VIRTUAL PIGGY, INC. (Form: 8-K, Received: 08/29/2016 16:06:47)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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): August 26, 2016

VIRTUAL PIGGY, INC.

(Exact name of Registrant as specified in charter)

Delaware

(State or other jurisdiction

of incorporation)

0-53944

(Commission File Number)

35-2327649

(I.R.S. Employer

Identification No.)

265 Sunrise Boulevard, Palm Beach, FL 33480

(Address of principal executive offices, including zip code)

(917) 216-3740

(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 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of the Registrant.

New Secured Note Financing

On August 26, 2016, Virtual Piggy, Inc. (the “Company”), pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), issued $600,000 aggregate principal amount of its 3.5% Secured Convertible Promissory Notes due June 30, 2018 (the “New Secured Notes”) to certain accredited investors (the “Investors”), which include a purchase of $100,000 of New Secured Notes by Kirk Bradley, a member of the Company’s Board of Directors (the “New Secured Note Offering”). The aggregate consideration provided in the New Secured Note Offering consisted of $300,000 in cash and the exchange of $300,000 outstanding principal amount of 10% Secured Convertible Promissory Notes due March 6, 2017 (the “Prior Secured Notes”) for New Secured Notes.

The New Secured Notes are convertible by the holders, at any time, into shares of the Company’s newly authorized Series C Cumulative Convertible Preferred Stock (“Series C Preferred Stock”) at a conversion price of $90.00 per share, subject to adjustment for stock splits, stock dividends and similar transactions with respect to the Series C Preferred Stock only. Each share of Series C Preferred Stock is currently convertible into 100 shares of the Company’s common stock at a current conversion price of $0.90 per share, subject to full ratchet anti-dilution adjustment for one year and weighted average anti-dilution adjustment thereafter, as described in the Certificate of Designation of the Series C Preferred Stock. Upon a liquidation event, the Company shall first pay to the holders of the Series C Preferred Stock, on a pari passu basis with the holders of the Company’s outstanding Series A Preferred Stock and Series B Preferred Stock, an amount per share equal to 700% of the conversion price (i.e., $630.00 per share of Series C Preferred Stock), plus all accrued and unpaid dividends on each share of Series C Preferred Stock (the “Series C Preference Amount”). The Series C Preference Amount shall be paid prior and in preference to payment of any amounts to the Common Stock. After the payment of all preferential amounts required to be paid to the holders of shares of Series C Preferred Stock, Series A Preferred Stock, Series B Preferred Stock and any additional senior preferred stock, the Series C Preferred Stock participates in further distributions subject to an aggregate cap of seven and one-half times (7.5x) the original issue price thereof, plus all accrued and unpaid dividends.

In addition, the Company entered into an Amended and Restated Security Agreement by and among the Company, the Investors, the holders of the Company’s outstanding 10% Secured Convertible Promissory Notes due March 6, 2017 (the “Prior Secured Notes”) and a collateral agent acting on behalf of the Investors and holders of the Prior Secured Notes (the “Security Agreement”). Pursuant to the Security Agreement, the New Secured Notes are secured, pari passu with the Prior Secured Notes, by a lien against substantially all of the Company’s business assets.

Pursuant to the Purchase Agreement, the Company also granted piggyback registration rights to the holders of the Series C Preferred Stock upon a conversion of the New Secured Notes.

Exchange of Unsecured Notes

In conjunction with the New Secured Note Offering, the Company agreed to enter into a Note Exchange Agreement with the holders of its outstanding unsecured promissory notes in the aggregate principal amount of $1,685,000 (the “Unsecured Notes”) pursuant to which the Unsecured Notes, plus any accrued interest and fees thereon, were exchanged for Prior Secured Notes, on a dollar-for-dollar basis (representing, an aggregate principal amount of newly issued Prior Secured Notes of $1,885,571). Kirk Bradley, a director of the Company, was the holder of $50,000 principal amount of Unsecured Notes, which were exchanged for $51,164.00 of principal amount of Prior Secured Notes, of which $50,000 was then exchanged for New Secured Notes.

The descriptions of the Series C Preferred Stock, the Purchase Agreement, the New Secured Notes, the Security Agreement, and Note Exchange Agreement as set forth herein do not purport to be complete and are qualified in their entirety by the provisions of the forms of Certificate of Designation of Preferences, Rights and Limitations of Series C Cumulative Convertible Preferred Stock, Purchase Agreement, the New Secured Notes, the Security Agreement and the Note Exchange Agreement, copies of which are attached hereto as Exhibits 3.1, 10.1, 10.2, 10.3 and 10.4, respectively, and are incorporated herein by reference.

ITEM 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year .

On August 26, 2016, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series C Cumulative Convertible Preferred Stock with the Delaware Secretary of State, authorizing the issuance of the Series C Preferred Stock. The information set forth above under Item 2.03 above with respect to the description of the Series C Preferred Stock is hereby incorporated by reference into this Item 5.03.

ITEM 9.01. Financial Statements and Exhibits.

(d) Exhibits – The following exhibits are filed as part of this report:

Exhibit No. Description of Exhibit

3.1	Certificate of Designation of Preferences, Rights and Limitations of Series C Cumulative Convertible Preferred Stock
10.1	Form of Securities Purchase Agreement
10.2	Form of Secured Convertible Promissory Note
10.3	Form of Amended and Restated Security Agreement
10.4	Form of Note Exchange Agreement

SIGNATURES

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.

		VIRTUAL PIGGY, INC.



Date: August 29, 2016	By:		/s/ Scott McPherson
			Scott McPherson
			Chief Financial Officer

Exhibit 3.1

VIRTUAL PIGGY, INC.

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK

The undersigned, Scott McPherson, hereby certifies that:

1. He is the Chief Financial Officer of Virtual Piggy, Inc., a Delaware corporation (the “ Corporation ”).

2. The Corporation is authorized to issue 2,000,000 shares of preferred stock, par value $0.0001 per share, of which (a) 195,500 shares have been designated Series A Cumulative Convertible Preferred Stock, 108,600 of which shares of Series A Cumulative Convertible Preferred Stock are issued and outstanding and (b) 222,222 shares have been designated Series B Cumulative Convertible Preferred Stock, 28,378 of which shares of Series B Cumulative Convertible Preferred Stock are issued and outstanding.

3. The following resolutions were duly adopted by the Board of Directors:

WHEREAS, the certificate of incorporation, as amended to date, of the Corporation provides for a class of its authorized stock known as preferred stock, comprised of up to 2,000,000 shares, par value $0.0001 per share (the “ Preferred Stock ”), issuable from time to time in one or more series;

WHEREAS, the Board of Directors of the Corporation is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of Preferred Stock and the number of shares constituting any series and the designation thereof, of any of them;

WHEREAS, as of the date hereof, 195,500 shares of Preferred Stock have been designated Series A Cumulative Convertible Preferred Stock, 108,600 of which are issued and outstanding, 222,222 shares of Preferred Stock have been designated Series B Cumulative Convertible Preferred Stock, 28,378 of which are issued and outstanding, and it is the desire of the Board of Directors of the Corporation, pursuant to its authority as aforesaid, to authorize 150,000 shares of Series C Cumulative Convertible Preferred Stock pursuant to the following Certificate of Designation of Preferences, Rights and Limitations.

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby authorize the following Certificate of Designation of Preferences, Rights and Limitations to provide for the issuance of a Series C Cumulative Convertible Preferred Stock for cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such Series C Cumulative Convertible Preferred Stock as follows:

TERMS OF SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK

1. Designation, Amount and Par Value . This series of Preferred Stock shall be designated as the Corporation’s Series C Cumulative Convertible Preferred Stock (the “ Series C Preferred Stock ”) and the number of shares so designated shall be 150,000 (which shall not be subject to increase without the consent of a majority of the holders of the Series C Preferred Stock. Each share of Series C Preferred Stock shall have a par value of $0.0001 per share.

2. Ranking .

2.1 Senior Preferred . The Corporation’s authorized Series A Cumulative Convertible Preferred Stock (the “ Series A Preferred Stock ”) and Series B Cumulative Convertible Preferred Stock (the “ Series B Preferred Stock ”) shall rank equal in priority to the Series C Preferred Stock with respect to dividend rights and rights upon liquidation, winding-up or dissolution. The Corporation is authorized to issue other series of Preferred Stock that rank equal to the Series C Preferred Stock with respect to dividend rights and rights upon liquidation, winding-up or dissolution. The Series C Preferred Stock, Series A Preferred Stock, Series B Preferred Stock and such other series of Preferred Stock that ranks equal to the Series C Preferred Stock are collectively referred to herein as the “ Senior Preferred Stock ”. Such other series of Preferred Stock that rank equal to the Series C Preferred Stock are referred to herein as the “ Additional Senior Preferred Stock ”.

2.2 Preferred Stock Senior to Series C Preferred Stock . Notwithstanding the terms of Section 2.1 above, the Corporation is authorized to issue other series of Preferred Stock that rank senior to the Series C Preferred Stock with respect to dividend rights and rights upon liquidation, winding-up or dissolution to the extent that such other Preferred Stock issuance is to a strategic or industry investor.

2.3 Junior Preferred . In addition to the Senior Preferred Stock, the Corporation is authorized to issue other series of preferred stock that rank junior to the Series C Preferred Stock with respect to dividend rights and rights upon liquidation, winding-up or dissolution (the “ Junior Preferred Stock ”). The Series C Preferred Stock and any other series of Senior Preferred Stock shall rank senior to the Corporation’s common stock, par value $0.0001 per share (“ Common Stock ”) and the Junior Preferred Stock with respect to dividend rights and rights upon liquidation, winding-up or dissolution.

3 Dividends and Other Distributions .

3.1 Accruing Dividends and Dividend Rate . From and after the date of the issuance of any shares of Series C Preferred Stock, dividends at the rate per annum of $7.20 per share shall accrue on such shares of Series C Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock) (the “ Accruing Dividends ”). Accruing Dividends shall accrue from day to day, whether or not declared, and shall be cumulative; provided, however, that except as set forth in the following sentence of this Section 3 or in Subsection 4.1 , such Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors and the Corporation shall be under no obligation to pay such Accruing Dividends. Under and subject to the last sentence of this Section, the Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in the Certificate of Incorporation) the holders of the Series C Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series C Preferred Stock in an amount at least equal to the greater of (i) the amount of the aggregate Accruing Dividends then accrued on such share of Series C Preferred Stock and not previously paid and (ii) (A) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Series C Preferred Stock as would equal the product of (1) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (2) the number of shares of Common Stock issuable upon conversion of a share of Series C Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (B) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Series C Preferred Stock determined by (1) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (2) multiplying such fraction by an amount equal to the Series C Original Issue Price (as defined below); provided that if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Series C Preferred Stock pursuant to this Section 3 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series C Preferred Stock dividend. The “ Series C Original Issue Price ” shall mean $90.00 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock. Notwithstanding the foregoing, the Company has the right to issue one or more additional classes of Preferred Shares that provide for the declaration, payment and/or setting aside of the payment of dividends and such other dividend rights that are senior and in priority to the rights provided above, provided such one or more additional classes of Preferred Shares are issued under and subject to Section 2.2 above.

4. Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales .

4.1 Preferential Payments to Holders of Series C Preferred Stock . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the holders of shares of Series C Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to the holders of Common Stock or Junior Preferred Stock by reason of their ownership thereof, an amount per share equal to seven times (7x) the Series C Original Issue Price, plus any Accruing Dividends accrued but unpaid thereon, whether or not declared, together with any other dividends declared but unpaid thereon (the “ Series C Preference Amount ”). The Series C Preference Amount shall be paid on a pari passu basis with the liquidation preference payable to the holders of Additional Senior Preferred Stock, if any, not to exceed seven times (7x) the issue price of the Additional Senior Preferred Stock, plus any Accruing Dividends accrued but unpaid thereon, whether or not declared, together with any other dividends declared but unpaid thereon. Any preference on a series of Additional Senior Preferred Stock in excess of seven times (7x) the issue price of the Additional Senior Preferred Stock, plus any Accruing Dividends accrued but unpaid thereon, shall not be paid pari passu with the Series C Preference Amount; but rather, after and subordinate to the Series C Preference Amount. If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series C Preferred Stock the full amount to which they shall be entitled under this Subsection 4.1 , the holders of shares of Series C Preferred Stock and Additional Senior Preferred Stock, if any, shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. Notwithstanding the foregoing, the Company has the right to issue one or more additional classes of Preferred Stock that provide for preferential payments upon liquidation, winding-up or dissolution and such other preferential payment rights that are senior and in priority to the rights provided above, provided such one or more additional classes of Preferred Stock are issued under and subject to Section 2.2 above.

4.2 Distribution of Remaining Assets . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, after the payment of all preferential amounts required to be paid to the holders of shares of Series C Preferred Stock and Additional Senior Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of the shares of Junior Preferred Stock, if any, to the extent of their preference and thereafter among the holders of the shares of Common Stock, Series C Preferred Stock and any series of Preferred Stock entitled to participation rights, pro rata based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to Common Stock pursuant to the terms of the Certificate of Incorporation immediately prior to such liquidation, dissolution or winding up of the Corporation; provided, however, that if the aggregate amount per share which the holders of Series C Preferred Stock are entitled to receive under Subsections 4.1 and 4.2 shall exceed seven-and-a-half times (7.5x) the Series C Original Issue Price, plus any Accruing Dividends accrued but unpaid thereon, whether or not declared, together with any other dividends declared but unpaid thereon (the “ Maximum Participation Amount ”), each holder of Series C Preferred Stock shall be entitled to receive upon such liquidation, dissolution or winding up of the Corporation the greater of (i) the Maximum Participation Amount and (ii) the amount such holder would have received if all shares of Series C Preferred Stock had been converted into Common Stock immediately prior to such liquidation, dissolution or winding up of the Corporation. The aggregate amount which a holder of a share of Series C Preferred Stock is entitled to receive under Subsections 4.1 and 4.2 is hereinafter referred to as the “ Series C Liquidation Amount .”

4.3 Deemed Liquidation Events .

4.3.1 Definition . Each of the following events shall be considered a “ Deemed Liquidation Event ” unless the holders of at least a majority of the outstanding shares of Series C Preferred Stock elect otherwise by written notice sent to the Corporation at least five (5) days prior to the effective date of any such event:

(a) a merger or consolidation in which

(i) the Corporation is a constituent party or

(ii) a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation,

except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; or

(b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger, consolidation or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.

4.3.2 Effecting a Deemed Liquidation Event .

(a) The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Subsection 4.3.1(a)(i) unless the agreement or plan of merger or consolidation for such transaction (the “ Merger Agreement ”) provides that the consideration payable to the stockholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 4.1 and 4.2 ., unless the holders of at least a majority of the outstanding shares of Series C Preferred Stock elect otherwise by written notice sent to the Corporation.

(b) In the event of a Deemed Liquidation Event referred to in Subsection 4.3.1(a)(ii) or 4.3.1(b) , if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Series C Preferred Stock no later than the ninetieth (90 ^th ) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause; (ii) to require the redemption of such shares of Series C Preferred Stock, and (iii) if the holders of at least a majority of the then outstanding shares of Series C Preferred Stock so request in a written instrument delivered to the Corporation not later than one hundred twenty (120) days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Corporation) , together with any other assets of the Corporation available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “ Available Proceeds ”), on the one hundred fiftieth (150 ^th ) day after such Deemed Liquidation Event, to redeem all outstanding shares of Series C Preferred Stock at a price per share equal to the Series C Liquidation Amount. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Series C Preferred Stock, the Corporation shall ratably redeem each holder’s shares of Series C Preferred Stock to the fullest extent of such Available Proceeds, and shall redeem the remaining shares as soon as it may lawfully do so under Delaware law governing distributions to stockholders. Prior to the distribution or redemption provided for in this Subsection 4.3.2(b) , the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business.

4.3.3 Amount Deemed Paid or Distributed . If the amount deemed paid or distributed under this Subsection 4.3.3 is made in property other than in cash, the value of such distribution shall be the fair market value of such property, determined as follows:

(a) For securities not subject to investment letters or other similar restrictions on free marketability,

(i) if traded on a securities exchange, the value shall be deemed to be the average of the closing prices of the securities on such exchange or market over the thirty (30) day period ending three (3) days prior to the closing of such transaction;

(ii) if actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the thirty (30) day period ending three (3) days prior to the closing of such transaction; or

(iii) if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board of Directors of the Corporation.

(b) The method of valuation of securities subject to investment letters or other similar restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall take into account an appropriate discount (as determined in good faith by the Board of Directors of the Corporation) from the market value as determined pursuant to clause (a) above so as to reflect the approximate fair market value thereof.

5. Voting .

5.1 General . On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series C Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series C Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Certificate of Incorporation, holders of Series C Preferred Stock shall vote together with the holders of Common Stock as a single class.

