning set forth in Section 2.2

“ Preferred Stock ” has the meaning set forth in Section 2.1 .

“ Purchaser ” and “ Purchasers ” have the meanings set forth in the preamble.

“ Qualified Incentive Plan ” means any Incentive Plan that is (i) in existence as of the date hereof and listed on the Capitalization Schedule and has not been modified or amended, except as approved by the Board after the Initial Closing or (ii) approved by the Board after the Initial Closing.

“ Release ” has the meaning set forth in the Comprehensive Environmental Response, Compensation and Liability Act of 1980.

“ Restricted Securities ” means (i) the Preferred Stock issued hereunder, (ii) the Series A-2 Preferred Stock issued upon conversion of Preferred Stock, (iii) the Common Stock issued upon conversion of Preferred Stock and/or Series A-2 Preferred Stock and (iv) any securities issued with respect to the securities referred to in clauses (i), (ii) or (iii) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular Restricted Securities, such securities shall cease to be Restricted Securities when they have (a) been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (b) been sold pursuant to Rule 144 under the Securities Act or become eligible for sale pursuant to Rule 144 under the Securities Act or (c) been otherwise transferred and new certificates for them not bearing a restrictive Securities Act legend have been delivered by the Company. Whenever any particular securities cease to be Restricted Securities, the holder thereof shall be entitled to receive from the Company, without expense, new securities of like tenor not bearing such restrictive Securities Act legend.

“ Sarbanes-Oxley Act ” has the meaning set forth in Section 8.7(a) .

“ Securities Act ” means the Securities Act of 1933, as amended, or any similar federal Law then in force.

“ Securities and Exchange Commission ” means the United States Securities and Exchange Commission, or any Governmental Entity succeeding to the functions thereof.

“ Series A Preferred Stock ” means the Company’s Series A Convertible Preferred Stock, par value $0.001 per share.

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“ Series A-2 Certificate of Designation ” has the meaning set forth in Section 3.2 .

“ Series A-2 Preferred Stock ” means the Company’s Series A-2 Convertible Preferred Stock, par value $0.001 per share.

“ Tax ” or “ Taxes ” means federal, state, county, local, foreign or other income, gross receipts, ad valorem, franchise, profits, sales or use, transfer, registration, excise, utility, environmental, communications, real or personal property, Capital Stock, license, payroll, wage or other withholding, employment, social security, severance, stamp, occupation, alternative or add-on minimum, estimated, unclaimed property or escheatment, and other taxes of any kind whatsoever (including, without limitation, deficiencies, penalties, additions to tax, and interest attributable thereto) whether disputed or not, and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

“ Tax Return ” means any return, claim or refund, declaration, information report or filing with respect to Taxes, filed or required to be filed with any Governmental Entity or taxing authority, including any schedules attached thereto and including any amendment thereof.

“ Termination Date ” has the meaning set forth in Section 11(b) .

“ Trading Day ” means any Business Day on which the Common Stock is traded, or able to be traded, on NASDAQ.

“ Transaction Agreements ” means, collectively, the Certificate of Designation, the Series A-2 Certificate of Designation and all other agreements entered into by the Company in connection with the transactions contemplated by this Agreement.

“ Treasury Regulations ” means the United States Treasury Regulations promulgated under the Code, and any reference to any particular Treasury Regulation section shall be interpreted to include any final or temporary revision of or successor to that section regardless of how numbered or classified.

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“ Underlying Common Stock ” means (i) the Common Stock issued or issuable upon conversion of the Preferred Stock and/or the Series A-2 Preferred Stock and (ii) any Common Stock or other securities issued or issuable with respect to the securities referred to in clause (i) above by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular shares of Underlying Common Stock, such shares shall cease to be Underlying Common Stock when they have been (a) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (b) distributed to the public through a broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or any similar provision then in force) or (c) repurchased by the Company or any Subsidiary.

“ Updated Disclosure Schedules ” means, with respect to each Additional Closing, Disclosure Schedules dated as of such Additional Closing, which reflect only changes that have occurred in the ordinary course of the Company’s and its Subsidiaries business (and none of which relate to any breach of contract, violation of Law or tort that is, individually or in the aggregate, material) since the date of the prior Disclosure Schedules or Updated Disclosure Schedules, as applicable, relating to such prior Closing, in a form reasonably acceptable to Purchaser. The foregoing to the contrary notwithstanding, any update to any Disclosure Schedule will not cure or remedy the effect of any prior untrue statement or omission of fact nor shall any such Disclosure Schedule update have the effect of amending or modifying this Agreement.

“ Wholly-Owned Subsidiary ” means, with respect to any Person, a Subsidiary of which all of the outstanding Capital Stock or other ownership interests are owned by such Person or another Wholly-Owned Subsidiary of such Person.

Section 2. Authorization and Closing .

2.1. Authorization of the Preferred Stock and the Common Stock . The Company shall authorize the issuance and sale to each Purchaser of the number of shares of its Series A-1 Convertible Preferred Stock, par value $0.001 per share (the “ Preferred Stock ”), having the terms and relative rights and preferences set forth in the Certificate of Designation attached hereto as Exhibit A , set forth below such Purchaser’s name on the signature page of this Agreement under the heading “Total Shares” (which aggregate amount for all Purchasers together shall be 9,000 shares of Preferred Stock). The Company shall authorize the issuance Series A-2 Preferred Stock, having the terms and relative rights and preferences set forth in the Series A-2 Certificate of Designation attached hereto as Exhibit B , issuable solely upon conversion of the Preferred Stock under certain circumstances. The Preferred Stock is (i) convertible into shares of the Company’s Common Stock, par value $0.001 per share (the “ Common Stock ”) at the conversion price set forth in the Certificate of Designation, as may be adjusted from time to time, including pursuant to Section 10.2(d) hereof and (ii) under certain circumstances set forth in the Certificate of Designation, automatically convertible into shares of the Company’s Series A-2 Preferred Stock. The Series A-2 Preferred Stock is convertible into shares of Common Stock at the conversion price set forth in the Series A-2 Certificate of Designation, as may be adjusted from time to time. In addition, the Company shall authorize the issuance of the shares of Common Stock that are issuable upon the conversion of the Preferred Stock and/or the Series A-2 Preferred Stock.

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2.2. Purchase and Sale of the Preferred Stock . At each Closing, the Company shall sell to each Purchaser and, subject to the terms and conditions set forth herein, each Purchaser shall purchase from the Company the number of shares of Preferred Stock to be purchased by such Purchaser at such Closing pursuant to Section 2.3(a) or (b) , as applicable, in each case, at a price of $300.00 per share (subject to appropriate adjustments for stock splits, reverse stock splits, stock dividends, and similar actions affecting such Preferred Stock, as applicable) (the “ Per Share Purchase Price ”).

2.3. The Closings .

(a) The Initial Closing . The initial closing of the purchase and sale of the Preferred Stock (the “ Initial Closing ”) shall take place remotely via the exchange of documents and signatures at 10:00 a.m. local time on the second Business Day following full satisfaction or due waiver of all of the closing conditions set forth in Section 3 , or on such other date as may be mutually agreeable to the Company and the Purchasers. At the Initial Closing, the Company shall cause its transfer agent to deliver to Purchaser stock certificates evidencing the number of shares of Preferred Stock to be purchased by such Purchaser at the Initial Closing (as set forth below such Purchaser’s name on the signature page of this Agreement under the heading “Initial Closing Shares”), registered in such Purchaser’s or its nominee’s name, upon payment of the purchase price in the aggregate amount of the “Initial Closing Purchase Price” set forth on such Purchaser’s signature page by wire transfer of immediately available funds to the Company’s account specified in writing by the Company which such account shall be specified not less than two Business Days prior to the Initial Closing. The aggregate number of shares of Preferred Stock to be sold to the Purchasers at the Initial Closing shall be 2,565 shares for an aggregate purchase price of $769,500. Notwithstanding anything to the contrary set forth herein, a Purchaser shall not be required to send its payment by wire transfer until it (or its designated custodian per its delivery instructions) confirms receipt of its shares of Preferred Stock.

(b) Additional Closings . After the Initial Closing, upon any purchase by Flexpoint of Series A Preferred Stock pursuant to the Flexpoint SPA, each Purchaser shall have the right to purchase in one or more additional closings to occur within ten Business Days of each such purchase by Flexpoint (each, an “ Additional Closing ”), upon written notice to the Company of its intent to exercise such right, and the Company shall have the obligation to issue and sell to such Purchaser, up to that number of newly issued shares of Preferred Stock not to exceed such Purchaser’s “Specified Percentage of Flexpoint’s Investment” (as set forth on such Purchaser’s signature page) multiplied by the number of shares of Series A Convertible Preferred Stock purchased by Flexpoint, in Purchaser’s notice of exercise having an aggregate purchase price equal to the product of (i) the Per Share Purchase Price and (ii) the number of shares of Preferred Stock to be purchased by such Purchaser at such Additional Closing (the “ Additional Preferred Stock ”). The aggregate Specified Percentage of Flexpoint’s Investment of all Purchasers shall not exceed 6.75%. Any Additional Closing shall take place remotely via the exchange of documents and signatures at 10:00 a.m. local time on the second Business Day following full satisfaction or due waiver of all of the closing conditions set forth in Section 4 hereof, or at such other place or on such other date as may be mutually agreeable to the Company and the Purchasers. At any Additional Closing, the Company shall cause its transfer agent to deliver to each Purchaser stock certificates evidencing the Additional Preferred Stock to be purchased by such Purchaser, registered in such Purchaser’s or its nominee’s name, upon payment of the purchase price thereof by wire transfer of immediately available funds to the Company’s account, which such account shall be specified in writing by the Company not less than two Business Days prior to such Additional Closing, in the aggregate amount equal to the number of shares of Additional Preferred Stock purchased by such Purchaser at such Additional Closing times the Per Share Purchase Price. Notwithstanding anything to the contrary set forth herein, a Purchaser shall not be required to send its payment by wire transfer until it (or its designated custodian per its delivery instructions) confirms receipt of its shares of Additional Preferred Stock. The term “ Closing ” shall refer to the Initial Closing and any Additional Closing, as the context requires. For the avoidance of doubt, if Flexpoint’s rights to purchase Series A Preferred Stock pursuant to the Flexpoint SPA terminate, the rights of the Purchasers to purchase additional Preferred Stock pursuant to this Section 2.3(b) shall also terminate.

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Section 3. Conditions of Purchaser’s Obligation at the Initial Closing . The obligation of each Purchaser to purchase and pay for the Preferred Stock at the Initial Closing is subject to the satisfaction as of the Initial Closing of the following conditions:

3.1. Representations and Warranties; Covenants .

(a) Other than with respect to the Fundamental Representations, the representations and warranties contained in Section 8 shall be true, complete and correct in all material respects at the Initial Closing (without giving effect to any references to Material Adverse Effect other than with respect to Section 8.10 ) as though such representation or warranty had been made at the Initial Closing (except that those representations and warranties which address matters only as of a particular date shall remain true, complete and correct as of such date).

