One Horizon Group, Inc. (Form: 8-K, Received: 12/29/2014 12:30:28)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): December 22, 2014

One Horizon Group, Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

Delaware		000-10822		46-3561419
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)		(COMMISSION FILE NO.)		(IRS EMPLOYEE IDENTIFICATION NO.)

Weststrasse 1, Baar, Switzerland, CH6340

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(ISSUER TELEPHONE NUMBER)

Hunter Taubman Weiss LLP

130 w. 42nd Street, Suite 1050

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):

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

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

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

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

Item 1.01 Entry into a Material Definitive Agreement.

On December 22, 2014, (the “Closing Date”), in connection with a security purchase agreement ( the “Purchase Agreement”) between One Horizon Group, Inc. (hereinafter referred to as “we,” “us,” or the “Company”) and the investor identified on Exhibit A thereto (the “Investor”), we closed a private placement (the “Offering”) of $3,500,000 for a total of 1,555,556 units (the “Units”), at a purchase price of $2.25 per Unit, each consisting of, (i) one (1) convertible debenture (“Convertible Debenture”), initially convertible into one (1) share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), (ii) one (1) Class C Warrant (the “Class C Warrant”), and (iii) one (1) Class D Warrant (the “Class D Warrant,” together with the Class C Warrant, the "Warrants"), each exercisable to purchase one-quarter (1/4) share of Common Stock ( the “Offering”), in reliance upon the exemption from securities registration afforded by Regulation S (“Regulation S”) as promulgated under the Securities Act of 1933, as amended.

Convertible Debenture

On the Closing, we issued a Convertible Debenture that is convertible into 1,555,556 shares of Common Stock; the Convertible Debenture will, by its principal terms,

(a)	Carry a dividend at an annual rate of 8%, payable quarterly in arrears, in cash or shares of Common Stock, or a combination of cash and shares of Common Stock at the Investors’ option;

(b)	Mature on the thirty six (36) month anniversary of the Closing including principal and any unpaid interest (the “Maturity Date”)

(c)	Convertible at any time after the issuance until the Maturity Date into one (1) Share of Common Stock at an initial conversion price of $2.25 per share, subject to adjustment pursuant to the terms of the Convertible Debenture; and

(d)

Carry a prepayment clause pursuant to which we may repurchase any or all outstanding Convertible Debenture in cash for 120% of their face value on ten(10) business days’ notice at any time after the twelve (12) month anniversary of the Closing while the Investors have the right to convert their Convertible Debenture within five (5) business days after written notice of such prepayment.

Class C Warrants

On the Closing, we issued a Class C Warrant to purchase up to 388,889 shares of Common Stock. The Class C Warrant will, by it principal terms,

(a)	Entitle the holder to purchase up to 388,889 shares of Common Stock;
(b)	Be exercisable at any time after the issuance and shall expire on the date that is four (4) years following the original issuance date of the Class C Warrants;
(c)	Be exercisable, in whole or in part, at an initial exercise price of $3.00 per share of Common Stock, subject to adjustment as set forth in the Class C Warrant; and,
(d)	Be exercised only for cash.

Class D Warrants

On the Closing, we issued a Class D Warrant to purchase up to 388,889 shares of Common Stock. The Class D Warrant will, by its principal terms,

(a)	Entitle the holder to purchase up to 388,889 shares of Common Stock;
(b)	Be exercisable at any time after the issuance and shall expire on the date that is four (4) years following the original issuance date of the Class D Warrants;
(c)	Be exercisable, in whole or in part, at an exercise price of $3.50 per share of Common Stock, subject to adjustment as set forth in the Class D Warrant; and,
(d)	Be exercised only for cash.

Performance Warrants

The Investor is eligible to receive additional consideration in the form of a performance warrant based on our annual reported subscriber numbers, twenty four (24) months after the Closing, as is reflected in our Annual Report on Form 10-K for the year ending December 31, 2016 (the “Form 10-K”). After 24 months, if we fail to achieve 5.0 million subscribers, the Investor will receive 450,000 Performance Warrants. If we achieve subscriber numbers between 5.0 million and 15.0 million, the Investor will receive a pro rata number of Performance Warrants based on 450,000 Performance Warrants for 5.0 million subscribers and 0 Performance Warrants for 15.0 million subscribers. If we achieve more than 15.0 million subscribers, we will not issue any Performance Warrants.

Performance Warrants will be issued at an exercise price of the daily value weighted average price for the Common Stock for the 30 trading day period ending the day prior the date the Form 10-K is reported.

Compensation to Placement Agents

TriPoint Global Equities, LLC acted as our exclusive placement agent (the “Placement Agent”) in connection with the Offering. In connection with the services performed by the Placement Agent in the Offering, the Placement Agent received 62,222 placement agent warrants that entitle the holder to purchase 62,222 shares of common stock at $2.25 per share, 15,556 Class C Warrants, 15,556 Class D Warrants and a cash fee of $280,000.