5.2 Series C Preferred Stock Protective Provisions . For so long as (i) the Corporation has not issued any other series of Preferred Stock that rank senior to the Series C Preferred Stock in accordance with Section 2.2 hereof and (ii) at least fifty percent (50%) of the number of shares of Series C Preferred Stock originally issued (subject to appropriate adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization with respect to the Series C Preferred Stock) remain outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series C Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect:

5.2.1 liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger or consolidation or any other Deemed Liquidation Event, or consent to any of the foregoing, unless as a result of any Deemed Liquidation Event, the holders of the Series C Preferred Shares receive their full Series C Preference Amount, in which case no such consent shall be necessary;

5.2.2 amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers, preferences or rights of the Series C Preferred Stock; or

5.2.3 create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock other than shares of Common Stock or as otherwise permitted in Section 2 hereof, or increase the authorized number of shares of Series C Preferred Stock or increase the authorized number of shares of any additional class or series of capital stock (other than Common Stock) other than as permitted in Section 2 hereof.

6. Optional Conversion .

The holders of the Series C Preferred Stock shall have conversion rights as follows (the “ Conversion Rights ”):

6.1 Right to Convert .

6.1.1 Conversion Ratio . Each share of Series C Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Series C Original Issue Price by the Series C Conversion Price (as defined below) in effect at the time of conversion. The “ Series C Conversion Price ” shall initially be equal to $0.90. Such initial Series C Conversion Price, and the rate at which shares of Series C Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided in Section 6.4 hereof and shall be subject to the limitation set forth in Section 6.1.3 hereof.

6.1.2 Termination of Conversion Rights . In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series C Preferred Stock.

6.1.3 Limitation on Conversion . Each holder of Series C Preferred Stock shall not have the right to convert any portion of the Series C Preferred Stock pursuant to Section 6.1 hereof, to the extent that after giving effect to such conversion, the holder (together with the holder’s affiliates) would beneficially own in excess of 4.99% (the “ Maximum Percentage ”) of the number of shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of this Section 6.1.3 , in determining the number of outstanding shares of Common Stock, the holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Corporation’s most recent Form 10-Q or Form 8-K, as the case may be (y) a more recent public announcement by the Corporation or (z) any other notice by the Corporation or the transfer agent of the Corporation setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the holder, the Corporation shall within one business day confirm orally and in writing to the holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Corporation, including the Series C Preferred Stock, by the holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Corporation, the holder may increase or decrease the Maximum Percentage to any other percentage specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Corporation (unless such notice is provided prior to the initial issuance of such Series C Preferred Stock), and (ii) any such increase or decrease will apply only to the holder and not to any other holder of Series C Preferred Stock.

6.2 Fractional Shares . No fractional shares of Common Stock shall be issued upon conversion of the Series C Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Corporation. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Series C Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

6.3 Mechanics of Conversion .

6.3.1 Notice of Conversion . In order for a holder of Series C Preferred Stock to voluntarily convert shares of Series C Preferred Stock into shares of Common Stock, such holder shall (a) provide written notice to the Corporation’s transfer agent at the office of the transfer agent for the Series C Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent for the Series C Preferred Stock) that such holder elects to convert all or any number of such holder’s shares of Series C Preferred Stock and, if applicable, any event on which such conversion is contingent and (b), if such holder’s shares are certificated, surrender the certificate or certificates for such shares of Series C Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Series C Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent for the Series C Preferred Stock). Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the shares of Common Stock to be issued. If required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent for the Series C Preferred Stock) of such notice and, if applicable, certificates (or lost certificate affidavit and agreement) shall be the time of conversion (the “ Conversion Time ”), and the shares of Common Stock issuable upon conversion of the specified shares shall be deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time (i) issue and deliver to such holder of Series C Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Series C Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (ii) pay in cash such amount as provided in Subsection 6.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) pay all declared but unpaid dividends on the shares of Series C Preferred Stock converted.

6.3.2 Reservation of Shares . Prior to, or as promptly following the issuance of the Series C Preferred Stock as it may do so, the Corporation shall reserve a number of shares of Common Stock equal to at least 150% of the number of shares of Common Stock into which the issued Series C Preferred Stock are convertible at issuance. At all times when the Series C Preferred Stock shall be outstanding, the Corporation shall take such corporate action as may be necessary to reserve and keep such number of shares available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series C Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series C Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Certificate of Incorporation. Before taking any action which would cause an adjustment reducing the Series C Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the Series C Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Series C Conversion Price.

6.3.3 Effect of Conversion . All shares of Series C Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Subsection 6.2 and to receive payment of any dividends declared but unpaid thereon. Any shares of Series C Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series C Preferred Stock accordingly.

6.3.4 No Further Adjustment . Upon any such conversion, no adjustment to the Series C Conversion Price shall be made for any declared but unpaid dividends on the Series C Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.

6.3.5 Taxes . The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series C Preferred Stock pursuant to this Section 6 . The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series C Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

6.4 Adjustments to Series C Conversion Price for Diluting Issues .

6.4.1 Special Definitions . For purposes of this Section 6 , the following definitions shall apply:

(a) “ Option ” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

(b) “ Series C Original Issue Date ” shall mean the date on which the Series C Preferred Stock was first authorized pursuant to this Certificate of Designation.

(c) “ Convertible Securities ” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

(d) “ Additional Shares of Common Stock ” shall mean all shares of Common Stock issued (or, pursuant to Subsection 6.4.3 below, deemed to be issued) by the Corporation after the Series C Original Issue Date, other than (1) the following shares of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “ Exempted Securities ”):

(i) shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on Series C Preferred Stock or any Additional Senior Preferred Stock;

(ii) shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Subsection 6.5, 6.6, 6.7 or 6.8 ;

(iii) shares of Common Stock, Options or Convertible Securities issued to investment bankers or broker-dealers in connection with the issuance of the Series C Preferred Stock;

(iv) shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Corporation;

(v) shares of Common Stock, Options or Convertible Securities issued in connection with a bona-fide strategic transaction approved by the Board of Directors of the Corporation, where the purchaser is a strategic or industry investor;

(vi) shares of Common Stock actually issued upon the conversion of the Senior Preferred Stock; or

(vii) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security.

6.4.2 No Adjustment of Series C Conversion Price . No adjustment in the Series C Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series C Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.

6.4.3 Deemed Issue of Additional Shares of Common Stock .

(a) If the Corporation at any time or from time to time after the Series C Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, until such time as the Common Stock is no longer issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

(b) If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Series C Conversion Price pursuant to the terms of Subsection 6.4.4 or Subsection 6.4.5 , are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Series C Conversion Price computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Series C Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the Series C Conversion Price to an amount which exceeds the lower of (i) the Series C Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the Series C Conversion Price that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.

(c) If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the Series C Conversion Price pursuant to the terms of Subsection 6.4.4 or Subsection 6.4.5 (either because the consideration per share (determined pursuant to Subsection 6.4.6 ) of the Additional Shares of Common Stock subject thereto was equal to or greater than the Series C Conversion Price then in effect, or because such Option or Convertible Security was issued before the Series C Original Issue Date), are revised after the Series C Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Subsection 6.4.3(a) ) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

(d) Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Series C Conversion Price pursuant to the terms of Subsection 6.4.4 or Subsection 6.4.5 , the Series C Conversion Price shall be readjusted to such Series C Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.

(e) If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the Series C Conversion Price provided for in this Subsection 6.4.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Subsection 6.4.3 ). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the Series C Conversion Price that would result under the terms of this Subsection 6.4.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Series C Conversion Price that such issuance or amendment took place at the time such calculation can first be made.

6.4.4 Adjustment of Series C Conversion Price Upon Issuance of Additional Shares of Common Stock . In the event the Corporation shall at any time after the Series C Original Issue Date and prior to the one-year anniversary of the Series C Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 6.4.3 ), without consideration or for a consideration per share less than the applicable Series C Conversion Price in effect immediately prior to such issue, then the Series C Conversion Price shall be reduced, concurrently with such issue, to the consideration per share received by the Corporation for such issue or deemed issue of the Additional Shares of Common Stock; provided that if such issuance or deemed issuance was without consideration, then the Corporation shall be deemed to have received an aggregate of $.0001 of consideration for all such Additional Shares of Common Stock issued or deemed to be issued.

6.4.5 Adjustment of Series C Conversion Price Upon Issuance of Additional Shares of Common Stock . In the event the Corporation shall at any time after the one-year anniversary of the Series C Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 6.4.3 ), without consideration or for a consideration per share less than the Series C Conversion Price in effect immediately prior to such issue, then the Series C Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-thousandth of a cent) determined in accordance with the following formula:

CP2 = CP1* (A + B) ÷ (A + C).

For purposes of the foregoing formula, the following definitions shall apply:

(a) “ CP2 ” shall mean the Series C Conversion Price in effect immediately after such issue of Additional Shares of Common Stock

(b) “ CP1 ” shall mean the Series C Conversion Price in effect immediately prior to such issue of Additional Shares of Common Stock;

(c) “ A ” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options and Warrants outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities (including the Series C Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);

(d) “ B ” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CP1); and

(e) “ C ” shall mean the number of such Additional Shares of Common Stock issued in such transaction.

6.4.6 Determination of Consideration . For purposes of this Subsection 6.4 , the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

(a) Cash and Property : Such consideration shall:

(i) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest;

(ii) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors of the Corporation; and

(iii) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors of the Corporation.

(b) Options, Warrants and Convertible Securities . The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Subsection 6.4.3 , relating to Options, Warrants and Convertible Securities, shall be determined by dividing:

(i) The total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options, Warrants or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options, Warrants or the conversion or exchange of such Convertible Securities, or in the case of Options or Warrants for Convertible Securities, the exercise of such Options or Warrants for Convertible Securities and the conversion or exchange of such Convertible Securities, by

(ii) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options, Warrants or the conversion or exchange of such Convertible Securities, or in the case of Options or Warrants for Convertible Securities, the exercise of such Options or Warrants for Convertible Securities and the conversion or exchange of such Convertible Securities.

6.4.7 Multiple Closing Dates . In the event the Corporation shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to the Series C Conversion Price pursuant to the terms of Subsection 6.4.4 or Subsection 6.4.5 , then, upon the final such issuance, the Series C Conversion Price shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).

6.5 Adjustment for Stock Splits and Combinations . If the Corporation shall at any time or from time to time after the Series C Original Issue Date effect a subdivision of the outstanding Common Stock, the Series C Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Series C Original Issue Date combine the outstanding shares of Common Stock, the Series C Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

6.6 Adjustment for Certain Dividends and Distributions . In the event the Corporation at any time or from time to time after the Series C Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the Series C Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Series C Conversion Price then in effect by a fraction:

(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

Notwithstanding the foregoing (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series C Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Series C Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made if the holders of Series C Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Series C Preferred Stock had been converted into Common Stock on the date of such event.

6.7 Adjustments for Other Dividends and Distributions . In the event the Corporation at any time or from time to time after the Series C Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 3 do not apply to such dividend or distribution, then and in each such event the holders of Series C Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Series C Preferred Stock had been converted into Common Stock on the date of such event.

6.8 Adjustment for Merger or Reorganization, etc . Subject to the provisions of Subsection 4.3 , if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Series C Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 6.4, 6.6 or 6.7 ), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Series C Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of Series C Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions in this Section 6 with respect to the rights and interests thereafter of the holders of the Series C Preferred Stock, to the end that the provisions set forth in this Section 6 (including provisions with respect to changes in and other adjustments of the Series C Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series C Preferred Stock. For the avoidance of doubt, nothing in this Subsection 6.8 shall be construed as preventing the holders of Series C Preferred Stock from seeking any appraisal rights to which they are otherwise entitled under the DGCL in connection with a merger triggering an adjustment hereunder, nor shall this Subsection 6.8 be deemed conclusive evidence of the fair value of the shares of Series C Preferred Stock in any such appraisal proceeding.

6.9 Certificate as to Adjustments . Upon the occurrence of each adjustment or readjustment of the Series C Conversion Price pursuant to this Section 6 , the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series C Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Series C Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Series C Preferred Stock (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Series C Conversion Price then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Series C Preferred Stock.

6.10 Notice of Record Date . In the event:

(a) the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Series C Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(b) of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, or any Deemed Liquidation Event; or

then, and in each such case, the Corporation will send or cause to be sent to the holders of the Series C Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Series C Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series C Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

7. Mandatory Conversion .

7.1 Trigger Events . In the event (a) the shares of Common Stock into which the shares of Series C Preferred Stock are convertible are either covered by an effective registration statement, or can be freely traded without volume or other limitations under Rule 144; and (b) the average closing price of the Common Stock for 20 consecutive trading days exceeds two-and-a-half times (2.5x) the Series C Conversion Price (the “ Mandatory Conversion Time ”), then, subject to the exception set forth in Section 7.2(b) hereof, (i) all outstanding shares of Series C Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective conversion rate as calculated pursuant to Subsection 6.1.1 ; and (ii) such shares may not be reissued by the Corporation.

7.2 Procedural Requirements . All holders of record of shares of Series C Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Series C Preferred Stock pursuant to this Section 7 . Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of shares of Series C Preferred Stock in certificated form shall either:

(a) surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice; or

(b) retain his, her or its certificate or certificates for all such shares, in which case, at all times after the Mandatory Conversion Time the shares of Series C Preferred Stock shall be treated as a Common Stock equivalent, entitled to all of the rights, preferences and privileges of the Common Stock and none of the rights, preferences and privileges of the Series C Preferred Stock described in this Certificate of Designation.

If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Series C Preferred Stock converted pursuant to Subsection 7.1 , including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender any certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Subsection 7.2 . As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Series C Preferred Stock, the Corporation shall (a) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and (b) pay cash as provided in Subsection 6.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Series C Preferred Stock converted. Such converted Series C Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series C Preferred Stock accordingly.

7.3 Maximum Percentage No Applicable . The limitation set forth in Section 6.1.3 on the holder’s right to effect an optional conversion of Series C Preferred Stock in excess of the Maximum Percentage shall not apply to mandatory conversion pursuant to Section 7 .

8. [Intentionally Omitted]

9. Amendments and Waiver . No provision of this Certificate of Designation may be amended, modified or waived except by an instrument in writing executed by the Corporation and the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series C Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect. Any such written amendment, modification or waiver will be binding upon the Corporation and each holder of Series C Preferred Stock; provided, that no amendment, modification or waiver of the terms or relative priorities of the Series C Preferred Stock may be accomplished by the merger, consolidation or other transaction of the Corporation with another corporation or entity unless the Corporation has obtained the prior written consent of the holders in accordance with this Section 9.

10. Notices . Any notice required or permitted by the provisions of this Certificate of Designation to be given to a holder of shares of Series C Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.

11. Transferability .

11.1 The Series C Preferred Stock constitutes “restricted securities” as such term is defined in Rule 144(a)(3) under the Act and may only be disposed of in compliance with U.S. federal securities laws and applicable state securities or “blue sky” laws. Without limiting the generality of the foregoing, the Series C Preferred Stock may not be offered for sale, sold, transferred, assigned, pledged or otherwise distributed unless (A) subsequently registered thereunder, (B) holder shall have delivered to the Corporation an opinion of counsel reasonably acceptable to the Corporation, in a form generally acceptable to the Corporation, to the effect that such Series C Preferred Stock to be offered for sale, sold, transferred, assigned, pledged or otherwise distributed may be offered for sale, sold, transferred, assigned, pledged or otherwise distributed pursuant to an exemption from such registration, or (C) holder provides the Corporation and its legal counsel with reasonable assurance that such Series C Preferred Stock can be offered for sale, sold, transferred, assigned, pledged or otherwise distributed pursuant to Rule 144A promulgated under the Act;

11.2 So long as is required by this Section 11 , the certificates or other instruments representing the Series C Preferred Stock shall bear any legends as required by applicable state securities or “blue sky” laws, in addition to the following restrictive legend (and that a stop-transfer order shall be placed against transfer of such certificates):

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE CORPORATION.

11.3 The Corporation shall keep at its principal office, or at the offices of its Transfer Agent, a register of the Series C Preferred Stock. Upon the surrender of any certificate representing Series C Preferred Stock at such place, the Corporation, at the request of the record holder of such certificate, shall execute and deliver (at the Corporation’s expense) a new certificate or certificates in exchange therefor representing in the aggregate the number of shares represented by the surrendered certificate. Each such new certificate shall be registered in such name and shall represent such number of shares as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate.

12. Lost or Mutilated Preferred Stock Certificate . Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing shares of Series C Preferred Stock, 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 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.

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

RESOLVED, FURTHER, that the chairman, chief executive officer, president, chief financial officer or any vice-president, and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file a Certificate of Designation of Preferences, Rights and Limitations of Series C Preferred Stock in accordance with the foregoing resolution and the provisions of Delaware law.

IN WITNESS WHEREOF, the undersigned have executed and acknowledged this Certificate of Designation this 26th day of August, 2016.

VIRTUAL PIGGY, INC.

By:	/s/ Scott McPherson
	Scott McPherson Chief Financial Officer

Exhibit 10.1

CONFIDENTIAL

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “ Agreement ”), dated on and as of the latest date set forth on the signature page hereto, by and between Virtual Piggy, Inc., a Delaware corporation (the “ Company ”), and the purchaser identified on the signature page hereof (“ Purchaser ”).