(b) The Fundamental Representations applicable to the Company and its Subsidiaries shall be true and correct in all material respects at and as of the Initial Closing as though then made, except to the extent of changes caused by the transactions expressly contemplated herein.

(c) The Company shall have performed and complied in all material respects with all covenants and obligations of this Agreement required to be performed and complied with by it as of the Initial Closing.

3.2. Certificate of Designation . The Company shall have duly adopted, executed and filed with the Secretary of State of Delaware (i) a Certificate of Designation of Rights and Preferences establishing the terms and the relative rights and preferences of the Preferred Stock in the form set forth in Exhibit A (the “ Certificate of Designation ”) and (ii) a Certificate of Designation of Rights and Preferences establishing the terms and the relative rights and preferences of the Series A-2 Preferred Stock in the form set forth in Exhibit B (the “ Series A-2 Certificate of Designation ”), and the Company shall not have adopted or filed any other document designating terms and relative rights and preferences of its preferred stock other than with respect to its Series A Preferred Stock. Each of the Certificate of Designation and the Series A-2 Certificate of Designation shall be in full force and effect as of the Initial Closing under the Laws of the State of Delaware and shall not have been amended or modified.

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3.3. Intentionally Omitted .

3.4. Intentionally Omitted .

3.5. Securities Law Compliance . The Company shall have made all filings under all applicable federal and state securities Laws necessary to consummate the issuance of the Preferred Stock pursuant to this Agreement in compliance with such Laws, except to the extent such filings may properly be made subsequent to the Initial Closing.

3.6. Opinion of the Company’s Counsel . Such Purchaser shall have received from Dechert LLP, counsel for the Company, an opinion with respect to the matters set forth in Exhibit C , which shall be addressed to such Purchaser, dated the date of the Initial Closing and in form and substance reasonably satisfactory to such Purchaser.

3.7. Closing Documents . The Company shall have delivered to such Purchaser all of the following documents:

(a) an Officer’s Certificate, dated the date of the Initial Closing, stating that the conditions specified in Section 2 and Sections 3.1 through 3.5 , inclusive, and Sections 3.7 through 3.12 , inclusive, have been fully satisfied;

(b) certified copies of the resolutions duly adopted by the Board authorizing the execution, delivery and performance of this Agreement and each of the other Transaction Agreements, the filing of the Certificate of Designation and Series A-2 Certificate of Designation referred to in Section 3.2 , the issuance and sale of the Preferred Stock, the reservation for issuance upon conversion of the Preferred Stock of an aggregate of 9,000 shares of Series A-2 Preferred Stock, the reservation for issuance upon conversion of the Preferred Stock and the Series A-2 Preferred Stock of an aggregate of 1,200,000 shares of Common Stock and the consummation of all other transactions contemplated by this Agreement and each of the other Transaction Agreements;

(c) certified copies of the Certificate of Incorporation, the Certificate of Designation, the Series A-2 Certificate of Designation and the Company’s bylaws, each as in effect at the Initial Closing;

(d) certificates of good standing for the Company and each of its Subsidiaries from the respective jurisdictions of their organization;

(e) an affidavit, under penalties of perjury, stating that the Company is not and has not been a United States real property holding corporation, dated as of the Closing Date and in form and substance required under Treas. Reg. Section 1.897-2(h);

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(f) copies of all third party and governmental consents, approvals and filings required in connection with the consummation of the transactions hereunder (including, without limitation, all federal securities Law and blue sky Law filings and waivers of all preemptive rights, anti-dilution rights and rights of first refusal);

(g) copies of all other agreements, documents and materials contemplated by this Section 3 ; and

(h) such other documents relating to the transactions contemplated by this Agreement as such Purchaser may reasonably request.

3.8. Proceedings . All corporate and other proceedings taken or required to be taken by the Company in connection with the transactions contemplated hereby to be consummated at or prior to the Initial Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Purchaser.

3.9. No Material Adverse Effect . From the date of this Agreement, there shall not have been a Material Adverse Effect.

3.10. Compliance with Applicable Laws; Card Association . The purchase of Preferred Stock by such Purchaser hereunder shall not be prohibited by any applicable Law or governmental rule or regulation and shall not subject such Purchaser to any penalty, liability or, in such Purchaser’s reasonable judgment, other onerous condition under or pursuant to any applicable Law or governmental rule or regulation, and the purchase of the Preferred Stock by such Purchaser hereunder shall be permitted by Laws, rules and regulations of the jurisdictions and Governmental Entities to which such Purchaser is subject. The Company’s and its Subsidiaries’ participation in any of the Card Association networks shall not, either directly or indirectly including, without limitation through any sponsoring banks, be prohibited or materially and adversely restricted.

3.11. Authorization; Listing . The Common Stock issuable upon conversion of the Preferred Stock and/or the Series A-2 Preferred Stock, whether issued on the date hereof or in the future, shall have been duly authorized and reserved for issuance and such Common Stock shall have been approved for listing on the NASDAQ Capital Market, subject to official notice of issuance.

3.12. Expenses . At the Initial Closing, the Company shall reimburse such Purchaser for the fees and expenses as provided in Section 12.1 .

Any condition specified in this Section 3 may be waived if consented to by such Purchaser (as to itself only); provided that no such waiver shall be effective against a Purchaser unless it is set forth in a writing executed by such Purchaser.

Section 4. Conditions of Purchaser’s Obligations at Additional Closings . The obligation of each Purchaser to purchase and pay for the Additional Preferred Stock at any Additional Closing, as applicable, is subject to the satisfaction as of such Closing of the following conditions:

4.1. Representations and Warranties; Covenants . Upon delivery to such Purchaser of Updated Disclosure Schedules dated as of such Additional Closing:

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(a) In the case of any Additional Closing, other than with respect to the Fundamental Representations, the representations and warranties contained in Section 8 shall be true, complete and correct in all respects at such Additional Closing (without giving effect to any references to Material Adverse Effect other than with respect to Section 8.10 ) as though such representation or warranty had been made at such Additional Closing (except that those representations and warranties which address matters only as of a particular date shall remain true, complete and correct as of such date); provided , however , that the conditions set forth in this Section 4.1(a) shall be deemed satisfied unless the effect of all such failures of such representations and warranties to be true, complete and correct, taken together, has had, or would reasonably be expected to have, a Material Adverse Effect.

(b) In the case of any Additional Closing, the Fundamental Representations applicable to the Company and its Subsidiaries shall be true and correct in all material respects at and as of such Additional Closing as though then made.

4.2. Certificate of Designation . Each of the Certificate of Designation and the Series A-2 Certificate of Designation shall be in full force and effect as of such Additional Closing under the Laws of the State of Delaware and shall not have been amended or modified.

4.3. Company Documents . The Company’s bylaws shall be in full force and effect as of such Additional Closing as were in effect at the Initial Closing.

4.4. Securities Law Compliance . The Company shall have made all filings under all applicable federal and state securities Laws necessary to consummate the issuance of the Preferred Stock pursuant to this Agreement in compliance with such Laws, except to the extent such filings may properly be made subsequent to such Additional Closing.

4.5. Opinion of the Company’s Counsel . Such Purchaser shall have received from Dechert LLP, counsel for the Company, an opinion with respect to the matters set forth in Exhibit D , which shall be addressed to such Purchaser, dated the date of such Additional Closing and in form and substance reasonably satisfactory to such Purchaser.

4.6. Closing Documents . The Company shall have delivered to such Purchaser all of the following documents:

(a) an Officer’s Certificate, dated the date of such Additional Closing, stating that the conditions specified in Section 2 and Sections 4.1 through 4.4 , inclusive, and Sections 4.6 through 4.11 , inclusive, have been fully satisfied;

(b) certificates of good standing for the Company and each of its Subsidiaries from the respective jurisdictions of their organization;

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(c) an affidavit, under penalties of perjury, stating that the Company is not and has not been a United States real property holding corporation, dated as of the Closing Date and in form and substance required under Treas. Reg. Section 1.897-2(h);

(d) copies of all third party and governmental consents, approvals and filings required in connection with the consummation of the transactions hereunder (including, without limitation, all federal securities Law and blue sky Law filings and waivers of all preemptive rights, anti-dilution rights and rights of first refusal); and

(e) such other documents relating to the transactions contemplated by this Agreement as such Purchaser may reasonably request.

4.7. No Material Adverse Effect . From the date of the Initial Closing until such Additional Closing, there shall not have been a Material Adverse Effect.

4.8. Compliance with Applicable Laws . The purchase of Preferred Stock by such Purchaser hereunder shall not be prohibited by any applicable Law or governmental rule or regulation and shall not subject such Purchaser to any penalty, liability or, in such Purchaser’s reasonable judgment, other onerous condition under or pursuant to any applicable Law or governmental rule or regulation, and the purchase of the Preferred Stock by such Purchaser hereunder shall be permitted by Laws, rules and regulations of the jurisdictions and Governmental Entities to which such Purchaser is subject. All consents, approvals, orders or authorizations of, or registrations, declarations or filings with, any Governmental Authority shall have been obtained or made and no such consent, approval, order or authorization shall have been revoked.

4.9. No Judgments or Settlements . From the date of the Initial Closing until such Additional Closing, neither the Company nor any of its Subsidiaries shall (a) become subject to any judgment, order, ruling or verdict, or settle or agree to settle any claim, dispute or litigation, in each case that results in the Company or any of its Subsidiaries becoming liable, net of any insurance proceeds actually received, (i) with respect to Merrick Bank Corporation or any of its Affiliates (collectively, “ Merrick ”) and arising out of or related to the Direct Air Matter, for an amount that, individually or in the aggregate, is not solely satisfied out of the Escrowed Shares (and without the payment of cash by the Company or any of its Subsidiaries) and/or the Designated Assets or (ii) in the case of any other third-party (including, without limitation, any sponsoring bank other than Merrick) or Merrick for any matter not arising out of or related to the Direct Air Matter, for an amount, individually or in the aggregate, equal to or exceeding $2,500,000 or (b) become subject to any claim made by any sponsoring bank or other third party which would reasonably be expected to cause the Company or its Subsidiaries to be liable, individually or in the aggregate, for an amount that is not solely satisfied out of the Escrowed Shares (and without the payment of cash by the Company or any of its Subsidiaries) and/or the Designated Assets (in the case of any claims by Merrick arising out of or related to the Direct Air Matter) or $2,500,000 (in the case of any other claim by any third party, including by Merrick for any claim not arising out of or related to the Direct Air Matter), as applicable.

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4.10. Authorization; Listing . The Common Stock issuable upon conversion of the Preferred Stock and/or the Series A-2 Preferred Stock, whether issued on the date hereof or in the future, shall have been duly authorized and reserved for issuance and such Common Stock shall have been approved for listing on the NASDAQ Capital Market, subject to official notice of issuance.