Use of Proceeds

The use of proceeds of the Offering shall be used for promotion of Chinese Mobile apps, Asian partnerships and working capital.

Registration Rights

In connection with the Offering, we also entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors in which we agreed to file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission ("SEC") to register for resale the Common Stock issuable upon exercise of Class C Warrants, Class D Warrants and Performance Warrants, within 45 days of the Closing Date, and to have the registration statement declared effective within the earlier of 180 days of the Closing Date or three (3) business days after the date on which the SEC informs us (i) that they will not review the Registration Statement or (ii) that the Company may request the acceleration of the effectiveness of the Registration Statement.

The foregoing description of the Purchase Agreement, Convertible Debenture, Class C Warrants, Class D Warrants, Performance Warrants and Registration Right Agreement (collectively, the “Offering Documents”) is only a summary of their material terms, does not purport to be complete and is qualified in its entirety by reference to such documents. A copy of each of the Offering Documents is filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6 respectively, to this current report on Form 8-K.

Important Notice regarding the Offering Documents

The Offering Documents have been included as exhibits to this Current Report on Form 8-K to provide investors and security holders with information regarding their terms. They are not intended to provide any other financial information about the Company or its subsidiaries. The representations, warranties and covenants contained in the Offering Documents were made only for purposes of those agreements and as of specific dates; were solely for the benefit of the parties to the Offering Documents; may be subject to limitations agreed upon by the parties, including being qualified by disclosures made for the purposes of allocating contractual risk between the parties to the Offering Documents instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of the Company. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Offering Documents, which subsequent information may or may not be fully reflected in public disclosures by the Company.

Item 3.02 Unregistered Sales of Equity Securities

To the extent required by Item 3.02 of Form 8-K, the information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.

This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration requirements and certificates evidencing such securities contain a legend stating the same.

Section 7 - Regulation FD

Item 7.01. Regulation FD Disclosure

On December 29, 2014, we issued a press release relating to the matters disclosed herein; please note however, that since the press release was distributed, we received the Investor’s full subscription of $3,500,000. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Information contained under Item 7.01, including Exhibit 99.1, shall not be deemed filed for the purposes of the Securities Exchange Act of 1934, as amended, nor shall such information and Exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01

Financial Statements and Exhibits.

(d)

Exhibits.

Exhibit No.	Description

10.1	Securities Purchase Agreement, dated December 22, 2014, by and among One Horizon Group, Inc.. and Investors Identified therein
10.2	Form of Convertible Debenture
10.3	Form of Class C Warrant
10.4	Form of Class D Warrant
10.5	Form of Performance Warrant
10.6	Registration Rights Agreement, dated December 22, 2014, by and among One Horizon Group, Inc. and Investors identified herein
99.1	Press Release

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.

	ONE HORIZON GROUP, INC.

Date: December 22, 2014	By:	/s/ Brian Collins
		Brian Collins
		Chief Executive Officer, President and Chairman

SECURITIES PURCHASE AGREEMENT

among

ONE HORIZON GROUP, INC.

and

THE PURCHASERS LISTED ON EXHIBIT A

Dated as of December [ ], 2014

Table of Contents

ARTICLE 1	Purchase and Sale of the Units	1
Section 1.1	Purchase and Sale of Units	1
Section 1.2	Warrants	1
Section 1.3	Conversion and Warrant Shares	2
Section 1.4	Purchase Price and Closing	2
ARTICLE 2	Representations and Warranties	2
Section 2.1	Representations and Warranties of the Company and Subsidiary	2
Section 2.2	Representations and Warranties of the Purchasers	13
ARTICLE 3	Covenants	16
Section 3.1	Securities Compliance	16
Section 3.2	Liquidation	16
Section 3.3	Keeping of Records and Books of Account	16
Section 3.4	Amendments	17
Section 3.5	Other Agreements	17
Section 3.6	Reservation of Shares	17
Section 3.7	Disposition of Assets	17
Section 3.8	Reporting Status	17
Section 3.9	Disclosure of Transaction	17
Section 3.10	Sarbanes-Oxley Act	18
Section 3.11	No Integrated Offerings	18
Section 3.12	Subsequent Financing	18
Section 3.13	No Commissions in Connection with Conversion of Convertible Debentures	20