R E C I T A L S:

WHEREAS, Purchaser desires to purchase and the Company desires to sell securities on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises hereof and the agreements set forth herein below, the parties hereto hereby agree as follows:

1. The Offering.

(a) Private Offering . The securities offered by this Agreement are being offered in a private offering (the “ Offering ”) of up to an aggregate original principal amount of $10,000,000 of 3.5% Secured Convertible Promissory Notes due 2018 (the “ New Secured Notes ”), which Notes shall accrue interest on the unpaid principal amount thereof at a rate equal to three and one-half percent (3.5%) per annum, compounded quarterly, and shall mature on June 30, 2018. The New Secured Notes shall be convertible by the holder, at any time, into shares of the Company’s Series C Cumulative Convertible Preferred Stock (“ Series C Preferred Stock ”) at a conversion price of $90.00 per share (the “ Conversion Price ”), subject to adjustment for stock, splits, stock dividends and similar transactions with respect to the Series C Preferred Stock only. Each share of Series C Preferred Stock is currently convertible into 100 shares of the Company’s common stock at a current conversion price of $0.90 per share, subject to anti-dilution adjustment as described in the Certificate of Designation of the Series C Preferred Stock. The New Secured Notes will be sold on a “best efforts” basis pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ” or the “ Act ”), and/or Rule 506(b) of Regulation D thereunder. The New Secured Notes, the shares of Series C Preferred Stock issuable upon conversion of the New Secured Notes and the shares of Company common stock (“ Common Stock ”) issuable upon conversion of the Series C Preferred Stock are hereinafter referred to collectively as the “ Securities .” The New Secured Notes are being offered solely to a limited number of “accredited investors” as that term is defined in Rule 501(a) of the Securities Act during an offering period (the “ Offering Period ”) commencing on the date hereof and terminating not later than September 30, 2016, unless further extended by the Company in its discretion (the “ Termination Date ”). The Offering may be terminated by the Company at any time in its sole discretion. This Agreement, the Exhibits hereto and the Offering Memorandum dated July 28, 2016 (including the documents incorporated by reference therein) are hereinafter collectively referred to as the “ Offering Documents ”.

(b) Description of Securities . The terms and provisions of the New Secured Notes are set forth in the form of 3.5% Secured Convertible Promissory Note due 2018, attached hereto as Exhibit A . The rights, preferences, powers and other terms of the Series C Preferred Stock are set forth in full in the Certificate of Designation of Series C Cumulative Convertible Preferred Stock attached hereto and made a part hereof as Exhibit B (the “ Certificate of Designation ”).

(c) Placement of the New Secured Notes. The Company intends to offer and sell certain or all of the New Secured Notes through the efforts of its own officers and personnel without the payment of a brokerage commission or sales incentives. However, the Company also reserves the right to engage the services of one or more registered broker-dealers serving as a placement agent (a “ Placement Agent ”) to offer and sell the New Secured Notes on a best-efforts basis, and in connection with sales to investors introduced to the Offering through the efforts of such Placement Agent(s), if at all, the Company will agree to pay to the Placement Agent: (i) a placement fee of up to five percent (5%) of the principal amount of Notes; (ii) a retainer in such amount or amounts as may be determined in the discretion of the Company; (iii) warrants to purchase up to three percent (3%) of the underlying securities at the applicable offering price; and (iv) such amounts as are necessary to cover the reasonable and ordinary out-of-pocket expenses of the Placement Agent.

(d) Escrow Account . The Company will establish a segregated escrow account (the “ Escrow Account ”) for the deposit of cash subscriptions. Upon the acceptance of subscriptions for the New Secured Notes, the Company may conduct an initial closing of the Offering and thereafter, may conduct any number of additional closings until the Termination Date.

(e) Security Agreement . As collateral security for the prompt and complete payment and performance when due of the Company’s obligations under the New Secured Notes, the Company will enter into an Amended and Restated Security Agreement with William F. Miller III, as collateral agent for each Purchaser, and each Purchaser in the form attached hereto and made a part hereof as Exhibit C (the “ Security Agreement ”) to grant a security interest in the Company’s Collateral (as defined in the Security Agreement) on a pari passu basis with the holders of the Prior Secured Notes (as defined below).

2. Sale and Purchase of Securities.

(a) Purchase and Sale . Subject to the terms and conditions hereof, the Company agrees to sell, and Purchaser irrevocably subscribes for and agrees to purchase, the aggregate principal amount of Notes set forth on the signature page of this Agreement at a purchase price equal to 100% of such principal amount (the “ Aggregate Purchase Price ”), which shall be payable upon execution hereof by check or wire transfer of immediately available funds as set forth below; provided that holders of the Company’s currently outstanding 10% Secured Convertible Promissory Notes due 2016 (the “ Prior Secured Notes ”) may exchange such Prior Secured Notes for New Secured Notes on a dollar-for-dollar basis with any New Secured Notes purchased for cash.

(b) Subscription Procedure . In order to purchase Notes, Purchaser shall: (i) deliver to the Company at 1618 South Broad Street, Philadelphia, PA 19145, Attn: Ernest Cimadamore (or via facsimile to 215-465-2013 or email to ernie@oink.com): (X) one completed and duly executed copy of this Agreement, (Y) one completed and duly executed copy of the Amended and Restated Security Agreement and (Z) one completed and duly executed Accredited Investor Questionnaire in the form attached hereto as Exhibit D ; and (ii) deposit into the Escrow Account payment for the New Secured Notes in an amount equal to the Aggregate Purchase Price by certified or bank check covering immediately available funds or through wire transmission, which Escrow Account is identified on Exhibit E , or otherwise provided upon request, and (iii) in the case of Purchasers also exchanging Prior Secured Notes, by delivery of such Prior Secured Notes to the Company at the address set forth above. Delivery of the Prior Secured Notes and the closing of this Offering and acceptance thereof shall constitute satisfaction in full of amounts due under the Prior Secured Notes and the collateral therefor shall be released thereupon. Execution and delivery of this Agreement shall constitute an irrevocable subscription for that aggregate principal amount of New Secured Notes set forth on the signature page hereto. Receipt by the Company in the Escrow Account of funds wired, or deposit and collection into the Escrow Account of the check tendered herewith, or of the original Prior Secured Notes, as the case may be, will not constitute acceptance of this Agreement by the Company. The New Secured Notes subscribed for will not be deemed to be issued to, or owned by, Purchaser until the Company has executed this Agreement. All consideration tendered by Purchaser will be held by the Company pending acceptance or rejection of this Agreement by the Company and the closing of Purchaser’s purchase of New Secured Notes. This Agreement will either be accepted by the Company, in whole or in part, in its sole discretion, or rejected by the Company prior to the termination of the Offering. If this Agreement is accepted only in part, Purchaser agrees to purchase such smaller principal amount of Notes as the Company determines to sell to Purchaser. If this Agreement is rejected for any reason, including the termination of the Offering by the Company, this Agreement and all funds or other consideration tendered herewith will be promptly returned to Purchaser, without interest or deduction of any kind, and this Agreement will be void and of no further force or effect. Until the Company elects to accept or reject a Purchaser’s Securities Purchase Agreement, the Purchaser’s subscription is irrevocable.

(c) Closing . The Company may conduct an initial closing of the Offering and thereafter, may conduct any number of additional closings until the Termination Date. Upon the Company’s execution of this Agreement, the subscription evidenced hereby, if not previously rejected by the Company, will, in reliance upon Purchaser’s representations and warranties contained herein, be accepted, in whole or in part, by the Company. If Purchaser’s subscription is accepted only in part, this Agreement will be marked to indicate such fact, and the Company will return to Purchaser the portion of the funds tendered by Purchaser representing the unaccepted portion of Purchaser’s subscription, without interest or deduction of any kind. Upon acceptance of this Agreement, in whole or in part, by the Company, the Company will promptly issue the New Secured Notes to Purchaser.

3. Representations and Warranties of Purchaser . Purchaser represents and warrants to the Company as follows:

(a) Organization and Qualification .

(i) If Purchaser is an entity, Purchaser is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with the corporate or other entity power and authority to own and operate its business as presently conducted, except where the failure to be or have any of the foregoing would not have a material and adverse effect on the legality, validity or enforceability of any Transaction Documents, and Purchaser is duly qualified as a foreign corporation or other entity to do business and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of their activities makes such qualification necessary, except for such failure to be so qualified or in good standing as would not have a Material Adverse Effect on it. For purposes of this Agreement, “ Material Adverse Effect ” means any of (i) a material and adverse effect on the legality, validity or enforceability of any Transaction Documents, (ii) a material and adverse effect on the results of operations, assets, business or financial condition of such party and its subsidiaries, taken as a whole, or (iii) any material adverse impairment to the ability of such party to perform in any material respect on a timely basis its obligations under any Transaction Document.

(ii) If Purchaser is an entity, the address of its principal place of business is as set forth on the signature page hereto, and if Purchaser is an individual, the address of his or her principal residence is as set forth on the signature page hereto.

(b) Authority; Validity and Effect of Agreement .

(i) If Purchaser is an entity, Purchaser has the requisite corporate or other entity power and authority to execute and deliver this Agreement and any documents contemplated hereby (collectively, the “ Transaction Documents ”) and perform its obligations under the Transaction Documents. The execution and delivery of each Transaction Document by Purchaser, the performance by Purchaser of its obligations thereunder, and all other necessary corporate or other entity action on the part of Purchaser have been duly authorized by its board of directors or similar governing body, and no other corporate or other entity proceedings on the part of Purchaser is necessary for Purchaser to execute and deliver the Transaction Documents and perform its obligations thereunder.

(ii) Each of the Transaction Documents has been duly and validly authorized, executed and delivered by Purchaser and, assuming each has been duly and validly executed and delivered by the Company, each constitutes a legal, valid and binding obligation of Purchaser, in accordance with its terms.

(c) No Conflict; Required Filings and Consents . Neither the execution and delivery of the Transaction Documents by Purchaser nor the performance by Purchaser of its obligations, thereunder will: (i) if Purchaser is an entity, conflict with Purchaser’s articles of incorporation or bylaws, or other similar organizational documents; (ii) violate any statute, law, ordinance, rule or regulation, applicable to Purchaser or any of the properties or assets of Purchaser; or (iii) violate, breach, be in conflict with or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the termination of, the acceleration of the maturity of, or the acceleration of the performance of any obligation of Purchaser under, or result in the creation or imposition of any lien upon any properties, assets or business of Purchaser under, any material contract or any order, judgment or decree to which Purchaser is a party or by which it or any of its assets or properties is bound or encumbered except, in the case of clauses (ii) and (iii), for such violations, breaches, conflicts, defaults or other occurrences which, individually or in the aggregate, would not have a Material Adverse Effect on it.

(d) Accredited Investor . Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act. If Purchaser is an entity, Purchaser was not formed for the specific purpose of acquiring the Securities, and, if it was, all of Purchaser’s equity owners are “accredited investors” as defined above.

(e) No Government Review . Purchaser understands that neither the United States Securities and Exchange Commission (“ SEC ”) nor any securities commission or other governmental authority of any state, country or other jurisdiction has approved the issuance of the New Secured Notes or passed upon or endorsed the merits of this Agreement, the New Secured Notes, or any of the other documents relating to the proposed Offering, or confirmed the accuracy of, determined the adequacy of, or reviewed this Agreement, the New Secured Notes or such other documents.

(f) Investment Intent . The Securities are being acquired for the Purchaser’s own account for investment purposes only, not as a nominee or agent and not with a view to the resale or distribution of any part thereof, and Purchaser has no present intention of selling, granting any participation in or otherwise distributing the same. By executing this Agreement, Purchaser further represents that Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or third person with respect to the New Secured Notes.

(g) Restrictions on Transfer . Purchaser understands that the Securities are “restricted securities” as such term is defined in Rule 144 under the Securities Act and have not been registered under the Securities Act or registered or qualified under any state securities law, and may not be, directly or indirectly, sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act and registration or qualification under applicable state securities laws or the availability of an exemption therefrom. Purchaser acknowledges that it is able to bear the economic risks of an investment in the Securities for an indefinite period of time, and that its overall commitment to investments that are not readily marketable is not disproportionate to its net worth.

(h) Investment Experience . Purchaser has such knowledge, sophistication and experience in financial, tax and business matters in general, and investments in securities in particular, that it is capable of evaluating the merits and risks of this investment in the Securities, and Purchaser has made such investigations in connection herewith as it deemed necessary or desirable so as to make an informed investment decision without relying upon the Company for legal or tax advice related to this investment. In making its decision to acquire the Securities, Purchaser has not relied upon any information other than information provided to Purchaser by the Company or its representatives and referenced herein.

(i) Access to Information . Purchaser acknowledges that it has had access to and has reviewed all publicly available documents and records relating to the Company, including, but not limited to, the Company’s Annual Report on SEC Form 10-K for the year ended December 31, 2014, as amended, the Company’s Annual Report on SEC Form 10-K for the year ended December 31, 2015, the Company’s Proxy Statement covering the annual meeting of its shareholders occurring during 2016, if any, and any Quarterly Report on SEC Form 10-Q, or Current Report on SEC Form 8-K, filed with the SEC after December 31, 2015 and before the date this Offering is closed (as such documents have been amended since the date of their filing, collectively, the “ Company SEC Documents ”), that it has deemed necessary in order to make an informed investment decision with respect to an investment in the New Secured Notes; that it has had the opportunity to ask representatives of the Company certain questions and request certain additional information regarding the terms and conditions of such investment and the finances, operations, business and prospects of the Company and has had any and all such questions and requests answered to its satisfaction; and that it understands the risks and other considerations relating to such investment. Purchaser understands any statement contained in the Company SEC Documents shall be deemed to be modified or superseded for the purposes of this Agreement to the extent that a statement contained herein or in any other document subsequently filed with the SEC modifies or supersedes such statement.

(j) Reliance on Representations . Purchaser understands that the New Secured Notes are being offered and sold to it in reliance on specific exemptions from the registration requirements of the federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser to acquire the New Secured Notes. Purchaser represents and warrants to the Company that any information that Purchaser has heretofore furnished or furnishes herewith to the Company is complete and accurate, and further represents and warrants that it will notify and supply corrective information to the Company immediately upon the occurrence of any change therein occurring prior to the Company’s issuance of the New Secured Notes. Within five (5) days after receipt of a request from the Company, Purchaser will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is subject.

(k) No General Solicitation . Purchaser is unaware of, and in deciding to participate in the Offering is in no way relying upon, and did not become aware of the Offering through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media, or broadcast over television or radio or the internet, in connection with the Offering.

(l) Placement and Finder’s Fees . No agent, broker, investment banker, finder, financial advisor or other person acting on behalf of Purchaser or under its authority is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee, directly or indirectly, in connection with the Offering, and no person is entitled to any fee or commission or like payment in respect thereof based in any way on agreements, arrangements or understanding made by or on behalf of Purchaser.

(m) Investment Risks . Purchaser understands that purchasing Notes in the Offering will subject Purchaser to certain risks, including, but not limited to, those set forth in the Company SEC Documents and the Offering Documents.

(n) OFAC . Purchaser is directed to review the U.S. Treasury Department’s Office of Foreign Assets Control (“ OFAC ”) website at www.treas.gov. before making the following representations. Purchaser represents that no part of the Aggregate Purchase Price set forth on the signature page hereto was directly or indirectly derived from activities that may contravene federal, state or international laws and regulations, including anti-money laundering laws and regulations. Federal regulations and executive orders administered by OFAC prohibit, among other things, the engagement in transaction with, and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found at the OFAC website. In addition, the programs administered by OFAC prohibit dealing with individuals or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists. Purchaser hereby represents that none of the following is named on the OFAC list, nor is a person or entity prohibited under the OFAC programs: (i) the Purchaser, (ii) any person controlling or controlled by the Purchaser, (iii) if the undersigned is an entity, any person having a beneficial interest in the Purchaser, or (iv) any person for whom the undersigned is acting as agent or nominee in connection with this investment. The Purchaser understands and acknowledges that, by law, the Company may be required to disclose the identity of the Purchaser to OFAC.

(o) Anti-Money Laundering . The Purchaser acknowledges that due to anti-money laundering regulations within their respective jurisdictions, the Company and/or any person acting on behalf of the Company may require further documentation verifying the Purchaser’s identity and the source of funds used to purchase the New Secured Notes before this Agreement can be accepted. The Purchaser further agrees to provide the Company at any time with such information as the Company determines to be necessary and appropriate to verify compliance with the anti-money laundering regulations of any applicable jurisdiction or to respond to requests for information concerning the identity of the Purchaser from any governmental authority, self-regulatory organization or financial institution in connection with its anti-money laundering compliance procedures, and to update such information as necessary.

(p) Short Sales and Confidentiality Prior to the Date Hereof . Other than the transaction contemplated hereunder, Purchaser has not directly or indirectly, nor has any person acting on behalf of or pursuant to any understanding with Purchaser, executed any disposition, including Short Sales (as such term is defined in Rule 200 of Regulation SHO under the Exchange Act), in the securities of the Company during the period commencing from the time that Purchaser first received written or oral notice of this Offering from the Company or any other person setting forth the material terms of the transactions contemplated hereunder or this Agreement until the date hereof (“ Discussion Time ”). Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other persons a party to this Agreement, Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

4. Representations and Warranties of the Company. Except as set forth in the correspondingly numbered section of the Schedules hereto, the Company represents and warrants to Purchaser as follows:

(a) Organization and Qualification . The Company is duly organized, validly existing and in good standing under the laws of the State of Delaware, with the corporate power and authority to own and operate its business as presently conducted, except where the failure to be or have any of the foregoing would not have a Material Adverse Effect on the Company. The Company is duly qualified as a foreign corporation or other entity to do business and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of their activities makes such qualification necessary, except for such failures to be so qualified or in good standing as would not have a Material Adverse Effect.