4.11. Expenses . At such Additional Closing, the Company shall reimburse such Purchaser for the fees and expenses as provided in Section 12.1 .

Any condition specified in this Section 4 may be waived if consented to by such Purchaser (as to itself only); provided that no such waiver shall be effective against a Purchaser unless it is set forth in a writing executed by such Purchaser.

Section 5. Conditions to the Company’s Obligations at Closing . The obligation of the Company to issue and sell the Preferred Stock to each Purchaser at each Closing is subject to the satisfaction as of each such Closing of the following conditions:

5.1. Representations and Warranties . Each of (i) representations and warranties of such Purchaser contained in Section 9 shall be true and correct as of the date hereof and as of the Closing as though made on and as of the Closing (other than representations and warranties that by their terms speak as of a certain date, which shall continue to be true and correct as of such certain date) except where the failure of any of such representations and warranties to be so true and correct, individually or in the aggregate, would not reasonably be expected to materially delay or impair such Purchaser’s ability to effect the Closing or to perform its obligations under this Agreement and the Transaction Documents and (ii) the Fundamental Representations applicable to such Purchaser shall be true and correct in all respects on and as of the Closing.

5.2. Performance . Such Purchaser shall have performed and complied in all material respects with all agreements, obligations, and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Initial Closing.

Section 6. Covenants .

6.1. Compliance with Agreements . The Company shall perform and observe all of its obligations to each holder of the Preferred Stock, all of its obligations to each holder of the Series A-2 Preferred Stock and all of its obligations to each holder of the Underlying Common Stock set forth in the Certificate of Incorporation, the Certificate of Designation, the Series A-2 Certificate of Designation, the Company’s bylaws and the Transaction Agreements.

6.2. Reservation of Common Stock and Series A-2 Preferred Stock .

(a) The Company shall at all times reserve and keep available out of its authorized but unissued shares of preferred stock, solely for the purpose of issuance upon the conversion of the Preferred Stock, such number of shares of Series A-2 Preferred Stock issuable upon the conversion of all outstanding Preferred Stock. All shares of Series A-2 Preferred Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all Taxes, Liens and charges. The Company shall take all such actions as may be necessary to ensure that all such shares of Series A-2 Preferred Stock may be so issued without violation of any applicable Law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed. The Company shall not take any action which would cause the number of authorized but unissued shares of Series A-2 Preferred Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the Preferred Stock.

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(b) The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the conversion of the Preferred Stock and/or the Series A-2 Preferred Stock, such number of shares of Common Stock issuable upon the conversion of all outstanding Preferred Stock and/or Series A-2 Preferred Stock and all Preferred Stock at any time issuable pursuant to Section 2.3 of this Agreement (including shares of Series A-2 Preferred Stock that may be issued upon conversion thereof). All shares of Common Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all Taxes, Liens and charges. The Company shall take all such actions as may be necessary to ensure that all such shares of Common Stock may be so issued without violation of any applicable Law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance and change in the number of shares of Common Stock outstanding, each of which shall be immediately transmitted by the Company upon issuance). The Company shall not take any action which would cause the number of authorized but unissued shares of Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the Preferred Stock.

6.3. Use of Proceeds . Unless otherwise consented to in writing by the Purchasers, the Company shall use the proceeds from the sale of the Preferred Stock to the Purchasers for no purpose other than for acquisitions or general corporate purposes.

6.4. Listing . The Company shall use reasonable best efforts to continue to have its Common Stock listed on the NASDAQ Capital Market or other national securities exchange so long as any Preferred Stock or Series A-2 Preferred Stock is outstanding. Prior to the Initial Closing, the Company shall prepare and submit to NASDAQ an application to list additional shares covering the shares of Common Stock issuable upon the conversion of the Preferred Stock purchased by the Purchasers at the Initial Closing (and the underlying Series A-2 Preferred Stock). Prior to each Additional Closing, the Company shall prepare and submit to NASDAQ an application to list additional shares covering the shares of Common Stock issuable upon conversion of the Preferred Stock purchased by the Purchasers at such Additional Closing (and the underlying Series A-2 Preferred Stock).

6.5. Section 203 of the Delaware General Corporation Law . The Company shall not adopt any resolution containing any provisions relating to the exemption from Section 203 of the Delaware General Corporation Law granted to each Purchaser or its Affiliates which would adversely affect or otherwise impair the rights of such Purchaser or its Affiliates thereunder.

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6.6. Conversion of Preferred Stock . The Company shall not take any action that would adversely affect or limit the rights of any Purchaser to convert the Preferred Stock or the Series A-2 Preferred Stock in accordance with the terms hereof.

6.7. Public Disclosures . Other than with respect to any required filings with the Securities and Exchange Commission, the Company shall not, nor shall it permit any Subsidiary to, disclose any Purchaser’s name or identity as an investor in the Company (or the names of any Purchaser’s affiliates or investment advisors) in any press release or other public announcement or in any document or material filed with any Governmental Entity, without the prior written consent of such Purchaser, unless such disclosure is required by applicable Law or governmental regulations or by order of a court of competent jurisdiction, in which case, prior to making such disclosure, the Company shall give written notice to such Purchaser describing in reasonable detail the proposed content of such disclosure and shall permit such Purchaser to review and comment upon the form and substance of such disclosure. On or before 5:30 p.m., New York City time, on the fourth (4th) Business Day immediately following the date of this Agreement, the Company will file a Current Report on Form 8-K with the Securities and Exchange Commission describing the terms of this Agreement and the Preferred Stock (and including as exhibits to such Current Report on Form 8-K this Agreement, the Certificate of Designation and the Series A-2 Certificate of Designation).

6.8. Restrictions on Transfer . Each Purchaser shall not sell, transfer or otherwise dispose any shares of Preferred Stock, Series A-2 Preferred Stock or Underlying Common Stock prior to January 1, 2015; provided , that nothing in this Section 6.8 shall restrict such Purchaser from transferring any shares of Preferred Stock, Series A-2 Preferred Stock or Underlying Common Stock to any Affiliate; provided , that such Affiliate agrees in writing to be bound by the terms of this Agreement. Notwithstanding the foregoing, (i) no Purchaser shall be restricted from selling, transferring or otherwise disposing of any shares of Preferred Stock, Series A-2 Preferred Stock or Underlying Common Stock in connection with or at any time following the occurrence of a Change of Control or Event of Noncompliance (each as defined in the Certificate of Designation) or in connection with such Purchaser’s participation in a Piggyback Registration (as defined below) and (ii) in the event that Flexpoint or any of its Affiliates is allowed to sell, transfer or otherwise dispose of any percentage of its shares of Series A Preferred Stock or shares of Common Stock issuable upon conversion thereof prior to January 1, 2015 (other than transfers to Affiliates that agree to be bound by the terms of the Flexpoint SPA), the same percentage of the Preferred Common Stock, Series A-2 Preferred Stock or Underlying Common Stock held by each Purchaser shall be immediately and fully released from any remaining restrictions on transfer set forth in this Section 6.8 concurrently therewith. In the event that the Purchasers are released from any of their obligations under this Section 6.8 or, by virtue of this Section 6.8 , becomes entitled to sell, transfer or otherwise dispose of any Preferred Stock, Series A-2 Preferred Stock or Underlying Common Stock prior to January 1, 2015, the Company shall notify the Purchasers within five (5) Business Days prior to such release.

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6.9. Piggyback Registrations .

(a) Right to Piggyback. Whenever the Company proposes to register any of its equity securities (including any proposed registration of the Company's equity securities by any third party) under the Securities Act (other than (i) in connection with registrations on Form S-4, S-8 or any successor or similar forms or (ii) to implement an employee benefit plan or a transaction to which Rule 145 of the Securities Act is applicable) and the registration form to be used may be used for the registration of shares of Underlying Common Stock (each, a " Piggyback Registration "), the Company shall give prompt written notice (and in any event within three Business Days after its receipt of notice of any exercise of demand registration rights other than under this Agreement) to the Purchasers of its intention to effect such a registration and shall include in such registration all shares of Underlying Common Stock with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company's notice. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion.

(b) Piggyback Expenses . The registration expenses (excluding discounts and commissions) of the Purchasers shall be paid by the Company in all Piggyback Registrations, whether or not any such registration is consummated.

(c) Priority on Primary Registrations . If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, then the Company shall include in such registration, (i) first, the securities the Company proposes to sell that, in the opinion of such underwriters, can be sold in an orderly manner within the price range of such offering, (ii) second, the securities held by the parties to the December 28, 2012 Registration Rights Agreements by and among the Company, American Services Insurance Company, Inc., Mendota Insurance Company, Special Opportunities Fund, Inc., Bulldog Investors General Partnership, R8 Capital Partners, LLC and Ira Lubert requested to be included in such registration, that in the opinion of such underwriters, can be sold in an orderly manner within the price range of such offering (if any), in accordance with the provisions set forth in such agreements and (iii) third, the securities held by Flexpoint requested to be included in such registration, that in the opinion of such underwriters, can be sold in an orderly manner within the price range of such offering (if any), in accordance with the provisions set forth in that certain Registration Rights Agreement, dated as of October 11, 2013 by and between the Company and Flexpoint, pro rata among the holders of such securities on the basis of the number of shares of securities of the Company owned by each such holder, and (iv) fourth, the other securities requested to be included therein (including, for the avoidance of doubt, securities of the Company held by any Purchaser) that, in the opinion of such underwriters, can be sold in an orderly manner within the price range of such offering (if any), pro rata among the holders of such securities on the basis of the number of shares of securities of the Company owned by each such holder.

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(d) Priority on Secondary Registrations . If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company's securities, and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the holders requesting such registration, then the Company shall include in such registration, (i) first, the securities requested to be included therein by the holders requesting such registration that, in the opinion of such underwriters, can be sold in an orderly manner within the price range of such offering (if any), pro rata among the holders of such securities on the basis of the number of shares of securities of the Company owned by each such holder, (ii) second, the securities held by Flexpoint requested to be included in such registration, that in the opinion of such underwriters, can be sold in an orderly manner within the price range of such offering (if any), in accordance with the provisions set forth in that certain Registration Rights Agreement, dated as of October 11, 2013 by and between the Company and Flexpoint, pro rata among the holders of such securities on the basis of the number of shares of securities of the Company owned by each such holder and (iii) third, the other securities requested to be included in such registration (including, for the avoidance of doubt, securities of the Company held by any Purchaser) that, in the opinion of such underwriters, can be sold in an orderly manner within the price range of such offering (if any), pro rata among the holders of such securities on the basis of the number of shares of securities of the Company owned by each such holder.

6.10. Further Assurances; Cooperation . The Company shall take, or cause to be taken, all actions, and do, or cause to be done, all things reasonably necessary, proper or advisable to obtain satisfaction of all conditions precedent to each Purchaser to, or otherwise to effectuate, the consummation of any of the transactions contemplated hereby, including, without limitation, reasonably cooperating with such Purchaser in connection with any filing or approval required to be made or obtained by such Purchaser pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (or any successor act, rules or regulations).