Section 3.14	Piggy‑Back Registrations for Registrable Securities	20
Section 3.15	No Manipulation of Price	21
Section 3.15	Best Efforts	21
ARTICLE 4	CONDITIONS	21
Section 4.1	Conditions Precedent to the Obligation of the Company to Sell the Units	21
Section 4.2	Conditions Precedent to the Obligation of the Purchasers to Purchase the Units	22
ARTICLE 5	Stock Certificate Legend	24
Section 5.1	Legend	24
ARTICLE 6	Indemnification	25
Section 6.1	General Indemnity	25
Section 6.2	Indemnification Procedure	25
ARTICLE 7	Miscellaneous	26
Section 7.1	Fees and Expenses	26
Section 7.2	Specific Enforcement, Consent to Jurisdiction	26
Section 7.3	Entire Agreement; Amendment	27
Section 7.4	Notices	27
Section 7.5	Waivers	28
Section 7.6	Headings	29
Section 7.7	Successors and Assigns	29
Section 7.8	Rescission and Withdrawal Right	29
Section 7.9	Replacement of Securities	29
Section 7.10	Limitation of Liability	30
Section 7.11	No Third Party Beneficiaries	30
Section 7.12	Governing Law	30
Section 7.13	Survival	30
Section 7.14	Counterparts	30
Section 7.15	Severability	30
Section 7.16	Further Assurances	30
Section 7.17	Currency	31
Section 7.18	Termination	31

EXHIBIT LIST

Exhibit A	List of Purchasers

Exhibit B	Definition of Accredited Investor

Exhibit B-1	Accredited Investor Representations and Acknowledgements

Exhibit B-2	Non-US Persons Representations and Acknowledgement Forms

Exhibit C	Form of Series A Convertible Debenture

Exhibit D	Form of Class C Warrant

Exhibit E	Form of Class D Warrant

Exhibit F	Form of Escrow Deposit Agreement

Exhibit G	Irrevocable Transfer Agent Instructions



Exhibit H	Selling Stockholder Questionnaire

iii

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “ Agreement ”) is dated as of December [ ], 2014 by and among One Horizon Group, Inc., a Delaware corporation (the “ Company ”), and each of the Purchasers whose names are set forth on Exhibit A hereto (individually, a “ Purchaser ” and collectively, the “ Purchasers ”).

RECITALS

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

WHEREAS, the Company is offering units (the “ Units ”), each consisting of (i) one (1) Series A convertible debenture (the “ Series A Convertible Debenture ” or “ Convertible Debenture ”) initially convertible into one (1) share of the Company’s common stock, par value $0.0001 per share (the “ Common Stock ”) (subject to adjustment), (ii) one (1) Class C Warrant (the “ Class C Warrant ”) and (iii) one (1) Class D Warrant (the “ Class D Warrant ”, collectively with Class C Warrant are sometimes referred herein below as the“ Warrant(s) ”), each of which are exercisable to purchase one-twenty fifth (1/25) of a share of Common Stock, for a maximum offering of $5,000,000 (the “ Maximum Offering Amount ” and the “ Offering ”).

AGREEMENT

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

ARTICLE 1

PURCHASE AND SALE OF THE UNITS

Section 1.1 Purchase and Sale of Units . Upon the following terms and conditions, the Company is offering to each Purchaser the number of Units set forth opposite such Purchaser’s name as Exhibit A hereto consisting of one Series A Convertible Debenture initially convertible into one share of the Company’s Common Stock (subject to adjustment), (ii) one Class C Warrant and (iii) one Class D Warrant, each exercisable to purchase one share of Common Stock, for a maximum of $5,000,000.

Section 1.2 Convertible Debenture. Each of the Purchasers shall be issued, as part of the Units, one Series A Convertible Debenture per each unit, each of which is convertible into one share of Common Stock at a conversion price of $2.25 (the “Conversion Price”). The Series A Convertible Debenture, in substantially the form attached hereto as Exhibit C, shall be convertible at any time after the Closing Date (defined herein below) of the Offering.

Section 1.3 Warrants . Each of the Purchasers shall be issued, as part of the Units, one Class C Warrant and one Class D Warrant per each unit, each of which is exercisable to purchase one-twenty fifth (1/25) of a share of Common Stock, so that collectively, the Warrants provide fifty percent (50%) warrant coverage to the Purchasers. The Class C Warrant and Class D Warrant, in substantially the form attached hereto as Exhibit D and Exhibit E , respectively , shall expire four (4) years following the Closing Date, and have an initial exercise price of $3.00 per share and $3.50 per share, respectively.

Section 1.4 Conversion and Warrant Shares . The Company has authorized and has reserved and covenants to continue to reserve, free of preemptive rights and other similar contractual rights of stockholders, a number of shares of Common Stock equal to one hundred ten percent (110%) of the number of shares of Common Stock as shall from time to time be sufficient to effect conversion of all of the Convertible Debentures and exercise of the Warrants then outstanding. Any shares of Common Stock issuable upon conversion of the Convertible Debenture and exercise of the Warrants (and such shares when issued) are herein referred to as the “ Conversion Shares ” and the “ Warrant Shares ”, respectively. The Convertible Debenture, the Conversion Shares, the Warrants and the Warrant Shares are sometimes collectively referred to as the “ Shares .”