(b) Authority; Validity and Effect of Agreement . The Company has the requisite corporate power and authority to execute and deliver each of the Transaction Documents, perform its obligations thereunder, and conduct the Offering. The execution and delivery of each of the Transaction Documents by the Company, the performance by the Company of its obligations thereunder, the transactions contemplated thereby, the Offering, and all other necessary corporate action on the part of the Company have been duly authorized by its board of directors, and no other corporate proceedings on the part of the Company are necessary to authorize each of the Transaction Documents or the Offering. Each of the Transaction Documents has been duly and validly executed and delivered by the Company and, assuming that each has been duly authorized, executed and delivered by Purchaser, each constitutes a legal, valid and binding obligation of the Company, in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

(c) No Conflict; Required Filings and Consents . Neither the execution and delivery of the Transaction Documents by the Company nor the performance by the Company of its obligations thereunder will: (i) conflict with the Company’s certificate of incorporation or bylaws; (ii) violate any statute, law, ordinance, rule or regulation, applicable to the Company or any of the properties or assets of the Company; or (iii) violate, breach, be in conflict with or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or permit the termination of any provision of, or result in the termination of, the acceleration of the maturity of, or the acceleration of the performance of any obligation of the Company, or result in the creation or imposition of any lien upon any properties, assets or business of the Company under, any material contract or any order, judgment or decree to which the Company is a party or by which it or any of its assets or properties is bound or encumbered except, in the case of clauses (ii) and (iii), for such violations, breaches, conflicts, defaults or other occurrences which, individually or in the aggregate, would not have a Material Adverse Effect.

(d) SEC Reports . The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, or to the extent corrected by a subsequent amendment, the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and all other reports of the Company filed with the Commission pursuant to the Exchange Act from January 1, 2016 through the date of this Agreement (including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”) complied in all material respects with the requirements of the Exchange Act, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(e) Issuance of the Securities . The New Secured Notes have been duly authorized and, when issued and paid for in accordance with the terms of the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens, other than restrictions on transfer provided for in the Transaction Documents or imposed by applicable securities laws, and shall not be subject to preemptive or similar rights of shareholders. Assuming the accuracy of the representations and warranties of the Purchasers in this Agreement, the New Secured Notes will be issued in compliance with applicable federal and state securities laws. The Company shall, so long as any of the New Secured Notes are outstanding, take all action reasonably necessary to reserve and keep available out of its authorized and unissued capital stock, 100% of the shares of Series C Preferred Stock issuable upon conversion of the New Secured Notes, 150% of the shares of Common Stock underlying the Series C Preferred Stock, as well as such other shares as, in the discretion of its Board of Directors, may be necessary for the ordinary and necessary business needs of the Company.

5. Other Agreements of the Parties .

(a) Transfer Restrictions .

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

(ii) Legends . The promissory notes, certificates and agreements evidencing the Securities shall have endorsed thereon the following legend (and appropriate notations thereof will be made in the Company’s stock transfer books), and stop transfer instructions reflecting these restrictions on transfer will be placed with the transfer agent of the Securities:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES REPRESENTED HEREBY HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER APPLICABLE SECURITIES LAWS.

(b) Securities Laws Disclosure; Publicity . On or prior to the fourth (4th) Business Day following the initial closing contemplated by this Agreement, the Company will file a Current Report on Form 8-K with the SEC describing the terms of the Transaction Documents. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described in this Section 5(b), such Purchaser will maintain the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

(c) Equal Treatment of Purchasers . No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of the New Secured Notes, the shares of Series C Preferred Stock (upon conversion of the New Secured Notes) or otherwise.

(d) Form D and Blue Sky . The Company agrees to file a Form D with respect to the sale of the New Secured Notes as required under Regulation D. The Company, on or before the Closing, shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the New Secured Notes for sale to the Purchasers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall make all filings and reports relating to the offer and sale of the New Secured Notes required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing.

(e) Lock-Up Agreements . Each Purchaser agrees in connection with any underwritten public offering that occurs after a closing of the Offering, if requested by the managing underwriter, not to sell or transfer any shares of Common Stock of the Company for a period of up to 180 days, plus up to an additional 20 days to the extent necessary to comply with applicable regulatory requirements following such public offering. Such lock-up agreement shall provide that any discretionary waiver or termination of the restrictions of such agreements by the Company or representatives of the underwriters shall apply to investors, pro rata, based on the number of shares held.

(f) Limitations on Certain Future Financings . Until such time as the New Secured Notes have been repaid in full or converted into Series C Preferred Stock, the Company shall not, without the consent of holders of a majority of the outstanding principal amount of New Secured Notes (i) issue any new promissory notes secured by Company assets or (ii) authorize any new class of preferred stock senior to, or with a liquidation preference greater than, the Series C Preferred Stock.

6. Piggyback Registration .

(a) Until the earlier of (i) the date as of which the Purchaser may sell all of the “Registrable Securities” (as defined below) owned by Purchaser without restriction pursuant to Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date on which the Purchaser shall have sold all of the Registrable Securities owned by Purchaser , (the “ Registration Period ” ), whenever the Company proposes to register any shares of its Common Stock under the Securities Act (other than a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 of the Securities Act is applicable, or a Registration Statement on Form S-4, S-8 or any successor form thereto or another form not available for registering the Securities for sale to the public), whether for its own account or for the account of one or more stockholders of the Company and the form of Registration Statement to be used may be used for any registration of Securities (a “ Piggyback Registration ”), the Company shall give prompt written notice (in any event no later than 10 days prior to the filing of such Registration Statement) to the Purchaser and the other holders of securities subject to piggyback registration rights (each, a “ Selling Stockholder ”) of its intention to effect such a registration and, subject to Section 6(b) and Section 6(c), shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion from the holders of Registrable Securities within 5 days after the Company's notice has been given to each such holder. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion and/or reduce the amount of shares to be included in such registration as a result of rules, regulations, positions or releases issued or actions taken by the SEC pursuant to its authority with respect to Rule 415, promulgated by the SEC under the Securities Act. For purposes of this Section 6, the term “ Registrable Securities ” means (x) the shares of Common Stock issuable upon conversion of shares of the Series C Preferred Stock (the “ Conversion Shares ”), (y) any Common Stock of the Company issued or issuable with respect to the Conversion Shares including, without limitation, as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, and (z) any other shares of Common Stock of the Company which are subject to piggyback registration rights.

(b) If during the Registration Period, a Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company, all Selling Stockholders proposing to distribute their Registrable Securities through such underwriting shall be required to enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. If during the Registration Period, a Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company and the managing underwriter advises the Company and the Selling Stockholders (if any Selling Stockholders have elected to be included in such Piggyback Registration) in writing that in its opinion the number of shares of Common Stock proposed to be included in such registration, including all Registrable Securities and all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such offering and/or that the number of shares of Common Stock proposed to be included in any such registration would adversely affect the price per share of the Common Stock to be sold in such offering and/or the Company is unable to include in such registration all of the securities as a result of rules, regulations, positions or releases issued or actions taken by the SEC pursuant to its authority with respect to Rule 415, promulgated by the SEC under the Securities Act, the Company shall include in such registration (i) first, the number of shares of Common Stock that the Company proposes to sell on its own behalf; and (ii) second, the number of all other shares of Common Stock required to be included as a result of contractual demand or piggyback registration rights, allocated among such holders pro rata on the basis of the number of securities to be included in such registration, or in such manner as they may otherwise agree.

(c) If during the Registration Period, a Piggyback Registration is initiated as an underwritten offering on behalf of a holder of Common Stock other than Registrable Securities as a result of contractual demand or mandatory registration rights, and the managing underwriter advises the Company in writing that in its opinion the number of shares of Common Stock proposed to be included in such registration, including all Registrable Securities and all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such offering and/or that the number of shares of Common Stock proposed to be included in any such registration would adversely affect the price per share of the Common Stock to be sold in such offering and/or the Company is unable to include in such registration all of the Registrable Securities as a result of rules, regulations, positions or releases issued or actions taken by the SEC pursuant to its authority with respect to Rule 415, promulgated by the SEC under the Securities Act, the Company shall include in such registration (i) first, the number of shares of Common Stock required to be included as a result of contractual demand or mandatory registration rights, (ii) second, the number of shares of Common Stock required to be included therein as a result of contractual piggyback registration rights, allocated among such holders pro rata according to the number of shares to be included in such registration; and (iii) third, the number of all other shares of Common Stock to be included as determined jointly by the Company and managing underwriter.

(d) If any Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company, the Company shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering.

(e) Registration Procedures . Subject to the limitations set forth in this Section 6, whenever it is obligated to register any Registrable Securities pursuant to this Agreement, the Company shall:

(i) use its reasonable best efforts to prepare and file with the SEC a Registration Statement with respect to the Registrable Securities in the manner set forth in this Section 6 and use its reasonable best efforts to cause such Registration Statement to be declared effective by the SEC as soon as reasonably practicable thereafter;

(ii) furnish to each Selling Stockholder such number of copies of the Registration Statement and the prospectus included therein (including each preliminary prospectus) as such person may reasonably request in order facilitate the public sale or other disposition of the Registrable Securities covered by such Registration Statement;

(iii) use its reasonable best efforts to register or qualify the Registrable Securities covered by such Registration Statement under the state securities laws of such jurisdictions as any Selling Stockholder shall reasonably request; provided , however , that the Company shall not be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction;

(iv) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Selling Stockholder participating in such underwriting shall also enter into and perform its obligations under such an agreement, as described in Section 6(b);

(v) immediately notify each Selling Stockholder at any time when a prospectus relating thereto is required to be delivered under the Act, of the happening of any event as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required or necessary to be stated therein in order to make the statements contained therein not misleading in light of the circumstances under which they were made. The Company will use reasonable efforts to amend or supplement such prospectus in order to cause such prospectus not to include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

(vi) notify each Selling Stockholder of the issuance by the SEC of any stop order of which the Company or its counsel is aware or should be aware suspending the effectiveness of the Registration Statement or any order preventing the use of a related prospectus, or the initiation or any threats of any proceedings for such purposes;

(vii) notify each Selling Stockholder of the receipt by the Company of any written notification of the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation of any threats of any proceeding for that purpose; and

(viii) cooperate in the timely removal of any restrictive legends from the shares of Registrable Securities in connection with the resale of such shares covered by an effective Registration Statement.

(f) Expenses .

(i) For the purposes of this Section 6(f), the term “ Registration Expenses ” shall mean all expenses incurred by the Company in complying with this Section 6, including, without limitation, all registration, qualifying and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, fees and expenses under state securities laws, fees of the Financial Industry Regulatory Authority, and fees and expenses of listing shares of Registrable Securities on any securities exchange or automated quotation system on which the Company’s shares are listed. The term “ Selling Expenses ” shall mean all underwriting discounts, broker and other selling fees and commissions, stock transfer taxes applicable to the sale of the Registrable Securities, and fees and disbursements of counsel for any Selling Stockholder.

(ii) Except as otherwise provided herein, the Company will pay all Registration Expenses in connection with the Registration Statements filed pursuant to this Section 6. All Selling Expenses in connection with any Registration Statements filed pursuant to this Section 6 shall be borne by the Selling Stockholders pro rata on the basis of the number of shares registered by each Selling Stockholder whose shares of Registrable Securities are covered by such Registration Statement, or by such persons other than the Company (except to the extent the Company may be a seller) as they may agree upon.

(g) Obligations of the Selling Stockholders .

(i) In connection with each registration hereunder, each Selling Stockholder shall furnish to the Company in writing such information with respect to it and the securities held by it and the proposed distribution by it, as shall be reasonably requested by the Company in order to assure compliance with applicable federal and state securities laws as a condition precedent to including the Selling Stockholder's Registrable Securities in the Registration Statement. Each Selling Stockholder shall also promptly notify the Company in writing of any changes in such information included in the Registration Statement or prospectus as a result of which there is an untrue statement of material fact or an omission to state any material fact required or necessary to be stated therein in order to make the statements contained therein not misleading in light of the circumstances under which they were made.

(ii) In connection with the filing of the Registration Statement, each Selling Stockholder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with such Registration Statement or prospectus.

(iii) In connection with each registration pursuant to this Agreement, each Selling Stockholder agrees that it will not affect sales of any Registrable Securities until notified by the Company of the effectiveness of the Registration Statement, and thereafter will suspend such sales after receipt of notice from the Company to suspend sales to permit the Company to correct or update a Registration Statement or prospectus or upon receipt by the Company of a threat by the SEC or state securities commission to undertake a stop order with respect to sales under the Registration Statement. At the end of any period during which the Company is obligated to keep a Registration Statement current, each Selling Stockholder shall discontinue sales of Registrable Securities pursuant to such Registration Statement upon receipt of notice from the Company of its intention to remove from registration the Registrable Securities covered by such Registration Statement which remains unsold, and each Selling Stockholder shall notify the Company in writing of the number of shares registered which remain unsold immediately upon receipt of such notice from the Company.

(h) Information Blackout and Holdbacks .

(i) At any time when a Registration Statement effected pursuant to this Section 6 is effective, upon written notice from the Company to the Selling Stockholder that the Company has determined in good faith that the sale of Registrable Securities pursuant to the Registration Statement would require disclosure of non-public material information, the Selling Stockholder shall suspend sales of Registrable Securities pursuant to such Registration Statement until such time as the Company notifies the Selling Stockholder that such material information has been disclosed to the public or has ceased to be material, or that sales pursuant to such Registration Statement may otherwise be resumed.

(ii) Notwithstanding any other provision of this Agreement, the Selling Stockholder shall not affect any sale or other transfer, or make any short sale of, any Common Stock or other securities of the Company held by such Selling Stockholder (other than those included in a Registration Statement) during the 180-day period following the effective date of any primary offering undertaken by the Company of shares of its Common Stock, (“ Primary Offering ”), which may also include other securities, unless the Company, in the case of a non-underwritten Primary Offering, or the managing underwriter, in the case of an underwritten Primary Offering, otherwise agree. The obligations described in this Section 6(h)(ii) shall not apply to a registration relating solely to employee benefit plans on Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated in the future.

7. Indemnification . Purchaser agrees to indemnify, defend and hold harmless the Company and its respective affiliates and agents from and against any and all demands, claims, actions or causes of action, judgments, assessments, losses, liabilities, damages or penalties and reasonable attorneys’ fees and related disbursements incurred by the Company that arise out of or result from a breach of any representations or warranties made by Purchaser herein, and Purchaser agrees that in the event of any breach of any representations or warranties made by Purchaser herein, the Company may, at its option, forthwith rescind the sale of the New Secured Notes to Purchaser.

8. Confidentiality . Purchaser acknowledges and agrees that:

(a) Certain of the information contained herein is of a confidential nature and may be regarded as material non-public information under Regulation FD of the Securities Act.

(b) This Agreement has been furnished to Purchaser by the Company for the sole purpose of enabling Purchaser to consider and evaluate an investment in the Company, and will be kept confidential by Purchaser and not used for any other purpose.

(c) Until the time the information contained herein has been adequately disseminated to the public, the existence of this Agreement and the information contained herein shall not, without the prior written consent of the Company, be disclosed by Purchaser to any person or entity, other than Purchaser’s personal financial and legal advisors for the sole purpose of evaluating an investment in the Company, and Purchaser will not, directly or indirectly, disclose or permit Purchaser’s personal financial and legal advisors to disclose, any of such information without the prior written consent of the Company.

(d) Purchaser shall make its representatives aware of the terms of this Section 8 and to be responsible for any breach of this Agreement by such representatives.

(e) Purchaser shall not, without the prior written consent of the Company, directly or indirectly, make any statements, public announcements or release to trade publications or the press with respect to the contents or subject matter of this Agreement.

(f) If Purchaser decides to not pursue further investigation of the Company or to not participate in the Offering, Purchaser will promptly return this Agreement and any accompanying documentation to the Company.

9. Non-Public Information . Purchaser acknowledges that certain information concerning the matters that are the subject matter of this Agreement constitute material non-public information under United States federal securities laws, and that United States federal securities laws prohibit any person who has received material non-public information relating to the Company from purchasing or selling securities of the Company, or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of the Company. Accordingly, until such time as any such non-public information has been adequately disseminated to the public, Purchaser shall not purchase or sell any securities of the Company, or communicate such information to any other person.

10. Sales and Confidentiality After The Date Hereof . Such Purchaser shall not, and shall cause its affiliates not to, engage, directly or indirectly, in any transactions in the securities of the Company (including, without limitation, any Short Sales (as such term is defined in Rule 200 promulgated under Regulation SHO under the Exchange Act)) during the period from the date hereof until such time as (i) the transactions contemplated by this Agreement are first publicly announced or (ii) this Agreement is terminated. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser's assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser's assets, the representation set forth above shall apply only with respect to the portion of assets managed by the portfolio manager that have knowledge about the financing transaction contemplated by this Agreement. Each Purchaser understands and acknowledges, severally and not jointly with any other Purchaser, that the SEC currently takes the position that covering a short position established prior to effectiveness of a resale registration statement with shares included in such registration statement would be a violation of Section 5 of the Securities Act, as set forth in Division of Corporation Finance Compliance and Disclosure Interpretation 239.10 regarding short selling.