Section 7. Transfer of Restricted Securities .

7.1. General Provisions . Restricted Securities are transferable only pursuant to (a) public offerings registered under the Securities Act, (b) Rule 144 or Rule 144A of the Securities and Exchange Commission (or any similar rule or rules then in force) if such rule is available and (c) subject to the conditions and restrictions specified in Section 7.2 and in the other Transaction Agreements, any other legally available means of transfer.

7.2. Opinion Delivery . In connection with the transfer of any Restricted Securities under Section 7.1 , the holder thereof shall deliver written notice to the Company describing in reasonable detail the transfer or proposed transfer, together with an opinion of counsel which (to the Company’s reasonable satisfaction) is knowledgeable in securities Law matters to the effect that such transfer of Restricted Securities may be effected without registration of such Restricted Securities under the Securities Act; provided, however, that no such opinion need be delivered by such holder for any transfer of any Restricted Securities under Section 7.1 to any Affiliate of such holder or any of its limited partners. In addition, if the holder of the Restricted Securities delivers to the Company an opinion of counsel that no subsequent transfer of such Restricted Securities shall require registration under the Securities Act, promptly upon such contemplated transfer the Company shall cause its transfer agent to deliver new certificates for such Restricted Securities which do not bear the Securities Act legend set forth in Section 7.3(a) . If the Company is not required to cause its transfer agent to deliver new certificates for such Restricted Securities not bearing such legend, the holder thereof shall not transfer the same until the prospective transferee has confirmed to the Company in writing its agreement to be bound by the conditions contained in this Section 7 .

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7.3. Legend; Legend Removal .

(a) Each certificate or instrument representing Restricted Securities shall be imprinted with a legend in substantially the following form:

“THE SECURITIES EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF SUCH SECURITIES AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN A TRANSACTION NOT INVOLVING A PUBLIC OFFERING, (II) PURSUANT TO ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (IV) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL NOTIFY ANY SUBSEQUENT PURCHASER OF SUCH SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. SUCH SECURITIES MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF THE SECURITIES PURCHASE AGREEMENT, DATED AS OF MAY 1, 2014, BETWEEN JETPAY CORPORATION AND THE PURCHASERS IDENTIFIED THEREIN.”

(b) If any Restricted Securities become eligible for sale pursuant to Rule 144 under the Securities Act, the Company shall, upon the request of the holder of such Restricted Securities, cause its transfer agent to remove the legend set forth in Section 7.3(a) from the certificates for such Restricted Securities.

7.4. Rule 144A . Upon the request of a Purchaser, the Company shall promptly supply to such Purchaser or its prospective transferees all information regarding the Company required to be delivered in connection with a transfer pursuant to Rule 144A of the Securities and Exchange Commission.

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Section 8. Representations and Warranties of the Company . As a material inducement to each Purchaser to enter into this Agreement and purchase the Preferred Stock hereunder, the Company hereby represents and warrants that:

8.1. Organization and Corporate Power . The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and is duly qualified as a foreign corporation to do business in every jurisdiction in which the failure to so qualify has had or would reasonably be expected to have a Material Adverse Effect. The copies of the Company’s and each Subsidiary’s Organizational Documents which have been furnished to each Purchaser reflect all amendments made thereto at any time prior to the date of this Agreement and are correct and complete.

8.2. Capital Stock and Related Matters .

(a) As of the Initial Closing and immediately thereafter, the authorized Capital Stock of the Company shall consist of (i) 1,000,000 shares of preferred stock, 134,000 of which shall be designated as Series A Convertible Preferred Stock, 9,000 of which shall be designated as Series A-1 Convertible Preferred Stock and 9,000 of which shall be designated as Series A-2 Convertible Preferred Stock and (ii) 100,000,000 shares of Common Stock, of which 11,529,094 shares shall be issued and outstanding and 1,200,000 shares shall be reserved for issuance upon conversion of the Preferred Stock and/or Series A-2 Preferred Stock. As of the Initial Closing, neither the Company nor any Subsidiary shall have outstanding any stock or securities convertible or exchangeable for any shares of its Capital Stock or other equity securities or containing any profit participation features, nor shall it have outstanding any warrants, options or other rights to subscribe for or to purchase its Capital Stock or other equity securities or any stock or securities convertible into or exchangeable for its Capital Stock or other equity securities or any stock appreciation rights or phantom stock plans, except for the Preferred Stock issued to Purchaser and except as set forth on the attached Capitalization Schedule . The Capitalization Schedule accurately sets forth the following information with respect to all outstanding warrants, options and other rights to acquire the Company’s Capital Stock and other equity securities: the holder, the number of shares covered, the issuance date, the exercise price, any applicable vesting schedule and the expiration date. As of the Initial Closing, neither the Company nor any Subsidiary shall be subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its Capital Stock or other equity securities or any warrants, options or other rights to acquire its Capital Stock or other equity securities, except as set forth on the Capitalization Schedule and except pursuant to (i) the Certificate of Designation with respect to the Preferred Stock and (ii) the Series A-2 Certificate of Designation with respect to the Series A-2 Preferred Stock. As of the Initial Closing, all of the outstanding shares of the Company’s Capital Stock shall be validly issued, fully paid and nonassessable and shall be free and clear of any Lien (other than pursuant to the Transaction Agreements), and the Common Stock issuable upon conversion of the Preferred Stock and/or the Series A-2 Preferred Stock has been duly and validly authorized and reserved for issuance and, when issued in compliance with the provisions of the Certificate of Designation or Series A-2 Certificate of Designation, as applicable, shall be validly issued, fully paid and nonassessable and shall be free and clear of any Lien (other than pursuant to the Transaction Agreements); provided that the Company’s Capital Stock shall be subject to restrictions on transfer under applicable state and/or federal securities Laws. The Capitalization Schedule accurately sets forth the Closing Price of the Common Stock as of the Trading Day immediately prior to the date of this Agreement.

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(b) There are no statutory or contractual stockholders’ preemptive rights or rights of refusal with respect to the issuance of the Preferred Stock hereunder, the issuance of the Series A-2 Preferred Stock upon conversion of the Preferred Stock or the issuance of the Common Stock upon conversion of the Preferred Stock and/or the Series A-2 Preferred Stock, except such contractual rights that have been waived prior to the date hereof. The Company has not violated any applicable federal or state securities Laws in connection with the offer, sale or issuance of any of its Capital Stock. The Company is not party to any agreement, and to the Company’s Knowledge, there are no agreements between the Company’s stockholders with respect to the voting or transfer of the Company’s Capital Stock or with respect to any other aspect of the Company’s affairs, except for the Transaction Agreements.

8.3. Subsidiaries; Investments . The attached Subsidiary Schedule correctly sets forth the name of each Subsidiary, the jurisdiction of its organization and the Persons owning the outstanding Capital Stock or other equity securities of such Subsidiary. Each Subsidiary is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization, possesses all requisite corporate or other applicable entity power and authority. All of the outstanding shares of Capital Stock or other equity securities of each Subsidiary are validly issued, full paid and nonassessable, and all such shares or securities are owned by the Company or another Subsidiary free and clear of any Lien and are not subject to any option or right to purchase any such shares or securities, except as set forth on the Subsidiary Schedule . Except as set forth on the Subsidiary Schedule , neither the Company nor any Subsidiary owns or holds the right to acquire any shares of stock or any other security or ownership interest in any other Person.

8.4. Authorization . The execution, delivery and performance of this Agreement and all other Transaction Agreements, the filing of the Certificate of Designation and the Series A-2 Certificate of Designation and the amendment of the Company’s bylaws have been duly authorized by all necessary corporate action on the part of the Company. This Agreement, the Certificate of Designation, the Series A-2 Certificate of Designation and all other Transaction Agreements each constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization and similar Laws affecting creditors’ rights generally or general equitable principles.

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8.5. No Breach . The Company is not in violation or default of any provision of its Certificate of Incorporation or other Organizational Documents, each as in effect as of the Closing. Except as set forth on the Restrictions Schedule , the execution, delivery, and performance of and compliance with this Agreement and the Transaction Agreements and the offering, issuance and sale of the Preferred Stock, the conversion of the Preferred Stock into shares of Series A-2 Preferred Stock and the conversion of the Preferred Stock and/or the Series A-2 Preferred Stock into shares of Common Stock and the fulfillment of and compliance with the respective terms hereof and thereof by the Company do not and shall not (a) conflict with or violate any provision of the Certificate of Incorporation (including the Certificate of Designation) or other Organizational Documents, (b) conflict with or violate any applicable Law (which conflict or violation would be material to the Company and its Subsidiaries taken as a whole) or any applicable judgment, order or decree of any Governmental Authority, (c) conflict with or result in any breach of, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right to termination, acceleration or cancellation under any Material Contract or result in the creation of any material mortgage, pledge, Lien, encumbrance, or charge upon any of the Capital Stock, properties or assets of the Company, or the suspension, revocation, impairment or forfeiture of any material permit, license, authorization, or approval applicable to the Company, its business or operations, or any of its assets or properties or (d) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any Governmental Entity pursuant to, the Certificate of Incorporation or the other Organizational Documents of the Company or any Subsidiary, or any Law to which the Company or any Subsidiary is subject, or any material agreement, instrument, order, judgment or decree to which the Company or any Subsidiary is subject. Except as set forth on the Restrictions Schedule , none of the Subsidiaries are subject to any restrictions upon making loans or advances or paying dividends or distributions to, transferring property to, or repaying any Indebtedness owed to, the Company or another Subsidiary.

8.6. Licenses . The Company and its Subsidiaries possess all requisite corporate power and authority, and all licenses, permits and authorizations, necessary to own and operate their respective properties, to carry on their respective businesses as now conducted and presently proposed to be conducted and to carry out the transactions contemplated by this Agreement, except where the failure to so possess would not individually, or in the aggregate, be reasonably expected to have a Material Adverse Effect. The Company and its Subsidiaries are in compliance with the terms and conditions of such licenses and neither the Company nor any of its Subsidiaries has received written or, to the Company’s Knowledge, oral notices from any Governmental Entity that it is in violation of any of the terms or conditions of such licenses, except where the failure to so comply would not individually, or in the aggregate, be reasonably expected to have Material Adverse Effect.