Section 1.5 Purchase Price and Closing . Subject to the terms and conditions hereof, the Company agrees to issue and sell to the Purchasers and, in consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Purchasers, severally but not jointly, agree to purchase the Units for $2.25 per Unit (the “ Unit Price ”) for an aggregate purchase price up to $5,000,000 (the amount paid by each Purchaser is referred herein as the “ Purchase Price ”). Subject to all conditions to closing being satisfied or waived, the closing of the purchase and sale of the Units shall take place at the offices of Hunter Taubman Weiss LLP (the “ Closing ”) by the earlier to occur of (a) completion of the $1,500, 000 ( the “ Minimum Offering Amount ”) and receipt by the Escrow Agent (as defined in the Escrow Deposit Agreement) of the Minimum Offering Amount, or (b) by 5:00 pm (EDT) on December 15, 2014 ( the “ Initial Closing Date ”); or by the earlier of (a) completion of the sale of all Units included in the Maximum Offering (subject to increase to cover over-allotments, if any), or (b) by 5:00 pm (EDT) on December 31, 2014 ( the “ Final Closing Date ” collectively with the Initial Closing Date are sometimes referred herein as the “ Closing Date ”) which can be further extended up to 30 days by the mutual agreement of the Company and the Placement Agent if the sale of all Units in the Maximum Offering has not been completed by the Final Closing Date. Subject to the terms and conditions of this Agreement, at the Closing the Company shall deliver or cause to be delivered to each Purchaser (x) Convertible Debenture set forth opposite the name of such Purchaser on Exhibit A hereto, (y) the Warrants to purchase such number of shares of Common Stock as is set forth opposite the name of such Purchaser on Exhibit A attached hereto, and (z) any other documents required to be delivered pursuant to Article 4 hereof. At the time of the Closing, each Purchaser shall have delivered its Purchase Price by wire transfer to the escrow account pursuant to the Escrow Deposit Agreement (as hereafter defined).

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

Section 2.1 Representations and Warranties of the Company and Subsidiary . The Company hereby represents and warrants to the Purchasers on behalf of itself, its Subsidiaries, as set forth on Schedule 2.1(e) , as of the date hereof (except as set forth on the Schedule of Exceptions attached hereto with each numbered Schedule corresponding to the section number herein), as follows:

(a) Organization, Good Standing and Power . Each of the Company, its Subsidiaries is a corporation or other entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization (as applicable) and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. Except as set forth on Schedule 2.1(a) , each of the Company, its Subsidiary is duly qualified to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary except for any jurisdiction(s) (alone or in the aggregate) in which the failure to be so qualified will not have a Material Adverse Effect (as defined in Section 2.1(g) hereof) on the Company’s consolidated financial condition.

(b) Corporate Power; Authority and Enforcement . The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Escrow Deposit Agreement by and among the Company, the Placement Agent and the escrow agent named therein, substantially in the form of Exhibit F attached hereto (the “ Escrow Deposit Agreement ”), the Irrevocable Transfer Agent Instructions in the form of Exhibit G attached hereto (as defined in Section 3.10), the Convertible Debenture, and the Warrants (collectively, the “ Transaction Documents ”), and to issue and sell the Units in accordance with the terms hereof. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or stockholders is required. Each of the Transaction Documents constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

(c) Capitalization . The authorized capital stock of the Company and the shares thereof currently issued and outstanding as of the date hereof is set forth on Schedule 2.1(c) hereto. All of the issued and outstanding shares of the Common Stock have been duly and validly authorized. Except as contemplated by the Transaction Documents or as set forth on Schedule 2.1(c) hereto:

(i) no shares of Common Stock are entitled to preemptive, conversion or other rights and there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company;

(ii) there are no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company or options, securities or rights convertible into shares of capital stock of the Company;

(iii) the Company is not a party to any agreement granting registration or anti-dilution rights to any person with respect to any of its equity or debt securities; and

(iv) the Company is not a party to, and it has no knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of the Company.

The offer and sale of all capital stock, convertible securities, rights, warrants, or options of the Company issued prior to the Closing complied with all applicable Federal and state securities laws. The Company has furnished or made available to the Purchasers true and correct copies of the Company’s Articles of Incorporation, as amended and in effect on the date hereof (the “ Articles ”), and the Company’s Bylaws, as amended and in effect on the date hereof (the “ Bylaws ”). Except as restricted under applicable federal, state, local or foreign laws and regulations, the Articles, the Convertible Debenture or the Transaction Documents, or as set forth on Schedule 2.1 (c) , no written or oral contract, instrument, agreement, commitment, obligation, plan or arrangement of the Company shall limit the payment of dividends on the Company’s Convertible Debentures, or its Common Stock.

(d) Issuance of Securities The Units, the Convertible Debentures, and the Warrants to be issued at the Closing have been duly authorized by all necessary corporate action and the Convertible Debentures, when paid for or issued in accordance with the terms hereof, will be validly issued and outstanding, fully paid and nonassessable, and, immediately after the Closing, the Purchasers will be the record and beneficial owners of all of such securities and have good and valid title to all of such securities, free and clear of all encumbrances. When the Conversion Shares and the Warrant Shares are issued in accordance with the terms of the Convertible Debenture and the Warrants, respectively, such Shares will be duly authorized by all necessary corporate action and validly issued and outstanding, fully paid and nonassessable, and the holders will be entitled to all rights accorded to a holder of Common Stock and will be the record and beneficial owners of all of such securities and have good and valid title to all of such securities, free and clear of all encumbrances.