11. Entire Agreement; No Third Party Beneficiaries . This Agreement and the other Transaction Documents contain the entire agreement between the parties and supersede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereto, and no party shall be liable or bound to any other party in any manner by any warranties, representations, guarantees or covenants except as specifically set forth in this Agreement and the Transaction Documents. Purchaser acknowledges and agrees that, with the exception of the information contained or incorporated by reference in the Offering Documents, Purchaser did not rely upon any statements or information, whether oral or written, provided by the Company, or any of its officers, directors, employees, agents or representatives, in deciding to enter into this Agreement or purchase the New Secured Notes. Nothing in this Agreement, express or implied, is intended to confer upon any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

12. Amendment and Modification . This Agreement may not be amended, modified or supplemented except by an instrument or instruments in writing signed by the Company and the Purchaser.

13. Extensions and Waivers . At any time prior to the Closing, the parties hereto entitled to the benefits of a term or provision may (a) extend the time for the performance of any of the obligations or other acts of the parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document, certificate or writing delivered pursuant hereto, or (c) waive compliance with any obligation, covenant, agreement or condition contained herein. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument or instruments in writing signed by the Company and the holders of a majority of the outstanding principal amount of the New Secured Notes sold in the Offering. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement.

14. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided , however , that the Company may not assign its rights or delegate its obligations under this Agreement without the express prior written consent of the Purchaser. Except as provided in Section 6, nothing in this Agreement is intended to confer upon any person not a party hereto (and their successors and assigns) any rights, remedies, obligations or liabilities under or by reason of this Agreement.

15. Survival of Representations, Warranties and Covenants . The representations and warranties contained herein shall survive the Closing and shall thereupon terminate 18 months from the Closing, except that the representations contained in Sections 3(a), 3(b), 4(a), and 4(b) shall survive indefinitely. All covenants and agreements contained herein which by their terms contemplate actions following the Closing shall survive the Closing and remain in full force and effect in accordance with their terms. All other covenants and agreements contained herein shall not survive the Closing and shall thereupon terminate.

16. Headings; Definitions . The Section headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. All references to Sections contained herein mean Sections of this Agreement unless otherwise stated. All capitalized terms defined herein are equally applicable to both the singular and plural forms of such terms.

17. Severability . If any provision of this Agreement or the application thereof to any person or circumstance is held to be invalid or unenforceable to any extent, the remainder of this Agreement shall remain in full force and effect and shall be reformed to render the Agreement valid and enforceable while reflecting to the greatest extent permissible the intent of the parties.

18. Notices . All notices hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy, telefax or other electronic transmission service to the appropriate address or number as set forth below:

If to the Company :

Virtual Piggy, Inc.

1618 South Broad Street

Philadelphia, PA 19145

Fax (215) 465-2013

Attention: Ernest Cimadamore

with a copy to :

Wiggin and Dana LLP

Two Stamford Plaza

281 Tresser Boulevard

Stamford, CT 06901

Fax (203) 363-7676

Attention: Michael Grundei, Esquire

If to Purchaser :

To that address indicated on the signature page hereof.

19. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

20. Arbitration . If a dispute arises as to the interpretation of this Agreement, it shall be decided in an arbitration proceeding conforming to the Rules of the American Arbitration Association applicable to commercial arbitration then in effect at the time of the dispute. The arbitration shall take place in Wilmington, Delaware. The decision of the arbitrators shall be conclusively binding upon the parties and final and such decision shall be enforceable as a judgment in any court of competent jurisdiction. The parties shall share equally the costs of the arbitration.

21. Counterparts . This Agreement may be executed and delivered by facsimile in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.

[Signature page follows.]

IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have caused this Agreement to be executed as of the date set forth below.

	PURCHASER
Date: __________________, 201__





	By:

		Name:

		Title:

		Address:



		Phone:

		Social Security
		or Tax ID No.:

	Original principal amount of 3.5% Secured Convertible Notes to be Purchased for cash : $____________

	Original principal amount of 3.5% Secured Convertible Notes to be Purchased through exchange of Prior Secured Notes : $____________


	Delivery Instructions (if different than Address):

	VIRTUAL PIGGY, INC.

Date: __________________, 201__
	By:
		Name:
		Title:

EXHIBIT A

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE HAS BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER APPLICABLE SECURITIES LAWS.

VIRTUAL PIGGY, INC.

3.5% SECURED CONVERTIBLE PROMISSORY NOTE DUE 2018

U.S. $[_______]

No.: PN-C2016-[___]

Philadelphia, PA

[__________], 2016

FOR VALUE RECEIVED , the undersigned, VIRTUAL PIGGY, INC., a Delaware corporation (the “ Company ”), hereby promises to pay to the order of [____________________] or any future holder of this promissory note (the “ Payee ”), at the principal office of the Payee set forth herein, or at such other place as the holder may designate in writing to the Company, the principal sum of [___________] Dollars (U.S. $[_________]), or such other amount as may be outstanding hereunder (the “ Principal Amount ”), together with all accrued but unpaid interest, in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debts and in immediately available funds, as provided in this promissory note (the “ Note ”).

This Note is one of a duly authorized issue of 3.5% Secured Convertible Promissory Notes due 2018 of the Company, in aggregate principal amount of up to Ten Million Dollars ($10,000,000) (the “ Promissory Notes ”) issued pursuant to the Securities Purchase Agreement of even date herewith (the “ Purchase Agreement ”; capitalized terms used herein without definition shall have the meanings assigned in the Purchase Agreement). The Promissory Notes rank equally and ratably without priority over one another. No payment, including any prepayment, shall be made hereunder unless payment, including any prepayment, is offered with respect to the other Promissory Notes in an amount which bears the same ratio to the then unpaid principal amount of such Promissory Notes as the payment made hereon bears to the then unpaid principal amount under this Note.

1. Principal and Interest Payments .

(a) Principal . The Company shall repay in full the entire principal balance then outstanding under this Note plus all accrued and unpaid interest on the first to occur (the “ Maturity Date ”) of: (i) June 30, 2018; (ii) such time as there occurs a Sale Transaction (as defined below) or (iii) the acceleration of the obligations as contemplated by this Note.

“ Sale Transaction ” shall mean (i) the sale or other disposition of all or substantially all of the Company’s assets, or (ii) the acquisition of the Company by another entity by means of any transaction or series of related transactions to which the Company is party (including, without limitation, any stock acquisition, reorganization, merger or consolidation but excluding any sale of stock for capital raising purposes) other than a transaction or series of transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction continue to retain (either by such voting securities remaining outstanding or by such voting securities being converted into voting securities of the surviving entity), as a result of shares in the Company held by such holders prior to such transaction, at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such transaction or series of transactions.

(b) Interest . Interest on the outstanding principal balance of this Note shall accrue at a rate of three and one-half percent (3.5%) per annum, compounded quarterly. Interest on the outstanding principal balance of this Note shall be computed on the basis of the actual number of days elapsed and a year of three hundred sixty (360) days and shall be payable on the Maturity Date, upon earlier prepayment of this Note or in the form of shares of Series C Preferred Stock, par value $0.0001 per share, of the Company (the “ Series C Preferred Stock ”) upon conversion of this Note as set forth in Section 8 below. Furthermore, upon the occurrence of an Event of Default, then to the extent permitted by law, the Company will pay interest to the Payee, payable on demand, on the outstanding principal balance of this Note from the date of the Event of Default until payment in full at the rate of fifteen percent (15%) per annum, compounded quarterly.

(c) Prepayment . The Company may prepay the outstanding principal amount of this Note, in whole or in part, prior to the Maturity Date (a “ Prepayment ”) without the written consent of the Payee, at any time upon ten (10) days prior written notice of the date on which the Company intends to make such Prepayment (a “ Prepayment Notice ”). Any partial Prepayment shall be applied first to accrued but unpaid interest and second to unpaid principal. Nothing in this Section 1(c) shall limit the right of the Payee to convert the principal and accrued interest under this Note into Series C Preferred Stock at any time after receipt of the Prepayment Notice and prior to the time at which such Prepayment is made. The Company shall prepay the outstanding principal amount of this Note, in whole, upon the occurrence of a Sale Transaction.

2. Non-Business Days . Whenever any payment to be made shall be due on a non-Business Day, such payment may be due on the next succeeding Business Day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

3. Security . This Note is secured, pursuant to the terms of an Amended and Restated Security Agreement between the Company, William F. Miller III as collateral agent, the holders of the Promissory Notes of even date herewith, and the holders of the Prior Secured Notes (as such term is defined in the Purchase Agreement) (the “ Security Agreement ”), by a security interest in the Collateral (as such term is defined in the Security Agreement). This Note is subject to the provisions of the Security Agreement.

4. Subordination of Future Debt; Payment of Dividends . Except as provided in the Transaction Documents, any debt incurred after the date hereof to any creditor shall be subordinated to the indebtedness evidenced by this Note. The Company shall not declare or pay any dividend or distribution with respect to any preferred stock or common stock of the Company other than (i) a pro rata dividend with respect to the common stock payable solely in shares of common stock or (ii) dividend accruals (but not payments or distributions) on Company preferred stock pursuant to the terns thereof.

5. Representations and Warranties of the Company . The Company represents and warrants to the Payee as follows:

(a) The Company has been duly incorporated and is validly existing and in good standing under the laws of the state of Delaware, with full corporate power and authority to own, lease and operate its properties and to conduct its business as currently conducted.

(b) This Note has been duly authorized, validly executed and delivered on behalf of the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to limitations on enforcement by general principles of equity and by bankruptcy or other laws affecting the enforcement of creditors' rights generally, and the Company has full power and authority to execute and deliver this Note and to perform its obligations hereunder.

6. Events of Default . The occurrence of any of the following events shall be an “ Event of Default ” under this Note:

(a) the Company shall fail to pay the principal or any accrued interest hereunder or any other Note after the date such payment shall become due and payable hereunder or thereunder; or

(b) if default shall be made in the performance or observance of any representation, warranty, covenant, or agreement contained in this Note, in the Amended and Restated Security Agreement or in the Purchase Agreement, or in any other agreement between the Company and the Payee relating to indebtedness of the Company to the Payee or any of its affiliates for borrowed money and such default shall have continued for a period of five (5) days after Company’s receipt of written notice of such default (unless such default is on account of failure to give a required notice, in which event such 5 day cure period shall commence with the date of such default); or

(c) the Company shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (the “ Bankruptcy Code ”) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce in writing to any petition filed against it in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic), or (vi) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing; or

(d) a proceeding or case shall be commenced in respect of the Company or any of its subsidiaries without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of thirty (30) consecutive days or any order for relief shall be entered in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic) against the Company or any of its subsidiaries or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Company or any of its subsidiaries and shall continue undismissed, or unstayed and in effect for a period of ninety (90) consecutive days.

7. Remedies Upon an Event of Default . If an Event of Default shall have occurred and shall be continuing, the Payee of this Note may at any time at its option, (a) declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable; provided , however , that upon the occurrence of an Event of Default described in (i) Sections 6(c) and (d) , without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Company, the outstanding principal balance and accrued interest hereunder shall be automatically due and payable, and (ii) Sections 6(a) and (b) the Payee may exercise or otherwise enforce any one or more of the Payee’s rights, powers, privileges, remedies and interests under this Note or applicable law. No course of delay on the part of the Payee shall operate as a waiver thereof or otherwise prejudice the right of the Payee. No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.

8. Conversion .

(a) General . The holder of this Note shall have the right at any time, at such holder’s option, to convert all or any lesser portion of the Principal Amount plus accrued and unpaid interest thereon into such number of fully paid and non-assessable shares of Series C Preferred Stock as is determined by dividing (i) the portion of the Principal Amount to be converted plus accrued and unpaid interest thereon by (ii) the Conversion Rate (as defined below) then in effect for this Note. The initial conversion rate shall be $90.00, such rate to be subject to adjustment in accordance with the provisions of this Section 8 . Such conversion rate in effect from time to time, as adjusted pursuant to this Section 8 , is referred to herein as a “ Conversion Rate .” All of the remaining provisions of this Section 8 shall apply separately to each Conversion Rate in effect from time to time with respect to this Note.

(b) Mechanics of Conversion .

(i) Such right of conversion shall be exercised by the Payee by delivering to the Company a conversion notice in the form attached hereto as Exhibit A (the “ Conversion Notice ”), appropriately completed and duly signed, and by surrender not later than two (2) Business Days thereafter of this Note. The Conversion Notice shall also contain a statement of the name or names (with addresses and tax identification or social security numbers) in which the certificate or certificates for Series C Preferred Stock shall be issued, if other than the name in which this Note is registered. Promptly after the receipt of the Conversion Notice, the Company shall issue and deliver, or cause to be delivered, to the Payee or such Payee’s nominee, a certificate or certificates for the number of shares of Series C Preferred Stock issuable upon such conversion. Such conversion shall be deemed to have been effected as of the close of business on the date of receipt by the Company of the Conversion Notice (the “ Conversion Date ”), and the person or persons entitled to receive the shares of Series C Preferred Stock issuable upon conversion shall be treated for all purposes as the holder or holders of record of such shares of Series C Preferred Stock as of the close of business on the Conversion Date. If the Payee has not converted the entire principal and interest amount of this Note pursuant to the Conversion Notice, then the Company shall execute and deliver to the Payee a new Note instrument identical in terms to this Note, but with a principal amount reflecting the unconverted portion of this Note. The new Note instrument shall be delivered subject to the same timing terms as the certificates for the Series C Preferred Stock.

(ii) The Company shall effect such issuance of Series C Preferred Stock within three (3) Business Days following the Conversion Date and shall transmit the certificates by messenger or reputable overnight delivery service to reach the address designated by such holder within three (3) Business Days after the receipt by the Company of such Conversion Notice. Provided that the holder complies with all of the provisions of this Note relating to the conversion hereof, if certificates evidencing the Series C Preferred Stock are not received by the holder (through no fault or negligence of the holder) within five (5) Business Days following the Conversion Date, then the holder will be entitled to revoke and withdraw its Conversion Notice, in whole or in part, at any time prior to its receipt of those certificates.

(d) Fractional Shares . The Company shall not be required to issue a fractional share of Series C Preferred Stock upon conversion of this Note. As to any fraction of a share which the holder of this Note would otherwise be entitled to acquire upon such conversion, the Company shall round down such fractional share to the nearest whole share of Series C Preferred Stock.

(e) Stock Dividends, Subdivisions and Combinations . If at any time while this Note is outstanding, the Company shall:

(i) cause the holders of its Series C Preferred Stock to be entitled to receive a dividend payable in, or other distribution of, additional shares of Series C Preferred Stock,

(ii) subdivide its outstanding shares of Series C Preferred Stock into a larger number of shares of Series C Preferred Stock, or

(iii) combine its outstanding shares of Series C Preferred Stock into a smaller number of shares of Series C Preferred Stock,

then in each such case the Conversion Rate shall be multiplied by a fraction of which the numerator shall be the number of shares of Series C Preferred Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Series C Preferred Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this Section 8(e) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clauses (ii) or (iii) of this Section 8(e) shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this paragraph occurs during the period that a Conversion Rate is calculated hereunder, then the calculation of such Conversion Rate shall be adjusted appropriately to reflect such event.

(f) Certain Other Distributions . If at any time while this Note is outstanding the Company shall take a record of the holders of its Series C Preferred Stock for the purpose of entitling them to receive any special dividend or other special distribution of:

(i) cash,

(ii) any evidences of its indebtedness, any shares of stock of any class or any other securities or property or assets of any nature whatsoever (other than cash or additional shares of Series C Preferred Stock as provided in Section 8(e) hereof), or

(iii) any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property or assets of any nature whatsoever (in each case set forth in subparagraphs 8(f)(i) , 8(f)(ii) and 8(f)(iii) hereof, the “ Distributed Property ”),

then upon any conversion of this Note that occurs after such record date, the holder of this Note shall be entitled to receive, in addition to the shares of Series C Preferred Stock issuable upon conversion of the Note (the “ Conversion Shares ”), the Distributed Property that such holder would have been entitled to receive in respect of such number of Conversion Shares had the holder been the record holder of such Conversion Shares as of such record date. Such distribution shall be made whenever any such conversion is made, but shall, for avoidance of doubt, not include ordinary course dividend accruals on the Series C Preferred Stock. In the event that the Distributed Property consists of property other than cash, then the fair value of such Distributed Property shall be as determined in good faith by the Board and set forth in reasonable detail in a written valuation report (the “ Valuation Report ”) prepared by the Board. The Company shall give written notice of such determination and a copy of the Valuation Report to the holder of this Note, and if the holder objects to such determination within twenty (20) Business Days following the date such notice is given, the Company shall submit such valuation to an investment banking firm of recognized national standing selected by the holder of this Note and acceptable to the Company in its reasonable discretion, whose opinion shall be binding upon the Company and the holder of this Note. A reclassification of the Series C Preferred Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Series C Preferred Stock and shares of any other class of stock shall be deemed a distribution by the Company to the holders of its Series C Preferred Stock of such shares of such other class of stock within the meaning of this Section 8(f) and, if the outstanding shares of Series C Preferred Stock shall be changed into a larger or smaller number of shares of Series C Preferred Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Series C Preferred Stock within the meaning of Section 8(e) .