8.7. Company Filings; Financial Statements .

(a) Company Filings . Since December 22, 2010, the Company has filed all reports, schedules, forms, statements and other documents with the Securities and Exchange Commission required to be filed by the Company pursuant to the Securities Act and the Exchange Act, together with all certifications required pursuant to the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”) (collectively, the “ Company Filings ”). As of their respective effective dates (in the case of Company Filings that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective dates of filing (in the case of all other Company Filings), the Company Filings complied in all material respects with the requirements of the Securities Act, the Exchange Act and/or the Sarbanes-Oxley Act, as the case may be, and the rules and regulations promulgated thereunder applicable thereto, and except to the extent amended or superseded by a subsequent filing with the Securities and Exchange Commission prior to the date of this Agreement, as of such respective dates, none of the Company Filings 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. None of the Company’s Subsidiaries is subject to the periodic reporting requirements of the Exchange Act. As of the date hereof, there are no outstanding or unresolved comments in comment letters from the Securities and Exchange Commission staff with respect to any of the Company Filings. To the Company’s Knowledge, as of the date hereof, none of the Company Filings is the subject of ongoing Securities and Exchange Commission review or outstanding Securities and Exchange Commission investigation.

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(b) Financial Statements . Each of the audited consolidated financial statements and the unaudited quarterly financial statements (including, in each case, the notes thereto) of the Company included in the Company Filings when filed complied as to form in all material respects with the published rules and regulations of the Securities and Exchange Commission with respect thereto, have been prepared in all material respects in accordance with GAAP (except as may be disclosed therein or in the notes thereto, and, in the case of unaudited quarterly statements, to the extent permitted by Form 10-Q of the Securities and Exchange Commission or other rules and regulations of the Securities and Exchange Commission) and fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited quarterly statements, to normal year-end adjustments and the absence of footnotes). Neither the Company nor any of its Subsidiaries has or is subject to any “Off-Balance Sheet Arrangement” (as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act), other than as disclosed in the Company Filings.

8.8. Internal Controls . The Company and its Subsidiaries have established and maintained a system of internal control over financial reporting (as defined in Rule 13a-15 under the Exchange Act) that are reasonably designed to ensure that material information relating to the Company, including its Subsidiaries, is made known to the individuals responsible for the preparation of the Company’s filings with the Securities and Exchange Commission and other public disclosure documents, and have disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Board any known (A) significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and, (B) fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. The Company has provided to each Purchaser copies of any material written materials relating to each of the foregoing.

8.9. Absence of Undisclosed Liabilities . Except as set forth on the attached Liabilities Schedule , there are no material liabilities or obligations of the Company or any of its Subsidiaries of any kind whatsoever (whether known, unknown, accrued, contingent, absolute, determined, determinable or otherwise) other than liabilities or obligations: (i) reflected in the financial statements included or otherwise disclosed in the Latest Balance Sheet, (ii) incurred since the date of the Latest Balance Sheet in the ordinary course of business consistent with past practice (other than any such liabilities related to any breach of contract, violation of Law or tort), (iii) transaction expenses incurred in connection with the Transaction Documents or (iv) that would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect. Except as set forth in the attached Liabilities Schedule , neither the Company nor any of its Subsidiaries has any liability or obligation arising out of, related to, or in connection with, any contingent consideration or any broker fees or claims therefore.

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8.10. No Material Adverse Change . Except as set forth on the attached Adverse Change Schedule , since December 31, 2012, there has been no Material Adverse Effect.

8.11. Absence of Certain Developments . Except (i) as expressly contemplated by this Agreement, (ii) as specifically disclosed in the Company Filings filed with respect to periods ended on or after December 28, 2012 or (iii) as set forth on the attached Developments Schedule , since December 28, 2012, neither the Company nor any Subsidiary has: (i) issued any notes, bonds or other debt securities or any Capital Stock or other equity securities or any securities convertible, exchangeable or exercisable into any Capital Stock or other equity securities; (ii) borrowed any amount or incurred or become subject to any material liabilities, except current liabilities incurred in the ordinary course of business and liabilities under contracts entered into in the ordinary course of business; (iii) discharged or satisfied any material Lien or paid any material obligation or liability, other than current liabilities paid in the ordinary course of business; (iv) declared or made any payment or distribution of cash (other than a distribution from a Subsidiary of the Company to the Company) or other property to its equityholders with respect to its Capital Stock or other equity securities or purchased or redeemed any shares of its Capital Stock or other equity securities (including, without limitation, any warrants, options or other rights to acquire its Capital Stock or other equity securities), other than repurchases of Common Stock pursuant to Qualified Incentive Plans or employment agreements existing on the date of this Agreement and disclosed in the Disclosure Schedules hereto or any employment or consulting agreements entered into in the ordinary course of business thereafter and approved by the Board; (v) mortgaged or pledged any of its properties or assets or subjected them to any Lien, except for Permitted Liens; (vi) sold, assigned or transferred any of its tangible assets, except in the ordinary course of business, or canceled any material debts or claims; (vii) suffered any extraordinary losses or waived any rights of material value, whether or not in the ordinary course of business or consistent with past practice; (vii) made any loans or advances to, guarantees for the benefit of, or any Investments in, any Persons in excess of $50,000 in the aggregate; (ix) made any charitable contributions or pledges in excess of $50,000 in the aggregate; (x) suffered any damage, destruction or casualty loss exceeding in the aggregate $50,000, whether or not covered by insurance; (xi) terminated, amended or modified any agreement or other contract which would be required to be set forth on the Contracts Schedule if it were in effect on the date of this Agreement (ignoring, if applicable, any such termination, amendment or modification); (xii) made any material change in the accounting principles utilized by the Company in connection with the business of the Company and its Subsidiaries, made any change in the Company’s independent public accounting firm, had any disagreement with its independent public accounting firm over the Company’s and its Subsidiaries’ application of accounting principles or with the preparation of any of their financial statements that was required to be disclosed in such Company Filings, or, given notification to the Company’s audit committee of any facts with respect to the Company’s or its Subsidiaries’ financial statements or methods of accounting that could reasonably be expected to result in a restatement of or amendment to the Company’s or its Subsidiaries’ financial statements; (xii) made or changed any Tax election, changed an annual accounting period for Tax, adopted or changed any Tax accounting method, filed any amended Tax Return, entered into any closing agreement, settled any Tax claim or assessment relating to the Company or any of its Subsidiaries, surrendered any right to claim a refund of Taxes, consented to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or any of its Subsidiaries, or took any other similar action relating to the filing of any Tax Return or the payment of any Tax; (xiii) received any written notice from the Securities and Exchange Commission in connection with any investigation or action by the Securities and Exchange Commission; (xiv) experienced any resignation or termination of employment of any of the Company’s executive officers or (xv) entered into any other material transaction, whether or not in the ordinary course of business.

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8.12. Property . The Leased Real Property Schedule attached hereto sets forth the address of each Leased Real Property, and a true and complete list of all Leases for each such Leased Real Property. The Company has delivered to Purchaser a true and complete copy of each such Lease. With respect to each of the Leases: (i) neither the Company nor any of its Subsidiaries has subleased, licensed or otherwise granted any Person the right to use or occupy such Leased Real Property or any material portion thereof other than as set forth on the Leased Real Property Schedule ; and (ii) there are no Liens (other than Permitted Liens) on the estate or interest created by such Lease. The Company and its Subsidiaries have good and valid title to, or a valid license to use or leasehold interest in, all of their respective material assets, free and clear of all Liens (other than Permitted Liens), except as would not materially impair ability of the Company and its Subsidiaries to conduct their businesses in the ordinary course of business consistent with past practices.

8.13. Tax Matters .

(a) Each of the Company and its Subsidiaries has timely prepared and filed all income and other material Tax Returns required to have been filed by the Company or any of its Subsidiaries with all appropriate Governmental Entities and timely paid all Taxes (whether or not shown thereon) otherwise owed by it. All such Tax Returns are true, correct and complete in all material respects. Except as set forth on the attached Taxes Schedule , all Taxes that the Company or any of its Subsidiaries is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper Governmental Entity or third party when due (or set aside for payment when due). No claim has ever been made by a Governmental Entity in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the Company or any of its Subsidiaries is or may be subject to taxation by that jurisdiction.

(b) Neither the Company nor any Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Initial Closing as a result of any: (A) change in method of accounting for a taxable period ending on a period to the Initial Closing; (B) use of an improper method of accounting for a taxable period ending on or prior to the Initial Closing; (C) “closing agreement” as described in Code §7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Initial Closing; or (D) election by the Company or any Subsidiary under Code §108(i).

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(c) Neither the Company nor any of its Subsidiaries (i) has been a member of an affiliated group filing a consolidated, combined, or unitary federal, state, local, or foreign income Tax Return (other than a group the common parent of which was the Company) or (ii) has any material liability for the Taxes of any Person (other than the Company or any of its Subsidiaries) under U.S. Treas. Reg. § 1.1502-6 (or any similar provision of state, local, or non-U.S. Law), as a transferee or successor, by contract, or otherwise.

(d) Neither the Company nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or could result, separately or in the aggregate, in the payment of any “excess parachute payment” within the meaning of Code §280G (or any corresponding provision of state, local, or non-U.S. Tax Law).

(e) Neither Target nor any of its Subsidiaries is or has been a party to any “reportable transaction,” as defined in Code §6707A(c)(1) and Reg. §1.6011-4(b).

(f) The unpaid Taxes of the Company and its Subsidiaries (A) did not, as of the date of the most recent Company Filings, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Company Filings (rather than in any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the Initial Closing in accordance with the past custom and practice of the Company and its Subsidiaries in filing their Tax Returns. Since the date of the Latest Company Filings, neither the Company nor any of its Subsidiaries has incurred any liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the ordinary course of business consistent with past custom practice.

8.14. Contracts and Commitments .

(a) Except as expressly contemplated by this Agreement or as set forth on the attached Contracts Schedule or the attached Employee Benefits Schedule , neither the Company nor any Subsidiary is a party to or bound by any written or oral Material Contracts.

(b) All of the contracts, agreements and instruments required to be set forth on the Contracts Schedule are valid, binding and enforceable in accordance with their respective terms. The Company and each Subsidiary have performed all obligations required to be performed under the contracts, agreements and instruments required to be listed on the Contracts Schedule and are not in default under or in breach of nor in receipt of any claim of default or breach under any contract, agreement or instrument required to be listed on the Contracts Schedule , nor, to the Company’s or any Subsidiary’s Knowledge, has such notice been threatened; no event has occurred which with the passage of time or the giving of notice or both would result in a default, breach or event of noncompliance by the Company or any Subsidiary under any contract, agreement or instrument required to be listed on the Contracts Schedule .

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(c) Purchaser has been supplied with a true and correct copy of each of the written instruments, plans, contracts and agreements and an accurate description of each of the oral arrangements, contracts and agreements which are listed on the Contracts Schedule or the Employee Benefits Schedule , together with all amendments, waivers or other changes thereto.

8.15. Intellectual Property Rights . Except as would not, individually or in the aggregate, reasonably be expected to be material, neither the Company’s nor any of its Subsidiaries’ use of any Intellectual Property Rights used in or necessary for the conduct of their respective businesses as currently conducted (collectively, the “ Company Intellectual Property ”), nor the operation of the Company’s or any of its Subsidiaries’ respective businesses, infringes, misappropriates or otherwise violates any Intellectual Property Rights of any other Person (and no actions, suits or claims are pending or threatened alleging any of the foregoing). To the Company or any Subsidiary’s Knowledge, no Person is infringing, misappropriating or violating the Intellectual Property Rights of the Company or any of its Subsidiaries, except as would not, individually or in the aggregate, reasonably be expected to be material.