(e) Subsidiaries . Schedule 2.1(e) hereto sets forth each Subsidiary of the Company, showing the jurisdiction of its incorporation or organization and showing the percentage of ownership of each Subsidiary. There is no outstanding preemptive, conversion or other rights, options, warrants or agreements granted or issued by or binding upon any Subsidiary for the purchase or acquisition of any shares of capital stock of any Subsidiary or any other securities convertible into, exchangeable for or evidencing the rights to subscribe for any shares of such capital stock. Neither the Company, nor any Subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of the capital stock of any Subsidiary or any convertible securities, rights, warrants or options of the type described in the preceding sentence. Except as filed as exhibits to the Commission Documents (as defined below), neither the Company, nor any Subsidiary is party to, nor has any knowledge of, any agreement restricting the voting or transfer of any shares of the capital stock of any Subsidiary. All of the outstanding shares of capital stock of each Subsidiary has been duly authorized and validly issued, and are fully paid and nonassessable. For the purposes of this Agreement, “ Subsidiary ” shall mean any corporation or other entity of which at least a majority of the securities or other ownership interests having ordinary voting power (absolutely or contingently) for the election of directors or other persons performing similar functions are at the time owned directly or indirectly by the Company and/or any Subsidiary.

(f) Commission Documents, Financial Statements . The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act (all of the foregoing including filings incorporated by reference therein being referred to herein as the “ Commission Documents ”). The Company has not provided to the Purchasers any material non-public information or other information which, according to applicable law, rule or regulation, was required to have been disclosed publicly by the Company but which has not been so disclosed, other than (i) with respect to the transactions contemplated by this Agreement, or (ii) pursuant to a non-disclosure or confidentiality agreement signed by the Purchasers. At the time of the respective filings, the Form 10-K and the Form 10-Q complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder and other federal, state and local laws, rules and regulations applicable to such documents. As of their respective filing dates, none of the Form 10-K or Form 10-Q contained any untrue statement of a material fact; and none 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. The financial statements of the Company included in the Commission Documents (the “ Financial Statements ”) comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. The Financial Statements have been prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in the Financial Statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

(g) No Material Adverse Effect . Since September 30, 2014, neither the Company, nor any Subsidiary has experienced or suffered any Material Adverse Effect. For the purposes of this Agreement, “ Material Adverse Effect ” means any of (i) a material and adverse effect on the legality, validity or enforceability of this Agreement or the other Transaction Documents, (ii) a material adverse effect on the business, operations, properties, or financial condition of the Company, its Subsidiary, individually, or in the aggregate and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to perform any of its obligations under this Agreement or the other Transaction Documents in any material respect or (iii) an adverse impairment to the Company’s ability to perform on a timely basis its obligations under this Agreement or the other Transaction Document.

(h) No Undisclosed Liabilities . Other than as disclosed on Schedule 2.1(h ) or set forth in the Commission Documents, to the knowledge of the Company, neither the Company, nor any Subsidiary has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) other than those incurred in the ordinary course of the Company’s and any Subsidiary’s respective businesses since September 30, 2014 and those which, individually or in the aggregate, do not have a Material Adverse Effect on the Company and any Subsidiary.

(i) No Undisclosed Events or Circumstances . To the Company’s knowledge, no event or circumstance has occurred or exists with respect to the Company or any Subsidiary or their respective businesses, properties, operations or financial condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

(j) Indebtedness . The Financial Statements set forth all outstanding secured and unsecured Indebtedness of the Company on a consolidated basis, or for which the Company, or any Subsidiary have commitments as of the date of Financial Statements or any subsequent period that would require disclosure. For the purposes of this Agreement, “ Indebtedness ” shall mean (a) any liabilities for borrowed money or amounts owed (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments due under leases required to be capitalized in accordance with GAAP. Neither the Company, nor any Subsidiary is in default with respect to any Indebtedness which, individually or in the aggregate, would have a Material Adverse Effect.

(k) Title to Assets . Except as disclosed on Schedule 2.1(k) , each of the Company and any Subsidiary has good and marketable title to (i) all properties and assets purportedly owned or used by them as reflected in the Financial Statements, (ii) all properties and assets necessary for the conduct of their business as currently conducted, and (iii) all of the real and personal property reflected in the Financial Statements free and clear of any Lien. All leases are valid and subsisting and in full force and effect.