(g) Series C Preferred Stock Reserved . The Company shall at all times reserve and keep available out of its authorized but unissued Series C Preferred Stock, solely for issuance upon the conversion of the Promissory Notes, such number of shares of Series C Preferred Stock as shall from time to time be issuable upon the conversion of all the Promissory Notes at the time outstanding.

9. Other Provisions Applicable to Adjustments . The following provisions shall be applicable to the making of adjustments of the number of shares of Series C Preferred Stock into which this Note is convertible and the current Conversion Rate provided for in Section 8 :

(a) When Adjustments to Be Made . The adjustments required by Section 8 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment to the Conversion Rate that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Series C Preferred Stock, as provided for in Section 8(e) ) up to, but not beyond the Conversion Date if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than 1% of the shares of Series C Preferred Stock into which this Note is convertible immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by Section 8 and not previously made, would result in a minimum adjustment or on the Conversion Date. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.

(b) Fractional Interests . In computing adjustments under Section 8 , fractional interests in Series C Preferred Stock shall be rounded down to the nearest whole share of Series C Preferred Stock.

(c) When Adjustment Not Required . If the Company undertakes a transaction contemplated under Section 8(f) and as a result takes a record of the holders of its Series C Preferred Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights or other benefits contemplated under Section 8(f) and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights or other benefits contemplated under Section 8(f) , then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

(d) Escrow of Stock . If after any property becomes distributable pursuant to Section 8 by reason of the taking of any record of the holders of Series C Preferred Stock, but prior to the occurrence of the event for which such record is taken, a holder of this Note converts this Note during such period, the holder of this Note shall continue to be entitled to receive any shares of Series C Preferred Stock issuable upon conversion under Section 8 by reason of such adjustment (as if this Note were not yet converted) and such shares or other property shall be held in escrow for the holder of this Note by the Company to be issued to holder of this Note upon and to the extent that the event actually takes place. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be canceled by the Company and escrowed property returned to the Company.

10. Replacement . Upon receipt of a duly executed, notarized and unsecured written statement from the Payee with respect to the loss, theft or destruction of this Note (or any replacement hereof), and, if requested by the Company, an indemnity bond customary in the industry, or, in the case of a mutilation of this Note, upon surrender and cancellation of such Note, the Company shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Note.

11. Parties in Interest, Transferability . This Note shall be binding upon the Company and its successors and permitted assigns and the terms hereof shall inure to the benefit of the Payee and its successors and assigns. This Note may be transferred or sold, subject to the provisions of Section 19 of this Note, or pledged, hypothecated or otherwise granted as security by the Payee.

12. Amendments . This Note may not be modified or amended in any manner except in writing executed by the Company and the Payee.

13. Notices . Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a Business Day during normal business hours where such notice is to be received), or the first Business Day following such delivery (if delivered other than on a Business Day during normal business hours where such notice is to be received) or (b) on the second Business Day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The Company will give written notice to the Payee at least twenty (20) days prior to the date on which dissolution, liquidation or winding-up will take place and in no event shall such notice be provided to the Payee prior to such information being made known to the public. Notices to the Payee shall be made to the address set forth in the Purchase Agreement. Notices to the Company shall be made to the following:

Address of the Company:	Virtual Piggy, Inc. 1618 South Broad Street Philadelphia, PA 19145 Fax (215) 465-2013 Attention: Ernest Cimadamore



with a copy to:	Wiggin and Dana LLP Two Stamford Plaza 281 Tresser Boulevard Stamford, CT 06901 Fax (203) 363-7676 Attention: Michael Grundei, Esquire

14. Governing Law . This Note shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to the choice of law provisions. This Note shall not be interpreted or construed with any presumption against the party causing this Note to be drafted.

15. Headings . Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.

16. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief . The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Payee’s right to pursue actual damages for any failure by the Company to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments and the like (and the computation thereof) shall be the amounts to be received by the Payee and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable and material harm to the Payee and that the remedy at law for any such breach may be inadequate. Therefore the Company agrees that, in the event of any such breach or threatened breach, the Payee shall be entitled, in addition to all other available rights and remedies, at law or in equity, to such equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.

17. Failure or Indulgence Not Waiver . No failure or delay on the part of the Payee in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

18. Enforcement Expenses . The Company agrees to pay all costs and expenses of enforcement of this Note, including, without limitation, reasonable attorneys' fees and expenses.

19. Compliance with Securities Laws . The Payee of this Note acknowledges that this Note is being acquired solely for the Payee’s own account and not as a nominee for any other party, and for investment, and that the Payee shall not offer, sell or otherwise dispose of this Note other than in compliance with the laws of the United States of America and as guided by the rules of the Securities and Exchange Commission. This Note and any Note issued in substitution or replacement therefore shall be stamped or imprinted with legends, as applicable, in substantially the following form:

“ THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE HAS BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER APPLICABLE SECURITIES LAWS.”

20. Severability . The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.

21. Consent to Jurisdiction . Each of the Company and the Payee (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the District of Delaware and the courts of the State of Delaware for the purposes of any suit, action or proceeding arising out of or relating to this Note and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Payee consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address set forth in Section 13 hereof and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 21 shall affect or limit any right to serve process in any other manner permitted by law.

22. Company Waivers .

(a) Except as otherwise specifically provided herein, the Company and all others that may become liable for all or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their liability herein and do further consent to the release of any person liable hereon, all without affecting the liability of the other persons, firms or Company liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.

(b) No delay or omission on the part of the Payee in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver of such rights or any other right of the Payee, nor shall any waiver by the Payee of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.

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IN WITNESS WHEREOF, the Company has executed and delivered this Promissory Note as of the date first written above.

	VIRTUAL PIGGY, INC.



	By:
		Name: Scott McPherson
		Title: Chief Financial Officer

EXHIBIT A

FORM OF CONVERSION NOTICE

(To be executed by the registered holder in order to convert the Note)

The undersigned hereby irrevocably elects to convert the principal and interest under the 3.5% Secured Convertible Promissory Note due 2018 (the “ Note ”) of Virtual Piggy, Inc., a Delaware corporation (the “ Company ”), due June 30, 2018 held by the undersigned into shares of Series C Preferred Stock, according to the terms and conditions of the Note and the conditions hereof, as of the date written below. The undersigned hereby requests that certificates for the shares of Series C Preferred Stock to be issued to the undersigned pursuant to this Conversion Notice be issued in the name of, and delivered to, the undersigned or its designee as indicated below. If the shares of Series C Preferred Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. A copy of the Note being converted is attached hereto (and the original Note shall be transmitted to the Company pursuant to the terms thereof). All capitalized terms used in this Conversion Notice, but not otherwise defined herein shall have the meanings assigned in the Note.


Date of Conversion (Date of Notice)


Principal Amount of Note to be Converted


Principal Amount of Note not to be Converted (Principal Amount Remaining after Conversion)


Amount of accumulated and unpaid interest on principal amount of Note to be Converted


Number of shares of Series C Preferred Stock to be Issued (including conversion of accrued but unpaid interest on Notes to be Converted)


Applicable Conversion Value

Conversion Information:[NAME OF HOLDER]

Address of Holder:





Issue Series C Preferred Stock to (if different than above):

Name:

Address:



Tax ID #:






Name of Holder



By:

Name:

Title:

Exhibit 10.2

VIRTUAL PIGGY, INC.

3.5% SECURED CONVERTIBLE PROMISSORY NOTE DUE 2018

U.S. $[_______]	Philadelphia, PA
No.: PN-C2016-[___]	[__________], 2016

1. Principal and Interest Payments .

5. Representations and Warranties of the Company . The Company represents and warrants to the Payee as follows:

6. Events of Default . The occurrence of any of the following events shall be an “ Event of Default ” under this Note:

(a) the Company shall fail to pay the principal or any accrued interest hereunder or any other Note after the date such payment shall become due and payable hereunder or thereunder; or

8. Conversion .

(b) Mechanics of Conversion .

(e) Stock Dividends, Subdivisions and Combinations . If at any time while this Note is outstanding, the Company shall:

(i) cause the holders of its Series C Preferred Stock to be entitled to receive a dividend payable in, or other distribution of, additional shares of Series C Preferred Stock,

(ii) subdivide its outstanding shares of Series C Preferred Stock into a larger number of shares of Series C Preferred Stock, or

(iii) combine its outstanding shares of Series C Preferred Stock into a smaller number of shares of Series C Preferred Stock,

(i) cash,

(b) Fractional Interests . In computing adjustments under Section 8 , fractional interests in Series C Preferred Stock shall be rounded down to the nearest whole share of Series C Preferred Stock.

12. Amendments . This Note may not be modified or amended in any manner except in writing executed by the Company and the Payee.

Address of the Company:	Virtual Piggy, Inc.
	1618 South Broad Street
	Philadelphia, PA 19145
	Fax (215) 465-2013
	Attention: Ernest Cimadamore


with a copy to:	Wiggin and Dana LLP
	Two Stamford Plaza
	281 Tresser Boulevard
	Stamford, CT 06901
	Fax (203) 363-7676
	Attention: Michael Grundei, Esquire

15. Headings . Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.

18. Enforcement Expenses . The Company agrees to pay all costs and expenses of enforcement of this Note, including, without limitation, reasonable attorneys' fees and expenses.

22. Company Waivers .

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IN WITNESS WHEREOF, the Company has executed and delivered this Promissory Note as of the date first written above.

	VIRTUAL PIGGY, INC.




	By:
		Name: Scott McPherson
		Title: Chief Financial Officer

EXHIBIT A

FORM OF CONVERSION NOTICE

(To be executed by the registered holder in order to convert the Note)


Date of Conversion (Date of Notice)


Principal Amount of Note to be Converted


Principal Amount of Note not to be Converted (Principal Amount Remaining after Conversion)


Amount of accumulated and unpaid interest on principal amount of Note to be Converted


Number of shares of Series C Preferred Stock to be Issued (including conversion of accrued but unpaid interest on Notes to be Converted)


Applicable Conversion Value

Conversion Information:[NAME OF HOLDER]

Address of Holder:





Issue Series C Preferred Stock to (if different than above):

Name:

Address:



Tax ID #:



Name of Holder

By:
Name:
Title:

Exhibit 10.3

AMENDED AND RESTATED SECURITY AGREEMENT

This AMENDED AND RESTATED SECURITY AGREEMENT is made as of August 26, 2016 between William F. Miller III, an individual residing at [_______________________________], as successor agent (hereinafter, in such capacity, the “ Agent ”) for itself, the Prior Noteholders (as defined below) and the holders of the New Secured Notes (as defined below) (the “ New Noteholders ,” and together with the Agent and the Prior Noteholders, collectively, the “ Secured Parties ”) and Virtual Piggy, Inc., a Delaware corporation with its chief executive office located at 1618 South Broad Street, Philadelphia, PA 19145, Attention: Secretary (the “ Debtor ”).

W I T N E S S E T H:

WHEREAS , the Debtor issued a series of 10% Secured Convertible Promissory Notes due 2017 (the “ Prior Notes ”) to certain persons (the “ Prior Noteholders ”) and such notes were secured pursuant to a Security Agreement, as amended, among the Company, Agent and the Prior Noteholders (the “ Prior Security Agreement ”);

WHEREAS , on the date hereof, the Company is issuing additional Prior Notes pursuant to an exchange of certain unsecured promissory notes of the Company, and the holders of such additional Prior Notes shall become signatories to this Amended and Restated Security Agreement, and “Prior Noteholders” and holders of “Prior Notes” for all purposes; and

WHEREAS , on the date hereof, the Debtor has issued in favor of each of the New Noteholders, 3.5% Secured Convertible Promissory Notes due 2018 (each a “ New Secured Note ” and collectively the “ New Secured Notes ”); such New Secured Notes have been issued pursuant to the terms of a Securities Purchase Agreement (the “ Purchase Agreement ”) of even date herewith between the Debtor and the New Noteholders; and

WHEREAS , it is a condition precedent to the Secured Parties’ making any loans under the Prior Notes, the Purchase Agreement and the New Secured Notes or otherwise extending credit to the Debtor that the Debtor execute and deliver to the Secured Parties this Amended and Restated Security Agreement;

WHEREAS , James E. Davison is resigning as Agent on the date hereof by executing this Amended and Restated Security Agreement and William F. Miller III has agreed to act as successor Agent hereunder; and

NOW, THEREFORE , in consideration of the premises and to induce the Secured Parties to extend the loans to the Debtor pursuant to the Prior Notes and the New Secured Notes, the Debtor hereby agrees with the Secured Parties as follows:

1. Defined Terms .

(a) Unless otherwise defined herein, (i) terms, which are defined in the New Secured Notes and used herein, shall have the meanings ascribed to such terms in the New Secured Notes, and (ii) terms, which are defined in the Purchase Agreement and used herein, shall have the meanings ascribed to such terms in the Purchase Agreement.

(b) The following terms which are defined in Article 9 are used herein as so defined: Accessions, Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Equipment, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letters of Credit, Letter-of-Credit Rights, Payment Intangibles, Proceeds, Promissory Notes, Software and Supporting Obligations.

“ Amended and Restated Security Agreement ” means this Amended and Restated Security Agreement, as amended, supplemented, restated or otherwise modified from time to time.

“ Article 9 ” means Article 9 of the Code as in effect from time to time.

“ Code ” means the Uniform Commercial Code as from time to time in effect in the State of Delaware, including, specifically, Article 9.

“ Collateral ” shall have the meaning assigned to it in Section 2 of this Amended and Restated Security Agreement.

“ Contracts ” means the separate contracts between the Debtor and third parties (including without limitation its customers), as the same may from time to time be amended, supplemented or otherwise modified, including, without limitation, (a) all rights of the Debtor to receive moneys due and to become due to it thereunder or in connection therewith, (b) all rights of the Debtor to damages arising out of, or for, breach or default in respect thereof, and (c) all rights of the Debtor to perform and to exercise all remedies thereunder; but excluding any contracts, the assignment or hypothecation of which, for collateral purposes, would result in a default or require, or cause, a forfeiture or permit a revocation of material rights under such contract.

“ Copyrights ” means (a) all copyrights of the United States or any other country, (b) all copyright registrations filed in the United States or in any other country, and (c) all Proceeds thereof.

“ Copyright License ” means any Contract providing for the grant by Debtor of any right to use any Copyright.

“ Customer Contracts ” means Contracts between the Debtor and its customers.

“ Encumbrance ” or “ Encumbrances ” means any security interest, mortgage, pledge, lien, claim, charge, encumbrance, title retention agreement, lessor’s interest under a financing lease or any analogous arrangements in any of properties or assets of Debtor, intended as, or having the effect of, security.

“ Event of Default ” as defined in each Note.

“ Governmental Authority ” means any Federal, state, local or foreign court, commission or tribunal, or governmental, administrative or regulatory agency, department, authority, instrumentality or other body.

“ Material Adverse Effect ” means a material adverse effect on the condition (financial or otherwise), assets, liabilities, business, results of operations or prospects of the Debtor and its subsidiaries, taken as a whole.

“ Obligations ” means all principal, interest, fees, charges, collateral protection expenses, enforcement costs and other sums (in each case whether pre-or-post petition) due or to become due and payable by Debtor to any of the Secured Parties under the New Secured Notes, this Agreement or the Purchase Agreement.

“ Patents ” means (a) all patents of the United States and all reissues and extensions thereof, (b) all applications for patents of the United States and all divisions, continuations and continuations-in-part thereof or any other country, and (c) all Proceeds thereof.

“ Patent License ” means any Contract providing for the grant by Debtor of any right to manufacture, use or sell any invention covered by a Patent.

“ Permitted Encumbrances ” means any of the following Encumbrances that exist or that the Debtor may create or incur or suffer to be created or incurred or to exist: (i) liens to secure taxes, assessments and other government charges in respect of obligations not overdue or liens on properties to secure claims for labor, material or supplies in respect of obligations not overdue; (ii) deposits or pledges made in connection with, or to secure payment of, workmen’s compensation, unemployment insurance, old age pensions or other social security obligations; (iii) liens of carriers, warehousemen, mechanics and materialmen, and other like liens on properties in existence less than 180 days from the date of creation thereof in respect of obligations not overdue; (iv) encumbrances on real estate consisting of easements, rights of way, zoning restrictions, restrictions on the use of real property and defects and irregularities in the title thereto, landlord’s or lessor’s liens under leases to which the Debtor is a party, and other minor liens or encumbrances none of which in the opinion of the Debtor interferes materially with the use of the property affected in the ordinary conduct of business of the Debtor, which defects do not individually or in the aggregate have a Material Adverse Effect; (v) purchase money security interests in or purchase money mortgages on real or personal property to secure purchase money indebtedness, incurred in connection with the acquisition of such property, which security interests or mortgages cover only the real or personal property so acquired; or (vi) security interests in the sale and lease back of real and personal property, the aggregate value of which does not exceed $500,000 during the term of the Note.

“ Person ” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other entity of whatever nature, whether public or private.

“ Required Secured Parties ” means, as of any date, the Secured Parties holding at least a majority of the outstanding principal amount of the total aggregate amount of the Prior Notes and the New Secured Notes on such date.