8.16. Litigation, etc. Except as set forth on the attached Litigation Schedule , there are no, and for the past three years there has not been any, actions, suits, proceedings, orders, investigations or claims pending or, to the Company’s Knowledge, threatened by or against or affecting the Company or any Subsidiary (or to the Company’s Knowledge, pending or threatened by or against or affecting any of the officers, directors or employees of the Company and its Subsidiaries with respect to their businesses or proposed business activities) at law or in equity, or before or by or against any Governmental Entity (including, without limitation, any actions, suits, proceedings, orders, investigations or claims with respect to the transactions contemplated by this Agreement). Except as set forth on the attached Litigation Schedule , there are no, and for the past three years there has not been any judgment, order or decree of any Governmental Entity in effect against the Company or any of its Subsidiaries.

8.17. Brokerage . Except as set forth on the attached Brokerage Schedule , there are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement binding upon the Company or any Subsidiary.

8.18. Governmental Consent, etc. No permit, consent, approval or authorization of, or declaration to or filing with, any Governmental Entity is required in connection with the execution, delivery and performance by the Company of this Agreement or the other Transaction Agreements, or the consummation by the Company of any other transactions contemplated hereby or thereby, except as set forth on the attached Consents Schedule or as otherwise expressly contemplated herein.

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8.19. Insurance . The attached Insurance Schedule contains a description of each insurance policy maintained by the Company and its Subsidiaries with respect to its properties, assets and businesses or otherwise, and each such policy is in full force and effect as of the Initial Closing. Except as set forth on the Insurance Schedule , the Company and its Subsidiaries do not have any self-insurance or co-insurance programs, and the reserves set forth on the Latest Balance Sheet are adequate to cover all anticipated liabilities with respect to any such self-insurance or co-insurance programs.

8.20. Employees . Except as set forth on the attached Employees Schedule , to the Company’s Knowledge, no executive or key employee of the Company or any Subsidiary or any group of employees of the Company or any Subsidiary has any plans to terminate employment with the Company or any Subsidiary. Neither the Company nor any of its Subsidiaries have any unions or, to the Company’s Knowledge, any material labor related problems. Neither the Company, its Subsidiaries nor, to the Company’s Knowledge, any of their employees is subject to any noncompete, nondisclosure, confidentiality, employment, consulting or similar agreements relating to, affecting or in conflict with the present or proposed business activities of the Company and its Subsidiaries, except for agreements between the Company or a Subsidiary and its present and former employees.

8.21. Employee Benefits . The attached Employee Benefits Schedule sets forth a complete and correct list of all “employee benefit plans” (as such term is defined in Section 3(3) of ERISA) and any other material employee benefit plan, program, policy or arrangement that is maintained, sponsored or contributed to by the Company or any Subsidiary or with respect to which the Company or any Subsidiary has any liability or potential liability (each an “ Employee Benefit Plan ” and collectively, “ Employee Benefit Plans ”). The Company has delivered or made available to Purchasers complete and correct copies, as applicable, of the plan documents, the most recent determination letter received from the IRS, the most recent annual report (Form 5500, with all applicable attachments) and all other material documents pursuant to which each Employee Benefit Plan is maintained, funded and administered. Each Employee Benefit Plan (and each related trust, insurance contract or fund) has been maintained, funded and administered in all material respects in accordance with its terms and complies in all material respects in form and in operation with the applicable requirements of ERISA, the Code and other applicable Laws. Each Employee Benefit Plan that is intended to meet the requirements of a “qualified plan” under Section 401(a) of the Code has received a favorable determination letter (or may rely on a favorable opinion letter) from the IRS, and nothing has occurred that could reasonably be expected to cause the disqualification of such Employee Benefit Plan. Neither the Company nor any of its Subsidiaries maintains, sponsors, contributes to, has any obligation to contribute to, or has any current or potential liability or obligation under or with respect to (i) a “defined benefit plan” (as such term is defined in Section 3(35) of ERISA) or (ii) a “multiemployer plan” as defined in Section 3(37) of ERISA. Neither the Company nor any of its Subsidiaries has any current or potential obligation to provide post-employment health, life or other welfare benefits other than as required under Section 4980B of the Code or any similar applicable Law and there do not exist any pending or threatened claims (other than routine undisputed claims for benefits) or Actions with respect to any Employee Benefit Plan. The transactions contemplated by the this Agreement and the Transaction Agreements will not cause the acceleration of vesting in, or payment of, any benefits or compensation under any Employee Benefit Plan and will not otherwise accelerate or increase any liability or obligation under any Employee Benefit Plan.

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8.22. Compliance with Laws; Card Associations . Except as set forth on the attached Compliance Schedule , neither the Company nor any Subsidiary has violated any Law or any governmental regulation or requirement (including the applicable provisions of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and the applicable listing and corporate governance rules and regulations of NASDAQ) in any material respect, and neither the Company nor any Subsidiary has received any written notice of any such violation. Neither the Company nor any Subsidiary is subject to, or has reason to believe it may become subject to, any liability (contingent or otherwise) or corrective or remedial obligation arising under any Environmental and Safety Requirements. The Company and each of its Subsidiaries is registered by a member of and is in good standing with the Card Associations, and is in compliance in all material respects with the rules of, the Card Associations, except to the extent (and only to the extent) such Person’s business does not require such registration or where the failure to be so registered or in good standing would not be material. The Company’s and its Subsidiaries’ participation in any of the Card Association networks is not, either directly or indirectly including, without limitation through any sponsoring banks, prohibited or materially and adversely restricted. To the Company’s Knowledge, there is no investigation, proceeding or disciplinary action, including fines (other than any investigation, proceeding or disciplinary action involving a maximum potential fine of less than $5,000, excluding any late fees or other penalties if such fine is not timely paid), currently pending, or to the Knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries by a Card Association or its applicable agent.

8.23. Affiliated Transactions . Except as set forth on the attached Affiliated Transactions Schedule , no officer, director, employee, stockholder or Affiliate of the Company or any Subsidiary, nor any individual related by blood, marriage or adoption to any such individual nor any entity in which any such Person or individual owns any beneficial interest, is a party to any agreement, contract, commitment or transaction with the Company or any Subsidiary or has any material interest in any material property used by the Company or any Subsidiary.

8.24. Private Placement . Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D promulgated under the Securities Act) in connection with the offer or sale of any of the Preferred Stock.

8.25. Application of Takeover Protections . The Company and the Board have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation, bylaws or the Laws of the State of Delaware (including, without limitation, Section 203 of the Delaware General Corporation Law) that is or could become applicable to any Purchaser and/or its Affiliates as a result of such Purchaser and the Company fulfilling their respective obligations or exercising their respective rights under this Agreement and the Transaction Agreements, including as a result of the issuance or ownership of the Preferred Stock, the Series A-2 Preferred Stock which such shares of Preferred Stock are convertible into and the Underlying Common Stock which such shares of Preferred Stock and/or Series A-2 Preferred Stock are convertible into, as the case may be, contemplated by this Agreement.

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8.26. Customers and Suppliers . The Customers and Suppliers Schedule attached hereto sets forth (a) a list of the Company’s and its Subsidiaries’ ten largest customers for the twelve-month period ended June 30, 2013, and sets forth opposite the name of each such customer the percentage of consolidated gross revenues attributable to such customer and (b) a list of the Company’s and its Subsidiaries’ material suppliers, which includes (but is not limited to) (i) sponsoring banks, (ii) Card Associations and (iii) key providers of software or other services used by the Company and its Subsidiaries in connection with the operation of their respective businesses. Since December 30, 2012, neither the Company nor any of its Subsidiaries has received any oral or written notice from any such customer to the effect that, and neither the Company nor any of its Subsidiaries has any Knowledge that, any such customer will stop, decrease the rate of, or change the terms (whether related to payment, price or otherwise) with respect to, buying products and/or services from the Company or any of its Subsidiaries (whether as a result of the consummation of the transactions contemplated hereby or otherwise). Since December 30, 2012, neither the Company nor any of its Subsidiaries has received any oral or written notice from any such supplier to the effect that, and neither the Company nor any of its Subsidiaries has any Knowledge that, any such suppler will stop, decrease the rate of, or change the terms (whether related to payment, price or otherwise) with respect to, supplying materials, products or services to the Company or any of its Subsidiaries (whether as a result of the consummation of the transactions contemplated hereby or otherwise). There are no suppliers of products or services to the Company or its Subsidiaries that are material to the Company’s business with respect to which practical alternative sources of supply are not generally available on comparable terms and conditions in the marketplace.

8.27. Disclosure . The Company confirms that neither it nor any of its officers or directors nor any other Person acting on its or their behalf has provided any Purchaser or its respective agents or counsel with any information that it believes constitutes or could reasonably be expected to constitute material, non-public information except insofar as the existence, provisions and terms of this Agreement and the proposed transactions hereunder may constitute such information, all of which will be disclosed by the Company in the Form 8-K as contemplated by Section 6.7 hereof. The Company understands and confirms that each of the Purchasers will rely on the foregoing representations in effecting transactions in securities of the Company.

Section 9. Representations and Warranties of Purchaser . As a material inducement to the Company to enter into this Agreement and issue the Preferred Stock hereunder, each Purchaser hereby represents and warrants that:

9.1. Organization and Existence . Such Purchaser has been duly formed and is validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to consummate the transactions contemplated by this Agreement.

9.2. Authorization . The execution, delivery and performance by such Purchaser of this Agreement and the other Transaction Agreements to which such Purchaser is a party have been duly authorized by such Purchaser and will each constitute the valid and legally binding obligation of such Purchaser, enforceable against such Purchaser in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization and similar Laws affecting creditors’ rights generally or general equitable principles.

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9.3. Private Placement .

(a) The Preferred Stock to be acquired by such Purchaser hereunder will be acquired for such Purchaser’s own account, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act or any applicable state securities Laws, and such Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the Securities Act or any applicable state securities Laws, without prejudice, however, to such Purchaser’s right at all times to sell or otherwise dispose of all or any part of such Preferred Stock (or Series A-2 Preferred Stock into which such Preferred Stock may be converted or Underlying Common Stock into which such Preferred Stock and/or Series A-2 Preferred Stock may be converted) in compliance with applicable securities Laws. Nothing contained herein shall be deemed a representation or warranty by such Purchaser to hold the Preferred Stock (or Series A-2 Preferred Stock into which such Preferred Stock may be converted or Underlying Common Stock into which such Preferred Stock and/or Series A-2 Preferred Stock may be converted) for any period of time. Such Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act.