(l) Actions Pending . Except as disclosed on Schedule 2.1(l) , there is no action, suit, claim, investigation, arbitration, alternate dispute resolution proceeding or any other proceeding pending or, to the knowledge of the Company, threatened against or involving the Company, any Subsidiary (i) which questions the validity of this Agreement or any of the other Transaction Documents or the transactions contemplated hereby or thereby or any action taken or to be taken pursuant hereto or thereto or (ii) involving any of their respective properties or assets. To the knowledge of the Company, there are no outstanding orders, judgments, injunctions, awards or decrees of any court, arbitrator or governmental or regulatory body against the Company or any Subsidiary or any of their respective executive officers or directors in their capacities as such.

(m) Compliance with Law . The Company and its Subsidiaries have all material franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of their respective business as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(n) No Violation. The business of the Company and any Subsidiary is not being conducted in violation of any federal, state, local or foreign governmental laws, or rules, regulations and ordinances of any governmental entity, except for possible violations which singularly or in the aggregate could not reasonably be expected to have a Material Adverse Effect. The Company is not required under federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under the Transaction Documents, or issue and sell the Units, the Convertible Debentures, the Warrants, the Conversion Shares and the Warrant Shares in accordance with the terms hereof or thereof (other than (x) any consent, authorization or order that has been obtained as of the date hereof, (y) any filing or registration that has been made as of the date hereof or (z) any filings which may be required to be made by the Company with the Commission or state securities administrators subsequent to the Closing).

(o) No Conflicts . The execution, delivery and performance of this Agreement and the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated herein and therein do not and will not (i) violate any provision of the Articles or Bylaws, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company or any Subsidiary is a party or by which it or its properties or assets are bound, (iii) create or impose a lien, mortgage, security interest, pledge, charge or encumbrance (collectively, “ Lien ”) of any nature on any property of the Company or any Subsidiary under any agreement or any commitment to which the Company or any Subsidiary is a party or by which the Company, or any Subsidiary is bound or by which any of its respective properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or any Subsidiary or by which any property or asset of the Company, or any Subsidiary are bound or affected, provided , however , that, excluded from the foregoing in all cases are such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect.

(p) Taxes . Each of the Company and any Subsidiary, to the extent its applicable, has accurately prepared and filed all federal, state and other tax returns required by law to be filed by it, has paid or made provisions for the payment of all taxes shown to be due and all additional assessments, and adequate provisions have been and are reflected in the consolidated financial statements of the Company for all current taxes and other charges to which the Company, or any Subsidiary, if any, is subject and which are not currently due and payable. None of the federal income tax returns of the Company have been audited by the Internal Revenue Service. The Company has no knowledge of any additional assessments, adjustments or contingent tax liability (whether federal, state or foreign) of any nature whatsoever, whether pending or threatened against the Company or any Subsidiary for any period, nor of any basis for any such assessment, adjustment or contingency.

(q) Certain Fees . Except as set forth on Schedule 2.1(q) hereto, no brokers fees, finders fees or financial advisory fees or commissions will be payable by the Company with respect to the transactions contemplated by this Agreement and the other Transaction Documents.

(r) Intellectual Property . Each of the Company and any Subsidiary, owns or has the lawful right to use all patents, trademarks, domain names (whether or not registered) and any patentable improvements or copyrightable derivative works thereof, websites and intellectual property rights relating thereto, service marks, trade names, copyrights, licenses and authorizations, if any, and all rights with respect to the foregoing, if any, which are necessary for the conduct of their respective business as now conducted without any conflict with the rights of others, except where the failure to so own or possess would not have a Material Adverse Effect.

(s) Books and Records Internal Accounting Controls . Except as may have otherwise been disclosed in the Commission Documents, the books and records of the Company, and any Subsidiary accurately reflect in all material respects the information relating to the business of the Company and any Subsidiary, the location and collection of their assets, and the nature of all transactions giving rise to the obligations or accounts receivable of the Company, or any Subsidiary. Except as disclosed on Schedule 2.1(s) or in the Commission Documents, the Company and any Subsidiary maintain a system of internal accounting controls sufficient, in the judgment of the Company, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate actions are taken with respect to any differences.

(t) Material Agreements . Any and all written or oral contracts, instruments, agreements, commitments, obligations, plans or arrangements, the Company and any Subsidiary is a party to, that a copy of which would be required to be filed with the Commission as an exhibit to a registration statement (collectively, the “ Material Agreements ”) if the Company or any Subsidiary were registering securities under the Securities Act has previously been publicly filed with the Commission in the Commission Documents. Each of the Company and any Subsidiary has in all material respects performed all the obligations required to be performed by them to date under the foregoing agreements, have received no notice of default and are not in default under any Material Agreement now in effect the result of which would cause a Material Adverse Effect.

(u) Transactions with Affiliates . Except as set forth in the Financial Statements,in the Commission Documents or on Schedule 2.1(u) , there are no loans, leases, agreements, contracts, royalty agreements, management contracts or arrangements or other continuing transactions between (a) the Company, or any Subsidiary on the one hand, and (b) on the other hand, any officer, employee, consultant or director of the Company or any Subsidiary, or any person owning more than 10% capital stock of the Company, or any Subsidiary, or any member of the immediate family of such officer, employee, consultant, director or stockholder or any corporation or other entity controlled by such officer, employee, consultant, director or stockholder, or a member of the immediate family of such officer, employee, consultant, director or stockholder.