“ Requirement of Law ” means any requirement of law, rule, regulation or guideline of any Governmental Authority.

“ Software License ” means any agreement, written or oral, providing for the grant by Debtor of any right to use any Software.

“ Source Code ” means all source code and all updates, releases and/or new versions of the Software.

“ Trademarks ” means (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers and the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether registered in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof or otherwise, (b) all renewals thereof, and (c) all Proceeds thereof, including the goodwill of the business connected with the use of and symbolized by the Trademarks.

“ Trademark License ” means any Contract providing for the grant by Debtor of any right to use any Trademark.

2. Grant of Security Interest .

(a) As collateral security for the prompt and complete payment and performance when due of the Obligations, the Debtor hereby grants to the Agent, for the benefit of each of the Secured Parties, a security interest in all properties, assets and rights of the Debtor now owned or at any time hereafter acquired by the Debtor or in which the Debtor now has or at any time in the future may acquire any right, title or interest, wherever located or situated and however defined or classified under Article 9, including, without limitation, all of the property described in clause (c) below (collectively, the “ Collateral ”).

(b) Debtor, the Prior Noteholders and the New Noteholders each acknowledge and agree that neither the lien arising from the Prior Notes nor the lien arising from the New Secured Notes shall be subordinate to the other and that the Collateral pursuant to such liens shall be shared pari passu among the Prior Noteholders and the New Noteholders.

(c) Without limitation of the foregoing, the Collateral includes all of Debtor’s right, title and interest in the following at all times:

(i)	all Accounts;

(ii)	all Chattel Paper;

(iii)	all Commercial Tort Claims;

(iv)	all Contracts;

(v)	all Copyrights;

(vi)	all Copyright Licenses;

(vii)	all Deposit Accounts;

(viii)	all Documents;

(ix)	all Equipment;

(x)	all General Intangibles;

(xi)	all Goods;

(xii)	all Instruments;

(xiii)	all Inventory;

(xiv)	all Investment Property;

(xv)	all Letter-of-Credit Rights;

(xvi)	all Letters of Credit;

(xvii)	all Patents;

(xviii)	all Patent Licenses;

(xix)	all Payment Intangibles;

(xx)	all Promissory Notes;

(xxi)	all Software (including, without limitation, any Source Code thereto, all Software Licenses and any Patents or Copyrights associated therewith);

(xxii)	all Supporting Obligations;

(xxiii)	all Trademarks;

(xxiv)	all Trademark Licenses;

(xxv)	all Proceeds, all Accessions and additions thereto and all substitutions and replacements therefor and products of any and all of the foregoing.

3. Rights of Agent; Limitations on Agent’s Obligations .

(a) Debtor Remains Liable under Accounts and Contracts . Anything herein to the contrary notwithstanding, the Debtor shall remain liable under each of the Accounts and Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account and in accordance with and pursuant to the terms and provisions of each such Contract. The Agent shall not shall have any obligation or liability under any Account (or any agreement giving rise thereto) or under any Contract by reason of or arising out of this Amended and Restated Security Agreement or the receipt by the Agent of any payment relating to such Account or Contract pursuant hereto, nor shall the Agent be obligated in any manner to perform any of the obligations of the Debtor under or pursuant to any Account (or any agreement giving rise thereto) or under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto) or under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

(b) Notice to Account Debtors and Contracting Parties . At any time after the occurrence of an Event of Default, upon the request of the Agent acting upon the written instruction of the Required Secured Parties, the Debtor shall notify account debtors on the Accounts and parties to the Contracts that the Accounts and the Contracts have been assigned to the Agent for the benefit of the Secured Parties, and that payments in respect thereof shall be made directly to the Agent. Upon the occurrence of an Event of Default, the Agent, may in its own name or in the name of others communicate with account debtors on the Accounts and parties to the Contracts to verify with them to the Agent’s reasonable satisfaction the existence, amount and terms of any Accounts or Contracts and to give notice to them of the Agent’s Lien against any Accounts or Contracts.

4. Representations and Warranties . The Debtor hereby represents and warrants to the Secured Parties that (a) it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, (b) it has the corporate power and authority to own or hold under lease the Collateral, to transact the business it transacts and proposes to transact, to execute and deliver this Amended and Restated Security Agreement and to perform the provisions hereof, (c) this Amended and Restated Security Agreement has been duly authorized by all necessary corporate action on the part of the Debtor and constitutes a legal, valid and binding obligation of the Debtor enforceable against the Debtor in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), (d) the execution, delivery and performance by the Debtor of this Amended and Restated Security Agreement will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any lien (other than those provided for in this Amended and Restated Security Agreement) in respect of any property of the Debtor under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, the Debtor’s articles of incorporation or bylaws, or any other material agreement or instrument to which the Debtor is a party or by which the Debtor or any of its properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Debtor, or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Debtor, (e) except for the Encumbrances granted pursuant to this Amended and Restated Security Agreement and Permitted Encumbrances, the Debtor owns each item of the Collateral free and clear of any and all Encumbrances or claims of others, and (f) except in connection with Permitted Encumbrances, no security agreement, financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as may have been filed in favor of the Secured Parties.

5. Covenants . The Debtor covenants and agrees with the Secured Parties that, from and after the date of this Amended and Restated Security Agreement until the Obligations are paid in full:

(a) Further Documentation; Pledge of Instruments and Chattel Paper . Upon the written request of the Secured Parties, and at the sole expense of the Debtor, the Debtor will promptly and duly execute and deliver such further instruments and documents and take such further action as the Secured Parties may reasonably request for the purpose of obtaining or preserving the full benefits of this Amended and Restated Security Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to the Encumbrances created hereby. The Debtor also hereby authorizes the Secured Parties to file any such financing or continuation statement. A carbon, photographic or other reproduction of this Amended and Restated Security Agreement shall be sufficient as a financing statement for filing in any jurisdiction. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be delivered to the Secured Parties, duly endorsed in a manner satisfactory to the Secured Parties to be held as Collateral pursuant to this Security Agreement.

(b) Indemnification . Following the occurrence of any Event of Default, in any suit, proceeding or action brought by any Secured Party under any Account or Contract for any sum owing thereunder, or to enforce any provisions of any Account or Contract, the Debtor will save, indemnify and keep the Secured Parties harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction or liability whatsoever of the account debtor or obligor thereunder, arising out of a breach by the Debtor of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such account debtor or obligor or its successors from the Debtor.

(c) Maintenance of Records . The Debtor will keep and maintain at its own cost and expense satisfactory and complete records of the Collateral, including, without limitation, a record of all payments received and all credits granted with respect to the Accounts. The Debtor will mark its books and records pertaining to the Collateral to evidence this Amended and Restated Security Agreement and the security interests granted hereby. The Secured Parties shall have a security interest in all of the Debtor’s books and records pertaining to the Collateral, and the Debtor shall make any such books and records available to the Secured Parties or to their representatives during normal business hours for their review at the request of the Secured Parties upon reasonable prior notice.

(d) Right of Inspection . The Secured Parties shall at all times but no more than once every six (6) months and upon reasonable prior notice have full and free access during normal business hours to all the books, correspondence and records of the Debtor, and the Secured Parties or their respective representatives may examine the same, take extracts therefrom and make photocopies thereof, and the Debtor agrees to render to the Secured Parties, at the Debtor’s cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto; provided, however, that during the occurrence of an Event of Default, the Secured Parties and their respective representatives may conduct such examinations at any time. The Secured Parties and their representatives shall at any reasonable time, but no more than once every six (6) months, and upon reasonable prior notice also have the right to enter into and upon any premises where any of the Inventory or Equipment is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests-therein provided, however, that during the occurrence of an Event of Default, the Secured Parties and their respective representatives may enter any such premises at any time.

(e) Compliance with Laws . The Debtor will comply in all material respects with all Requirements of Law applicable to the Collateral or any part thereof or to the operation of the Debtor’s business; provided, however, that the Debtor may contest any Requirement of Law in any reasonable manner which shall not, in the opinion of the Secured Parties, adversely affect the Secured Parties’ rights or the priority of its Encumbrances on the Collateral.

(f) Compliance with Terms of Contracts . The Debtor will perform and comply in all material respects with all its obligations under the Contracts and all its other contractual obligations relating to the Collateral except where such nonperformance and noncompliance could not reasonably be expected to have a Material Adverse Effect.

(g) Payment of Obligations . The Debtor will pay promptly when due all taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of its income or profits therefrom, as well as all claims of any kind (including, without limitation, claims for labor, materials and supplies) against or with respect to the Collateral, except that no such charge need be paid if (i) the validity thereof is being contested in good faith by appropriate proceedings, (ii) such proceedings do not involve any material danger of the sale, forfeiture or loss of any of the Collateral or any interest therein, and (iii) such charge is adequately reserved against on the Debtor’s books in accordance with generally accepted accounting principles.

(h) Limitation on Encumbrances on Collateral . The Debtor will not create, incur or permit to exist, will defend the Collateral against, and will take such other action as is necessary to remove, any Encumbrance or claim on or to the Collateral, other than the Encumbrances created hereby or Permitted Encumbrances, and will defend the right, title and interest of the Secured Parties in and to any of the Collateral against other claims and demands of all Persons whomsoever.

(i) Limitations on Dispositions of Collateral . The Debtor will not sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so except for (x) sales of Inventory in the ordinary course of its business, (y) licenses of Software in the ordinary course of its business, and (z) so long as no Event of Default has occurred, the disposition in the ordinary course of business of property not material to the conduct of its business.

(j) Limitations on Modifications, Waivers, Extensions of Contracts and Agreements Giving Rise to Accounts . The Debtor will not (i) amend, modify, terminate or waive any provision of any Contract or any agreement giving rise to an Account in any manner which could reasonably be expected to materially adversely affect the value of all Contracts and Accounts as Collateral when examined in the aggregate, or (ii) fail to exercise promptly and diligently each and every material right which it may have under each Contract and each agreement giving rise to an Account where such failure could reasonably be expected to have a Material Adverse Effect on the value of all Contracts and Accounts when examined in the aggregate.

(k) Maintenance of Equipment . The Debtor will maintain each item of Equipment in good operating condition, ordinary wear and tear and immaterial impairments of value and damage by the elements excepted, and will provide all maintenance, service and repairs necessary for such purpose except where the failure to maintain such Equipment could not reasonably be expected to have a Material Adverse Effect.

(l) Further Identification of Collateral . The Debtor will furnish to the Agent from time to time upon request, but no more than once per year, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may reasonably request, all in reasonable detail.

(m) Notices . The Debtor will advise the Secured Parties promptly, in reasonable detail, (i) of any Encumbrance (other than Encumbrances created hereby or Permitted Encumbrances) on, or claim asserted against, any of the Collateral, (ii) of any notice sent by a Secured Party of the occurrence of an Event of Default under such Secured Party’s Note, and (iii) of the occurrence of any other event which could reasonably be expected to have a Material Adverse Effect on the aggregate value of the Collateral or on the Encumbrances created hereunder.

(n) Changes in Locations, Name . The Debtor shall provide Secured Parties with at least thirty (30) days prior written notice in the event of either (i) a change the location of its chief executive office/chief place of business or jurisdiction of incorporation or remove its books and records from such location, or (ii) change its name, identity or corporate structure to such an extent that any financing statement filed by the Secured Parties in connection with this Amended and Restated Security Agreement would become seriously misleading.

(o) Patents, Copyrights, Software, Trademarks and General Intangibles .

(i) Whenever Debtor shall file an application for the registration of any Patent, Software or Trademark with the United States Patent and Trademark Office or any Copyright or Software with the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, Debtor shall report such filing to the Secured Parties within five (5) business days after the last day of the fiscal quarter in which such filing occurs.

(ii) The Debtor shall execute and deliver any and all agreements, instruments, documents, and papers as the Secured Parties may reasonably request to evidence the Secured Parties’ security interest in any Patent, Copyright, Software, General Intangible or Trademark and the goodwill of Debtor relating thereto or represented thereby, and Debtor hereby constitutes the Agent as its attorney-in-fact to execute and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power being coupled with an interest is irrevocable until the Obligations are paid in full.

(iii) The Debtor will take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of any registered Patents, Copyrights, Software, General Intangibles or Trademarks, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability.

(iv) In the event that any material Patent, Copyright, Software, General Intangible or Trademark included in the Collateral is infringed, misappropriated or diluted by a third party, Debtor shall promptly notify the Agent after it learns thereof and shall, unless Debtor shall reasonably determine that such Patent, Copyright, Software, General Intangible or Trademark is of negligible economic value to Debtor, promptly sue for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for such infringement, misappropriation or dilution, or take such other actions as Debtor shall reasonably deem appropriate under the circumstances to protect such Patent, Copyright, Software, General Intangible or Trademark.

(p) Insurance . Debtor , at its expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, are reasonable given the nature of Debtor ’s business and the type and use of Collateral. Debtor shall also maintain insurance relating to Debtor ’s business, ownership and use of the Collateral in amounts and of a type that are customary to businesses similar to Debtor ’s. All such policies of insurance shall be in such form, with such companies, and in such amounts as are reasonably satisfactory to the Agent. All such policies of property insurance shall contain a lender’s loss payable endorsement, in a form satisfactory to the Agent, showing the Agent as an additional loss payee thereof, and all liability insurance policies shall show the Agent as an additional insured and shall specify that the insurer must give at least twenty (20) days notice to the Agent before canceling its policy for any reason. Upon the Agent’s request, Debtor shall deliver to the Agent certified copies of such policies of insurance and evidence of the payments of all premiums therefor. All proceeds payable under any such policy shall, at the option of the Agent, be payable to the Agent to be applied on account of the Obligations in such order as the Agent shall elect.

(q) Commercial Tort Claims . The Debtor shall promptly notify the Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim against any third party, and upon request of the Secured Parties, promptly enter into an amendment to this Amended and Restated Security Agreement and do such other acts or things deemed appropriate by the Secured Parties to give the Secured Parties a security interest in any such Commercial Tort Claim.

6. Agent’s Appointment as Attorney-in-Fact .

(a) Powers . During the existence of an Event of Default, the Debtor hereby irrevocably constitutes and appoints the Agent with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Debtor and in the name of Debtor or in its own name, from time to time in the Agent’s discretion upon instruction from the Required Secured Parties, for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement, and, without limiting the generality of the foregoing, Debtor hereby gives the Agent the power and right, on behalf of Debtor, without notice to or assent by Debtor, to do the following: to pay or discharge taxes and Encumbrances (other than Permitted Encumbrances) levied or placed on the Collateral (upon written instruction of the Required Secured Parties), to effect any repairs or any insurance called for by the terms of this Amended and Restated Security Agreement and to pay all or any part of the premiums therefor and the costs thereof (upon written instruction of the Required Secured Parties); and during the existence of an Event of Default and only upon written instruction of the Required Secured Parties: (A) to direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Secured Party or as the Secured Party shall direct; (B) to ask or demand for, collect, receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (C) to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against Debtor with respect to any Collateral; (F) to settle, compromise or adjust any suit, action or proceeding described in clause (E) above and, in connection therewith, to give such discharges or releases as the Agent may deem appropriate; (G) to assign any Patent, Copyright, Software, General Intangible or Trademark (along with the goodwill of the business to which any such Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Agent shall determine; and (H) generally, to sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Agent were the absolute owner thereof for all purposes, and to do, at the Agent’s option and Debtor’s expense, at any time, or from time to time, all acts and things which the Agent, with the consent and instruction of the Required Secured Parties, deems necessary to protect, preserve or realize upon the Collateral and the Agent’s Encumbrances thereon and to effect the intent of this Security Agreement, all as fully and effectively as Debtor might do. In addition, the Debtor hereby irrevocably constitutes and appoints the Agent with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of Debtor and in the name of Debtor or in its own name, from time to time in the Agent’s discretion, for the purpose of perfecting the Agent’s Lien against the Collateral, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish such purpose. The Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. The powers of attorney in this subsection are powers coupled with an interest and shall be irrevocable.

(b) Other Powers . The Debtor also authorizes the Agent, at any time and from time to time, to execute, in connection with the sale provided for in Section 9 hereof, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral.

(c) No Duty on Agent’s Part . The powers conferred on the Agent hereunder are solely to protect Agent’s interests in the Collateral and shall not impose any duty upon the Agent to exercise any such powers. The Agent shall be accountable only for amounts that it or the Secured Parties actually receive as a result of the exercise of such powers, and none of them nor any of their officers, directors, or employees shall be responsible to Debtor for any act or failure to act hereunder, except for its own gross negligence or willful misconduct.

7. Performance by Agent of Debtor’s Obligations . If Debtor fails to perform or comply with any of its agreements contained herein and the Agent, upon written instruction of the Required Secured Parties, shall itself perform or comply, or otherwise cause performance or compliance, with such agreement, the reasonable expenses of the Agent incurred in connection with such performance or compliance, shall be payable by Debtor to the Agent on demand and shall constitute Obligations secured hereby.