(b) Such Purchaser acknowledges that it: (i) is able to conduct its own evaluation of the transactions contemplated by this Agreement; (ii) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its prospective investment contemplated hereunder; and (iii) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment. Such Purchaser acknowledges that it (x) has conducted its own investigation of the Company and its Subsidiaries and the terms of the Preferred Stock and (y) has been offered the opportunity to conduct such review and analysis of the business, assets, condition, operations and prospects of the Company and its Subsidiaries and to ask questions of the Company and received answers thereto, each as it deemed necessary in connection with the decision to purchase the Preferred Stock. Such Purchaser further acknowledges that it has had such opportunity to consult with its own counsel, financial and tax advisors and other professional advisers as it believes is sufficient for purposes of the purchase of the Preferred Stock.

9.4. No Conflict, Breach, Violation or Default . The execution, delivery and performance by such Purchaser of this Agreement and the Transaction Agreements to which it is a party and the purchase of the Preferred Stock contemplated hereby will not: (i) conflict with or result in a violation of the certificate of incorporation (or other governing documents) of such Purchaser, (ii) result in any material violation of any Law to which such Purchaser or any of its assets are subject, or (iii) result in a material breach or a material violation of any of the terms and provisions of, or constitute a default under, any material contract to which such Purchaser is a party. Neither the execution, delivery or performance by such Purchaser of this Agreement or any Transaction Agreement to which it is a party, nor the consummation by such Purchaser of the obligations and transactions contemplated thereby, in each case at the Initial Closing, requires any consent of, authorization by, exemption from, filing with or notice to any Governmental Entity or any other Person, other than filings required under applicable U.S. federal and state securities Laws to be made by the Company.

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9.5. No Reliance . Except for the representations and warranties contained in Section 8 of this Agreement and in any certificate delivered hereunder, such Purchaser acknowledges that neither the Company, its Subsidiaries nor any Person on behalf of the Company or its Subsidiaries makes, and such Purchaser has not relied upon, any other express or implied representation or warranty with respect to the Company or any of its Subsidiaries or with respect to any other information provided to such Purchaser in connection with the transactions contemplated by this Agreement. The foregoing, however, does not limit or modify the representations and warranties contained in Section 8 of this Agreement, any certificate delivered hereunder or the right of such Purchaser to rely thereon.

9.6. Financial Capability . Such Purchaser currently has or will have available at the Closing the funds necessary to consummate the Closing on the terms and conditions contemplated by this Agreement.

9.7. Brokers and Finders . Neither such Purchaser nor any of its Affiliates (other than the Company and its Subsidiaries) or any of their respective officers or directors has employed any broker or finder or incurred any liability for any financial advisory fee, brokerage fee, commission or finder’s fee, and no broker or finder has acted directly or indirectly for such Purchaser or any of its Affiliates (other than the Company and its Subsidiaries) or any of their respective officers or directors in connection with this Agreement or the transactions contemplated hereby.

Section 10. Survival of Representations and Warranties; Indemnification .

10.1. Survival of Representations and Warranties . All of the representations and warranties (i) of the Company contained in Section 8 above (other than the Fundamental Representations applicable to the Company and the representations set forth in Section 8.13 ), (ii) of each Purchaser contained in Section 9 (other than the Fundamental Representations applicable to such Purchaser) and (iii) of the Company or a Purchaser contained in any Transaction Agreements or in any certificate or other agreement delivered in connection with the transactions contemplated hereby or thereby shall survive the applicable Closing hereunder (even if such Purchaser knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect only for so long as such similar representations survive under the Flexpoint SPA (for the avoidance of doubt, such representations and warranties contained herein shall be coterminous with those made by the Company to Flexpoint in the Flexpoint SPA). All of the Fundamental Representations of the parties contained in this Agreement and the representations of the Company set forth in Section 8.13 shall survive the applicable Closing (even if the damaged party knew or had reason to know of any misrepresentation or breach of warranty at the time of applicable Closing) and continue in full force and effect only for so long as such similar representations survive under the Flexpoint SPA (for the avoidance of doubt, such representations and warranties contained herein shall be coterminous with those made by the Company to Flexpoint in the Flexpoint SPA).

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10.2. Indemnification .

(a) General . In consideration of each Purchaser’s execution and delivery of this Agreement and acquiring the Preferred Stock hereunder and in addition to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless each Purchaser and each other holder of Preferred Stock and all of their officers, directors, managers, stockholders, partners, members, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “ Indemnitees ”) from and against Indemnified Liabilities, incurred directly or indirectly by the Indemnitees or any of them as a result of, or arising out of, or relating to (i) any claims by any third party relating to (x) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Preferred Stock or (y) the execution, delivery, performance or enforcement of this Agreement and any other instrument, document or agreement executed pursuant hereto by any Indemnitee, (ii) a breach of a representation or warranty by the Company or any Subsidiary hereunder, under any Transaction Agreements or in any certificate or other agreement delivered in connection with the transactions contemplated hereby or thereby, (iii) a breach of a covenant by the Company or any of its Subsidiaries under this Agreement, the Certificate of Designation or any instrument, certificate or other document executed in connection with the transactions contemplated hereby or (iv) the Direct Air Matter, including, without limitation any amounts set-off, seized or claimed by Merrick out of the Designated Assets, net of any recovery actually received in cash by the Company or any of its Subsidiaries from a third-party or by WLES’ forfeiture to the Company of Escrowed Shares, provided that for purposes of this Section 10.2(a)(iv) , the value of each Escrowed Share shall be deemed to be the lesser of (1) the Implied Value and (2) $3.00 (as adjusted for stock splits, reverse stock splits, stock dividends, and similar actions affecting such Escrowed Shares, as applicable); it being acknowledged and agreed that the amount of any Indemnified Liabilities sustained by the Company or any of its Subsidiaries related to the matters referenced in the foregoing clauses (i) through (iv) (or any facts and circumstances underlying such matters) shall constitute indirect losses to the Indemnitees for which the Indemnitees are indemnified.

(b) Limitations on Indemnification . Notwithstanding Section 10.2(a) , other than with respect to any breach of any Fundamental Representations or Section 8.13 , (i) no claims by the Indemnitees pursuant to Section 10.2(a)(ii) may be payable unless and until the aggregate amount of Indemnified Liabilities that would otherwise be payable hereunder when claimed exceeds on a cumulative basis an amount equal to $100,000 (the “ Deductible ”), and then only to the extent such Indemnified Liabilities exceed the Deductible and (ii) the aggregate amount of payments to which the Indemnitees shall be entitled in satisfaction of claims for Indemnified Liabilities pursuant to Section 10.2(a)(ii) shall in no event exceed the aggregate purchase price of all Preferred Stock purchased by the Purchasers pursuant to this Agreement.

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(c) Materiality . Notwithstanding anything contained herein to the contrary, for purposes of this Section 10 of determining whether there has been a breach and the amount of Indemnified Liabilities, each representation and warranty in this Agreement, and any other instrument, certificate document or agreement executed pursuant hereto shall be read without regard and without giving effect to the terms “material” or “Material Adverse Effect” or similar phrases contained in such representation or warranty (as if such words or phrases were deleted from such representation and warranty).

(d) Subject to Section 10.2(b) , in the event of an indemnification claim by any Indemnitee pursuant to Section 10.2(a) , the then applicable conversion price with respect to the Preferred Stock set forth in the Certificate of Designation (as the same may have been adjusted from time to time) shall be automatically reduced by an amount equal to the product of (i) $3.00 (as adjusted for stock splits, reverse stock splits, stock dividends, and similar actions affecting the Preferred Stock, as applicable), which is the conversion price in effect as of the date of this Agreement multiplied by (ii) the result of (A) the amount of Indemnified Liabilities subject to such indemnification claim divided by (B) the Deemed Common Equity Value (for illustrative purposes, if the Company has agreed to pay $5,000,000 to settle the Direct Air Matter (ignoring for purposes of this illustration any related costs and expenses), then the amount of Indemnified Liabilities is $5,000,000 and the Deemed Common Equity Value is $34,587,282, which would result in a conversion price adjustment equal to $3.00 X ($5,000,000/$34,587,282), which equals a reduction in the conversion price of ~$0.437 per share); provided, however, that if the foregoing conversion price adjustment would cause the adjusted conversion price to be zero or a negative number, then the adjusted conversion price shall be deemed to be $0.001 (as adjusted for stock splits, reverse stock splits, stock dividends, and similar actions affecting the Preferred Stock, as applicable); provided, further, that if the indemnification claim is for Indemnified Liabilities relating to or arising out of a breach of a covenant by the Company or any of its Subsidiaries under this Agreement, the Certificate of Designation or any instrument, certificate or other document executed in connection with the transactions contemplated hereby, then such Purchaser may, at its sole option, elect to be paid in cash, by wire transfer of immediately available funds, for such Indemnified Liabilities.

Section 11. Termination Prior to the Initial Closing . Notwithstanding any other provision of this Agreement, as between a Purchaser and the Company, this Agreement may be terminated at any time prior to the Initial Closing:

(a) by the mutual written consent of such Purchaser and the Company;

(b) by such Purchaser or the Company, upon written notice to the other party, if the Initial Closing shall not have been consummated on or prior to May 15, 2014 (the “ Termination Date ”); provided , however , that the right to terminate this Agreement pursuant to this Section 11(b) shall not be available to any party whose breach of any provision of this Agreement results in or causes the failure of the Initial Closing to occur by such time;

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(c) by such Purchaser or the Company, upon written notice to the other party, if a Governmental Entity of competent jurisdiction has issued a decision, injunction, judgment, order, ruling, verdict, writ or any other action permanently enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement or the other Transaction Documents, and such decision, injunction, judgment, order, ruling, verdict, writ or any other action has become final and non-appealable; provided , however , that the right to terminate this Agreement pursuant to this Section 11(c) shall not be available to any party whose breach of any provision of this Agreement results in or causes such decision, injunction, judgment, order, ruling, verdict, writ or other action;

(d) by such Purchaser, upon written notice to the Company, if (i) there has been a breach of any representation, warranty, covenant or agreement made by the Company in this Agreement, such that the conditions to the Initial Closing set forth in Section 3 would not be satisfied and (ii) such breach is not cured (if curable) within thirty days after delivery of such notice; provided that this Section 11(d) shall only apply if such Purchaser is not in material breach of any of its obligations under this Agreement; or

(e) by such Purchaser, upon written notice to the Company, in the event the Company or any of its Subsidiaries, (a) become subject to any judgment, order, ruling or verdict, or settle or agree to settle any claim, dispute or litigation, in each case that results in the Company or any of its Subsidiaries becoming liable, net of insurance proceeds actually received (i) with respect to Merrick and arising out of or related to the Direct Air Matter, for an amount that, individually or in the aggregate, is not solely satisfied out of the Escrowed Shares (and without the payment of cash by the Company or any of its Subsidiaries) and/or the Designated Assets or (ii) in the case of any other third-party (including, without limitation, any sponsoring bank other than Merrick) or Merrick for any matter not arising out of or related to the Direct Air Matter, for an amount, individually or in the aggregate, equal to or exceeding $2,500,000 or (b) become subject to any claim made by any sponsoring bank or other third party which would reasonably be expected to cause the Company or its Subsidiaries to be liable, individually or in the aggregate, for an amount that is not solely satisfied out of the Escrowed Shares (and without the payment of cash by the Company or any of its Subsidiaries) and/or the Designated Assets (in the case of any claims by Merrick arising out of or related to the Direct Air Matter) or $2,500,000 (in the case of any other claim by any third party, including by Merrick for any claim not arising out of or related to the Direct Air Matter), as applicable.