(v) Securities Act of 1933 . Assuming the accuracy of the representations of the Purchasers set forth in Section 2.2 (d)-(i) hereof, the Company has complied with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Units hereunder. Neither the Company nor anyone acting on its behalf, directly or indirectly, has sold or will sell, offer to sell or solicit offers to buy any of the Units, the Convertible Debentures, the Warrants or similar securities to, or solicit offers with respect thereto from, or enter into any preliminary conversations or negotiations relating thereto with, any person, or has taken or will take any action so as to bring the issuance and sale of any of the Units, the Convertible Debentures and the Warrants in violation of the registration provisions of the Securities Act and applicable state securities laws, and neither the Company nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of any of the Units, the Convertible Debentures and the Warrants.

(w) Governmental Approvals . Except for the filing of any notice prior or subsequent to the Closing Date that may be required under applicable state and/or federal securities laws (which if required, shall be filed on a timely basis), including the filing of a Form D, no authorization, consent, approval, license, exemption of, filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, is or will be necessary for, or in connection with, the execution or delivery of the Units, the Convertible Debentures and the Warrants, or for the performance by the Company of its obligations under this Agreement and the Transaction Documents.

(x) Employees . Except as disclosed on Schedule 2.1(x ), neither the Company nor any Subsidiary has any collective bargaining arrangements covering any of its employees. Schedule 2.1(x) sets forth a list of the employment contracts, agreements regarding proprietary information, non-competition agreements, non-solicitation agreements, confidentiality agreement, or any other similar contract or restrictive covenant, relating to the right of any officer, employee or consultant to be employed or engaged by the Company. Since September 30, 2014, no officer, consultant or key employee of the Company or any Subsidiary whose termination, either individually or in the aggregate, would have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the Company or any Subsidiary.

(y) Absence of Certain Developments . Except as disclosed on Schedule 2.1(y) , since September 30, 2014, other than in the ordinary course of business, neither the Company, nor any Subsidiary have:

(i) issued any stock, bonds or other corporate securities or any rights, options or warrants with respect thereto;

(ii) borrowed any amount or incurred or become subject to any liabilities (absolute or contingent) except current liabilities incurred in the ordinary course of business which are comparable in nature and amount to the current liabilities incurred in the ordinary course of business during the comparable portion of its prior fiscal year, as adjusted to reflect the current nature and volume of the business of the Company and any Subsidiary;

(iii) discharged or satisfied any lien or encumbrance or paid any obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business;

(iv) declared or made any payment or distribution of cash or other property to stockholders with respect to its stock, or purchased or redeemed, or made any agreements so to purchase or redeem, any shares of its capital stock;

(v) sold, assigned or transferred any other tangible assets, or canceled any debts or claims, except in the ordinary course of business;

(vi) sold, assigned or transferred any patent rights, trademarks, trade names, copyrights, trade secrets or other intangible assets or intellectual property rights, or disclosed any proprietary confidential information to any person except to customers in the ordinary course of business or to the Purchasers or their representatives;

(vii) suffered any material losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of prospective business;

(viii) made any changes in employee compensation except in the ordinary course of business and consistent with past practices;

(ix) made capital expenditures or commitments therefor that aggregate in excess of $50,000;

(x) entered into any other transaction other than in the ordinary course of business, or entered into any other material transaction, whether or not in the ordinary course of business;

(xi) made charitable contributions or pledges in excess of $10,000;

(xii) suffered any material damage, destruction or casualty loss, whether or not covered by insurance;

(xiii) experienced any material problems with labor or management in connection with the terms and conditions of their employment;

(xiv) effected any two or more events of the foregoing kind which in the aggregate would be material to the Company or any Subsidiary; or

(xv) entered into an agreement, written or otherwise, to take any of the foregoing actions.

(z) Public Utility Holding Company Act; Investment Company Act and U.S. Real Property Holding Corporation Status . The Company is not a “holding company” or a “public utility company” as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. The Company is not, and as a result of and immediately upon the Closing will not be, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended.

(aa) ERISA . No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan (as defined below) by the Company or any of its subsidiaries which is or would be materially adverse to the Company and its subsidiaries. The execution and delivery of this Agreement and the other Transaction Documents and the issuance and sale of the Units, the Convertible Debentures and the Warrants will not involve any transaction which is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as amended, provided, that, if any of the Purchasers, or any person or entity that owns a beneficial interest in any of the Purchasers, is an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to which the Company is a “party in interest” (within the meaning of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section 2.1(aa), the term “ Plan ” shall mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company, any Subsidiary by any trade or business, whether or not incorporated, which, together with the Company, any Subsidiary, is under common control, as described in Section 414(b) or (c) of the Code.