8. Proceeds . In addition to the rights of the Agent specified in Section 3 with respect to payments of Accounts, it is agreed that during the existence of an Event of Default (a) all Proceeds received by the Debtor consisting of cash, checks and other near-cash items shall be held by the Debtor in trust for the Secured Parties, segregated from other funds of the Debtor, and shall, forthwith upon receipt by the Debtor, be turned over to the Agent in the exact form received by the Debtor (duly endorsed by the Debtor to the Agent), and (b) any and all such Proceeds received by the Agent (whether from the Debtor or otherwise) may, in the sole discretion of the Agent upon written instruction of the Required Secured Parties, be held by the Agent as collateral security for, and/or then or at any time thereafter may be applied by the Agent, pro ratably against, the Obligations or in such order as the Required Secured Parties may elect. Any balance of such Proceeds remaining after the Obligations shall have been paid in full, shall be paid over to the Debtor or to whomsoever may be lawfully entitled to receive the same.

9. Remedies . Upon the occurrence and during the continuance of an Event of Default, the Agent, at the written direction of the Required Secured Parties, may exercise, in addition to all other rights and remedies granted to it in this Amended and Restated Security Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code. Without limiting the generality of the foregoing, the Agent at written direction of the Required Secured Parties, during the existence of an Event of Default and without further demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon Debtor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of the Agent or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Each purchaser at any such sale shall hold the Collateral sold absolutely free from any claim or right on the part of the Debtor, and Debtor hereby waives (to the extent permitted by law) all rights of redemption, stay, or appraisal that it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each of the Secured Parties shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in Debtor, which right or equity is hereby waived or released, and in connection herewith to credit bid the Obligations with the proceeds that would otherwise be payable to such Secured Party. The Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. To the extent permitted by law, Debtor hereby waives any claims against Agent arising because the price at which any Collateral may have been sold at a private sale was less than the price that might have been obtained at a public sale. The Debtor further agrees, at the Agent’s request upon instruction from the Required Secured Parties, to assemble the Collateral and make it available to the Agent at places, which the Agent shall reasonably select, whether at Debtor’s premises or elsewhere. The Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Agent hereunder, including, without limitation, reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Required Secured Parties may elect, and only after such application and after the payment by Agent of any other amount required by any provision of law, including, without limitation, any provision of the Code, need the Agent account for the surplus, if any, to Debtor. To the extent permitted by applicable law, Debtor waives all claims, damages and demands it may acquire against the Agent or any Secured Party arising out of the exercise by Agent of any of its rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least ten (10) days before such sale or other disposition. The Debtor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay the obligations and the fees and disbursements of any attorneys employed by Agent to collect such deficiency. Debtor hereby agrees that any sale or other disposition of the Collateral conducted in conformity with reasonable commercial practices of banks, insurance companies, or other financial institutions in the city and state where Agent is located in disposing of property similar to the Collateral shall be deemed to be commercially reasonable.

10. Limitation on Duties Regarding Preservation of Collateral . The Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Article 9 or otherwise, shall be to deal with it in the same manner as any Secured Party deals with similar property for its own account. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of Debtor or otherwise.

11. Powers Coupled with an Interest . All authorizations and agencies herein contained with respect to the Collateral are irrevocable and powers coupled with an interest.

12. Agent . Each Secured Party hereby designates and appoints the Agent to serve in accordance with the terms and conditions of this Agreement, and the Agent hereby agrees to act as such, upon the terms and conditions provided in this Agreement. The Agent may execute any of its duties under this Agreement by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent or other document or conversation believed by it to be genuine and correct. The Agent shall be fully justified in failing or refusing to take any action unless it first receives such advice or concurrence from the Required Secured Parties. The Agent shall be under no obligation to take any action to protect, preserve or enforce any rights or interests in the Collateral or to take any action toward the execution or enforcement of the rights and remedies hereunder, whether on its own motion or on the request of any other Person, which in the opinion of the Agent may involve loss, liability or expense to it, unless the Debtor and/or one or more Secured Parties shall offer and furnish security or indemnity, reasonably satisfactory to the Agent, against loss, liability and expense to the Agent. The Agent shall in all cases be fully protected in acting or refraining from acting in accordance with a request or consent of the Required Secured Parties and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Secured Parties. The Agent will not be deemed to have knowledge or notice of the occurrence of any Event of Default except with respect to payment default required to be paid to the Agent in its individual capacity, unless the Agent shall have received written notice from a Secured Party or the Debtor describing such default. The Agent shall use its best efforts to notify all Secured Parties and the Debtor of any such notice. The Agent shall take such action with respect to such default as may be reasonably and lawfully requested by the Required Secured Parties in accordance with the terms of this Agreement subject to the requirements set forth above for indemnification and further subject to its right to resign under Section 13 below. In addition to any other indemnification provided for hereunder or otherwise in favor of the Agent, each of the Secured Parties shall indemnify upon demand the Agent and its agents, pro rata, from and against any and all actions, causes of actions, suits, losses, liabilities, damages and expenses, including reasonable attorney’s fees, other than those resulting from the Agent or its agents gross negligence or willful misconduct. The Agent shall not be required to advance, expend or risk its own funds or otherwise incur personal liability in the performance of its duties or in the exercise of any rights or remedies hereunder. All funds expended by the Agent hereunder (including, without limitation, funds expended for reasonable attorney’s fees) shall be promptly reimbursed by the Debtor and/or the Secured Parties upon demand from the Agent. Nothing shall limit or restrict the right of the Agent in its individual capacity to be a holder of Prior Notes or New Secured Notes and to exercise its rights thereunder, including, without limitation, its right to vote as a Secured Party as part of the Required Secured Parties. The Agent shall not be liable or responsible in any way for any diminution in the value of the Collateral or any act or default of any warehouseman, carrier, forwarding agency, or other Person whomsoever, but the same shall be at the sole risk of the Debtor and/or the Secured Parties. Unless instructed in writing by the Required Secured Parties and indemnified by the Secured Parties, the Agent shall not be responsible for effecting any filings with the United States Patent and Trademark Office or the United States Copyright Office with respect to any of the Collateral. The Agent makes no representation or warranty as to the validity, sufficiency or enforceability hereof or of the Collateral or as to the value, title, condition, or adequacy of insurance on, or otherwise with respect to, the Collateral. The Agent shall not be accountable to anyone for the use or application of the proceeds of the Prior Notes or the New Secured Notes. The Agent makes no representation or warranty as to the attachment, perfection or priority of the security interests and liens contemplated hereby.

13. Resignation of Agent . The Agent may resign at any time by giving twenty (20) days prior written notice thereof to the Secured Parties and the Debtor. Upon any such resignation, the Required Secured Parties shall have the right to appoint a successor Agent. Unless an Event of Default shall have occurred and be continuing, such successor Agent shall be reasonably acceptable to the Debtor. If no successor Agent shall have been so appointed by the Required Secured Parties and shall have accepted such appointment within fifteen (15) days after the retiring Agent’s giving of notice of resignation, then the retiring Agent may, on behalf of the Secured Parties, appoint a successor Agent. If no such successor can be found or appointed, a successor Agent may be appointed, upon application of the retiring Agent or any Secured Party, by any court of competent jurisdiction. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder.

14. Severability . Any provision of this Amended and Restated Security Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. All covenants and other agreements contained in this Amended and Restated Security Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns whether so expressed or not.

15. Paragraph Headings . The paragraph headings used in this Amended and Restated Security Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. This Amended and Restated Security Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

16. No Waiver; Cumulative Remedies . The Agent shall not, by any act (except by a written instrument), delay, indulgence, omission or otherwise, be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of the Agent, of any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Agent or any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that the Agent would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. THIS AMENDED AND RESTATED SECURITY AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF DELAWARE EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

17. Jurisdiction; Venue; Service of Process . This Agreement shall be subject to the exclusive jurisdiction of the Federal District Court, District of Delaware and if such court does not have proper jurisdiction, the State Courts of Delaware. The parties to this Agreement agree that any breach of any term or condition of this Agreement shall be deemed to be a breach occurring in the State of Delaware by virtue of a failure to perform an act required to be performed in the State of Delaware and irrevocably and expressly agree to submit to the jurisdiction of the Federal District Court, District of Delaware and if such court does not have proper jurisdiction, the State Courts of Delaware for the purpose of resolving any disputes among the parties relating to this Agreement or the transactions contemplated hereby. The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, or any judgment entered by any court in respect hereof brought in Delaware, and further irrevocably waive any claim that any suit, action or proceeding brought in Federal District Court, District of Delaware and if such court does not have proper jurisdiction, the State Courts of Delaware has been brought in an inconvenient forum. Each of the parties hereto consents to process being served in any such suit, action or proceeding, by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 17 shall affect or limit any right to serve process in any other manner permitted by law.

18. Entire Agreement; Amendments . This Amended and Restated Security Agreement amends are restates in its entirety the Prior Security Agreement. This Amended and Restated Security Agreement may not be further amended, modified or supplemented except by an instrument or instruments in writing signed by the Debtor and the Required Secured Parties; provided, that notwithstanding the foregoing, additional holders of New Secured Notes issued in accordance with the Purchase Agreement may be added as “New Noteholders” solely by delivery of a joinder agreement hereto executed by the Debtor and such New Noteholder to the extent the aggregate principal amount of New Secured Notes does not exceed $10,000,000 .

19. Notices . Notices hereunder shall be given to the Debtor, the Agent and each Secured Party in the manner set forth in the Purchase Agreement of even date herewith between the Debtor and each of the Secured Parties and at the addresses set forth therein and, as applicable, to each of the Prior Noteholders pursuant to their addresses as provided to the Debtor.

20. Termination . Upon the repayment in full of all Obligations, this Amended and Restated Security Agreement shall terminate, the Secured Parties shall deliver any release of the Encumbrances created under this Amended and Restated Security Agreement that Debtor may reasonably request (at the cost of the Debtor), and the Secured Parties shall return to the Debtor all Collateral then in its possession, custody, or control, and this Amended and Restated Security Agreement shall terminate without further action by the Party and be of no further force and effect.

[Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Security Agreement to be duly executed and delivered as of the date first above written.

	VIRTUAL PIGGY, INC.




	By:
	Name:	Scott McPherson
	Title:	Chief Financial Officer


	William F. Miller III, as Agent

OMNIBUS SIGNATURE PAGE TO

VIRTUAL PIGGY, INC.

AMENDED AND RESTATED SECURITY AGREEMENT

The undersigned, as a Secured Party, hereby executes and delivers the Amended and Restated Security Agreement to which this signature page is attached, which, together with all counterparts of the Amended and Restated Security Agreement and signature pages of the other parties named in said Amended and Restated Security Agreement, shall constitute one and the same document in accordance with the terms of the Amended and Restated Security Agreement.

	Print Name:

	By:

	Name:

	Title:

Exhibit 10.4

NOTE EXCHANGE AGREEMENT

This NOTE EXCHANGE AGREEMENT (the “ Agreement ”), dated August 26, 2016, is entered into by and between Virtual Piggy, Inc., a Delaware corporation (the “ Company ”) and the undersigned holders (the “ Holders ” and each individually a “ Holder ”) of those certain outstanding unsecured promissory notes issued by the Company to each such Holder, as amended (the “ Unsecured Notes ”).

WHEREAS, the Company has elected to offer up to an aggregate original principal amount of $10,000,000 of Secured Convertible Promissory Notes (the “ New Secured Notes ”), which shall accrue interest on the unpaid principal amount thereof at a rate equal to 3.5% per annum, compounded quarterly, which mature on June 30, 2018, or earlier (the “ Offering ”);

WHEREAS, the terms of the Offering contemplate that the Holders be provided a right to exchange their Unsecured Notes (including any accrued interest and commitment fees thereon) on a dollar-for-dollar basis for the Company’s outstanding class of secured convertible promissory notes which accrue interest on the unpaid principal amount thereof at a rate equal to 10% per annum, compounded quarterly, which mature on March 6, 2017 (the “ Prior Secured Notes ”);

WHEREAS, provided that the Offering is consummated, the Company and each undersigned Holder desire to cause the Unsecured Notes held by such Holder to be exchanged for new Prior Secured Notes on the terms and subject to the conditions provided herein.

NOW, THEREFORE, for and in consideration of the premises and the mutual agreements, provisions and covenants herein contained the parties hereto, intending to be legally bound, hereby agree as follows:

1. Exchange of Unsecured Notes for Prior Secured Notes . Subject to the terms of this Agreement including the satisfaction of the conditions to Closing set forth below, the Company hereby agrees to exchange and issue to each Holder, and each Holder hereby agrees to exchange and accept, severally and not jointly, each such Holder’s Unsecured Note for a Prior Secured Note in the amount set forth opposite such Holder’s name on Exhibit A , which amount shall include the principal amount of such Unsecured Note, together with any accrued and unpaid interest and commitment fees related to such Unsecured Note (the “ Exchange ”). The parties acknowledge and agree that neither the Company nor any Holder shall be obligated to complete the Exchange unless and until the initial closing of the Offering is consummated.

2. Closing; Exchange of Certificates .

a. The Exchange shall be contingent upon and shall occur (the “ Closing ”) simultaneous with the initial closing of the Offering. If the initial closing of the Offering does not occur, this Agreement shall be null and void and of no force or effect.

b. This Agreement shall be deemed a joinder by the undersigned Holder to the Security Agreement, as amended, relating to the Prior Secured Notes.

c. At the Closing (but no later than three (3) business days thereafter), (i) the Company will deliver to each Holder a new Prior Secured Note for the amount as set forth opposite such Holder’s name in Exhibit A , such new Prior Secured Note shall be in the form as set forth in Exhibit B and (ii) each Holder shall deliver to the Company the Unsecured Note for cancellation; provided, however, that any Unsecured Note that is not delivered to the Company following receipt of a new Prior Secured Note shall be automatically cancelled.

3. Representations and Warranties of the Company . The Company represents and warrants to each of the Holders, on the date hereof and at Closing, as follows:

a. 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. The Company has all requisite legal and corporate power to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement.

b. Due Authorization . The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated herein have been duly authorized by all necessary corporate action. This Agreement has been duly and validly executed and delivered by the Company, and constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms.

c. No Conflicts . The execution, delivery and performance of this Agreement will not result in any violation of, be in conflict with, or constitute a default under any terms or provision of (i) the Company’s organizational documents, in each case as amended, (ii) any agreement, order or other instrument to which the Company is a party or by which it or any of its property is bound or affected and which may have a material adverse effect on the condition, financial or otherwise, or operations the Company or (iii) any order, writ, injunction or decree of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, and to the knowledge of the Company, there exists no condition, event or act which constitutes, or which after notice, lapse of time or both could constitute, such a default.

d. Consent . No consent or approval of, or filing with, any governmental authority or other person not a party hereto is required for the execution, delivery and performance by the Company of this Agreement or the consummation of the Exchange.

4. Representations and Warranties of the Holders . Each of the Holders, severally and not jointly, represents and warrants to the Company, on the date hereof and at Closing, as follows:

a. Organization and Power . Each Holder has all requisite power and authority to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement. If Holder is an entity, Holder is duly organized, validly existing and in good standing under the laws of its state of organization.

b. Due Authorization . This Agreement has been duly and validly executed and delivered by each Holder, and constitutes a valid and binding agreement of each Holder, enforceable against such Holder in accordance with its terms. The execution of this Agreement and the performance by each of the Holders of its obligations hereunder does not conflict with or violate any agreement to which any Holder is a party or is bound or any law applicable to such Holder.

c. Investment Representations . Each Holder has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the new Prior Secured Notes, has independently evaluated the merits of the Exchange and has made an informed, independent investment decision with respect thereto. The Holders have been given the opportunity to ask questions of, and to receive answers from the Company and its representatives concerning the terms and conditions of an investment in the new Prior Secured Note. Each Holder is accepting the new Prior Secured Note for its own account, for investment purposes only and not with a view to the distribution (as such term is used in Section 2(11) of the Securities Act of 1933 (the “ Act ”)) thereof in violation of the Act. Each Holder understands that the new Prior Secured Notes have not been registered under the Act and cannot be sold unless subsequently registered under the Act or an exemption from such registration is available. Each Holder is an “ accredited investor ” within the meaning of Rule 501 of Regulation D of the SEC.

5. Binding Effect; Assignment . This Agreement is not assignable by any party, unless the prior written consent of the other parties hereto is obtained. This Agreement and all of the provisions hereof shall be binding upon and shall inure to the benefit of the Company and its successors and permitted assigns with respect to the obligations of the Holders under this Agreement, and to the benefit of each of the Holders and their respective successors and permitted assigns with respect to the obligations of the Company under this Agreement.

6. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but together shall constitute one and the same instrument. Any copy of this Agreement containing a facsimile signature page shall be deemed an original for all purposes.

7. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to agreements made and to be performed within that State, without regard to the conflicts of laws principles thereof.

8. Further Assurances . The Company and each of the Holders agree to execute and deliver, or otherwise provide, such other documents or agreements as may be necessary or desirable for the implementation of this Agreement and the consummation of the transactions contemplated hereby.

9. Survival . The representations of the parties shall survive the Closing hereunder.

[ Signature page follows .]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth above.

COMPANY:

VIRTUAL PIGGY, INC.


By:
Name:
Title:



HOLDERS:

Print Name:



By:


Name:


Title:

[Note Exchange Agreement Signature Page]

EXHIBIT A

Name of Noteholder	Original Principal Amount of Unsecured Note	Value of Unsecured Note at August 26, 2016 (including accrued interest and commitment fees)


TOTAL:

EXHIBIT B

Form of Prior Secured Note