In the event this Agreement is terminated pursuant to this Section 11 , such termination shall not relieve any party of liability for any breaches of this Agreement that occurred prior to such termination and notwithstanding any such termination, the provisions of Section 12 shall not terminate and shall be deemed to survive any such termination.

Section 12. General Provisions .

12.1. Expenses . The Company shall pay, and hold Purchaser and all holders of Preferred Stock, Series A-2 Preferred Stock and Underlying Common Stock harmless against liability for the payment of stamp and other taxes which may be payable in respect of the execution and delivery of this Agreement or the issuance, delivery or acquisition of any shares of Preferred Stock, Series A-2 Preferred Stock or any shares of Common Stock issuable upon conversion of Preferred Stock and/or Series A-2 Preferred Stock. In addition, the Company shall pay the reasonable legal fees and expenses (not to exceed $25,000 in the aggregate) of Greenberg Traurig, LLP, counsel to the Purchasers, incurred by such Purchasers in connection with the transactions contemplated by this Agreement, which amount shall be paid directly by the Company to Greenberg Traurig, LLP at the applicable Closing or paid by the Company to Greenberg Traurig, LLP upon termination of this Agreement so long as such termination did not occur as a result of a material breach by such Purchasers of any of their obligations hereunder (as the case may be).

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12.2. Amendments and Waivers . Except as otherwise provided herein, no term of this Agreement may be amended or modified without the prior written consent of the Company and the holders of a majority of the Underlying Common Stock purchased hereunder (treating for this purpose only the holders of Preferred Stock and Series A-2 Preferred Stock as holders of Underlying Common Stock that such shares of Preferred Stock and/or Series A-2 Preferred Stock are convertible or are converted into). No provision of this Agreement may be waived except in a writing executed and delivered by the party against whom such waiver is sought to be enforced. The failure or delay of any Person to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such Person thereafter to enforce each and every provision of this Agreement in accordance with its terms. A waiver of consent to or of any breach or default by any Person in the performance by that Person of his, her or its obligations under this Agreement shall not be deemed to be a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person under this Agreement. For purposes of this Agreement and the Transaction Agreements, shares of Preferred Stock, Series A-2 Preferred Stock or Underlying Common Stock held by the Company or any Subsidiaries shall not be deemed to be outstanding.

12.3. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be prohibited, invalid, illegal or unenforceable in any respect under applicable Law in any jurisdiction, such provision shall be affected only to the extent of such prohibition, illegality, unenforceability or invalidity, without invalidating the remainder of this Agreement.

12.4. Remedies . Each holder of Preferred Stock, Series A-2 Preferred Stock and Underlying Common Stock shall have all rights and remedies set forth in this Agreement, the Certificate of Incorporation, the Certificate of Designation and the Series A-2 Certificate of Designation and all rights and remedies which such holders have been granted at any time under any other agreement or contract 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 caused by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that a breach of this Agreement would cause irreparable harm and money damages would not be an adequate remedy for any such breach and that, in addition to any other rights and remedies existing hereunder, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.

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12.5. Successors and Assigns . Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns whether so expressed or not. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for a Purchaser’s benefit as a purchaser or holder of Preferred Stock, Series A-2 Preferred Stock or Underlying Common Stock are also for the benefit of, and enforceable by, any subsequent holder of such Preferred Stock, Series A-2 Preferred Stock or such Underlying Common Stock.

12.6. Notices . Any notice, demand or other communication to be given under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when delivered personally to the recipient, (ii) when sent by confirmed facsimile if sent during normal business hours of the recipient; but if not, then on the next Business Day (provided that any such notice under this clause (ii) shall not be effective unless within one Business Day after the notice is sent, a copy of such notice is sent to the recipient by first-class mail, return receipt requested, or reputable overnight courier service (charges prepaid)), (iii) one Business Day after it is sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) three Business Days after it is mailed to the recipient by first-class mail, return receipt requested. All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by five days’ advance written notice to the other party:

If to the Company :

JetPay Corporation
1175 Lancaster Avenue, Suite 100

Berwyn, Pennsylvania 19312

Attention: President

Facsimile: (484) 318-8370

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

Dechert LLP

Cira Centre

2929 Arch Street

Philadelphia, PA 19104

Attention: James A. Lebovitz

Facsimile: (215) 994-2222

If to a Purchaser :

c/o Wellington Management Company, LLP

280 Congress Street

Boston, MA 02210

Attention: Legal Department

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Facsimile: 617-289-5699

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

Greenberg Traurig, LLP

One International Place

Boston, MA 02110

Attention: Bradley A. Jacobson

Facsimile: (617) 279-8402

12.7. Business Days . If any time period for giving notice or taking action under this Agreement expires on a day that is not a Business Day, the time period shall automatically be extended to the Business Day immediately following such Saturday, Sunday or legal holiday.

12.8. Governing Law . The corporate Law of the State of Delaware shall govern all issues and questions concerning the relative rights and obligations of the Company and its stockholders. All other issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.

12.9. Mutual Waiver of Jury Trial . As a specifically bargained inducement for each of the parties hereto to enter into this Agreement (with each party having had opportunity to consult counsel), each party hereto expressly and irrevocably waives the right to trial by jury in any lawsuit or other legal proceeding relating to or arising in any way from this Agreement, the other Transaction Agreements or the transactions contemplated herein, and any lawsuit or other legal proceeding relating to or arising in any way to this Agreement, the other Transaction Agreements or the transactions contemplated herein shall be tried in a court of competent jurisdiction by a judge sitting without a jury.

12.10. CONSENT TO JURISDICTION AND SERVICE OF PROCESS . THE PARTIES HERETO AGREE THAT JURISDICTION AND VENUE IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY ANY PARTY PURSUANT TO THIS AGREEMENT OR ANY OTHER TRANSACTION AGREEMENT SHALL PROPERLY AND EXCLUSIVELY LIE IN THE CHANCERY COURT OF THE STATE OF DELAWARE AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE OF DELAWARE (OR, IF THE CHANCERY COURT OF THE STATE OF DELAWARE DECLINES TO ACCEPT JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE STATE OF DELAWARE). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY WITH RESPECT TO SUCH SUIT, ACTION OR PROCEEDING. THE PARTIES HERETO IRREVOCABLY AGREE THAT VENUE WOULD BE PROPER IN SUCH COURT AND HEREBY WAIVE ANY OBJECTION THAT ANY SUCH COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE RESOLUTION OF SUCH SUIT, ACTION OR PROCEEDING. EACH OF THE PARTIES FURTHER IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 12.6 . Nothing in this Agreement will affect the right of any party to serve process in any other manner permitted by law.

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12.11. Effective Date . This Agreement shall become effective immediately upon execution and delivery thereof by the parties hereto.

12.12. Descriptive Headings; Interpretation . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than by limitation.

12.13. No Strict Construction . The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or non-U.S. statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word ‘‘including’’ shall mean including without limitation.

12.14. Electronic Delivery . This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent executed and delivered by means of a photographic, photostatic, facsimile, or similar reproduction of such signed writing using a facsimile machine or electronic mail shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

12.15. Entire Agreement . Except as otherwise provided herein, this Agreement and the other agreements and instruments referred to herein contain the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and thereof and supersede and preempt any prior understandings, agreements and representations by or among the parties hereto (whether written or oral) which may have related to the subject matter hereof or thereof in any way.

12.16. Counterparts . This Agreement may be executed simultaneously in multiple counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement.

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12.17. Capital and Surplus; Special Reserves . The Company agrees that the capital of the Company (as such term is used in Section 154 of the General Corporation Law of Delaware) in respect of the Preferred Stock issued pursuant to this Agreement shall be equal to the aggregate par value of such shares and that it shall not increase the capital of the Company with respect to any shares of the Company’s Capital Stock at any time on or after the date of this Agreement. The Company also agrees that it shall not create any special reserves under Section 171 of the General Corporation Law of Delaware without the prior written consent of the holders of at least 50% of the outstanding Preferred Stock and the Series A Preferred Stock, voting together as a single class.

12.18. Treatment of the Preferred Stock and Series A-2 Preferred Stock . The Company covenants and agrees that (a) so long as federal income Tax Laws prohibit a deduction for distributions made by the Company with respect to equity interests, it shall treat all distributions paid by it on the Preferred Stock or Series A-2 Preferred Stock as Non-deductible dividends on all of its Tax Returns and (b) it shall treat the Preferred Stock and Series A-2 Preferred Stock as equity interests in all of its financial statements and other reports and shall treat all distributions paid by it on the Preferred Stock or Series A-2 Preferred Stock as dividends on equity interests in such statements and reports. The Company and the Purchasers mutually agree that the Preferred Stock and the Series A-2 Preferred Stock is stock which participates in corporate growth to a significant extent within the meaning of Treasury Regulations Section 1.305-5(a), and hence will not be treated as preferred stock for purposes of Code Section 305 and the regulations thereunder.

12.19. Generally Accepted Accounting Principles . When any accounting determination or calculation is required to be made under this Agreement or the exhibits hereto, such determination or calculation (unless otherwise provided) shall be made in accordance with GAAP, consistently applied, except that if because of a change in GAAP the Company would have to alter a previously utilized accounting method or policy in order to remain in compliance with GAAP, such determination or calculation shall continue to be made in accordance with the Company’s previous accounting methods and policies, unless otherwise directed by the holders of at least 50% of the outstanding Preferred Stock and the Series A Preferred Stock, voting together as a single class.

12.20. Third Party Beneficiaries . Nothing in this Agreement (implied or otherwise) is intended to confer upon any Person other than the parties or their respective successors and permitted assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement.

* * * * *

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

	JETPAY CORPORATION

	By:	/s/ Bipin C. Shah
	Name:	Bipin C. Shah
	Its:	Chairman and Chief Executive Officer

[Signature Page to Securities Purchase Agreement]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.

	PURCHASER

	By:	Wellington Management Company, LLP, its investment advisor

	By:	/s Steven M. Hoffman
	Name:	Steven M. Hoffman
	Title:	Vice President and Counsel

Total Shares: 9,000

Initial Closing Shares: 2,565

Initial Closing Purchase Price: $769,500

Specified Percentage of Flexpoint’s Investment: 6,75%

[Signature Page to Securities Purchase Agreement]