(bb) Integrated Offerings . Except as previously disclosed to the Purchasers and listed on Schedule 2.1(bb) , neither the Company, nor any of officers, directors or shareholders owning more than 10% of the outstanding Common Stock (an “ Affiliate ”), nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would cause the offering of the Units pursuant to this Agreement and the Transaction Documents to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Units pursuant to Rule 506 under the Securities Act, nor will the Company or any of its affiliates take any action or steps that would cause the offering of the Units to be integrated with other offerings. Since September 30, 2014, other than as contemplated under this Agreement and the Transaction Documents, the Company has not offered or sold any of its equity securities or debt securities convertible into shares of Common Stock.

(cc) Sarbanes-Oxley Act. Except as specified in the Commission Documents, the Company is in compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), and the rules and regulations promulgated thereunder, that are effective and for which compliance by the Company is required as of the date hereof.

(dd) Solvency. Based on the financial condition of the Company as of the Closing Date (and assuming that the Closing shall have occurred), (i) the Company’s fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amount are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).

(ee) Intentionally Left Blank .

(ff) Listing and Maintenance Requirements. Except as specified in the Commission Documents, the Company has not, in the two years preceding the date hereof, received notice from any Trading Market to the effect that the Company is not in compliance with the listing maintenance requirement thereof. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with the listing and maintenance requirements for continued listing of the Common Stock on the Trading Market on which the Common Stock is currently listed or quoted. The issuance and sale of the Units under this Agreement and the Transaction Documents do not contravene the rules and regulations of the Trading Market which the Common Stock is currently listed or quoted, and, except as otherwise set forth in the Transaction Documents, no approval of the stockholders of the Company thereunder is required for the Company to issue and deliver to the Purchasers the Units contemplated by this Agreement and the Transaction Documents. “Trading Market” means whichever of the New York Stock Exchange, NYSE Amex, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, OTC Markets or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

(gg) Intentionally Left Blank

(hh) Insurance. The Company and any Subsidiary are insured against such losses and risks and in such amounts as are prudent and customary for businesses in which the Company and any Subsidiary are engaged.

(ii) Intentionally Left Blank.

(jj) Disclosure. All disclosure provided to the Purchasers regarding the Company and any Subsidiary or their respective businesses and the transactions contemplated hereby, furnished by or on behalf of the Company (including the Company’s representations and warranties set forth in this Agreement and the disclosure set forth in any diligence report or business plan provided by the Company or any person acting on the Company’s behalf) are true and correct in all material aspects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(kk) No Additional Agreements . Neither the Company nor any Affiliate has any agreement or understanding with any Purchaser with respect to the transactions contemplated by this Agreement and the Transaction Documents other than as specified in this Agreement and the Transaction Documents.

(ll) Foreign Corrupt Practices Act . Neither the Company or any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any PRC Subsidiary, has, directly or indirectly, (i) used any funds, or will use any proceeds from the sale of the Units, for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any Person acting on their behalf of which the Company or any Subsidiary is aware) or any members of their respective management which is in violation of any applicable law, or (iv) has violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder which was or is applicable to the Company, any Subsidiary.

(mm) PFIC . None of the Company or any Subsidiary is or intends to become a “passive foreign investment company” within the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.

(nn) OFAC . None of the Company or any Subsidiary nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or person acting on behalf of any of the Company or any of its Subsidiaries, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”); and the Company will not directly or indirectly use the proceeds of the sale of the Units, or lend, contribute or otherwise make available such proceeds to any of its Subsidiaries, joint venture partner or other Person or entity, towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.

(oo) Money Laundering Laws . The operations of each of the Company and any Subsidiary have been conducted at all times in compliance with the money laundering requirements of all applicable governmental authorities and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental authority (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental authority or any arbitrator involving any of the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

Section 2.2 Representations and Warranties of the Purchasers . Each Purchaser hereby makes the following representations and warranties to the Company as of the date hereof, with respect solely to itself and not with respect to any other Purchaser:

(a) Organization and Good Standing of the Purchasers . If the Purchaser is an entity, such Purchaser is a corporation, partnership or limited liability company duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.

(b) Authorization and Power . Each Purchaser has the requisite power and authority to enter into and perform this Agreement and each of the other Transaction Documents to which such Purchaser is a party and to purchase the Units, consisting of the Convertible Debentures and Warrants, being sold to it hereunder. The execution, delivery and performance of this Agreement and each of the other Transaction Documents to which such Purchaser is a party by such Purchaser and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate, partnership or limited liability company action, and no further consent or authorization of such Purchaser or its Board of Directors, stockholders, partners, members, or managers, as the case may be, is required. This Agreement and each of the other Transaction Documents to which such Purchaser is a party has been duly authorized, executed and delivered by such Purchaser and constitutes, or shall constitute when executed and delivered, a valid and binding obligation of such Purchaser enforceable against such Purchaser in accordance with the terms hereof.

(c) No Conflicts . The execution, delivery and performance of this Agreement and each of the other Transaction Documents to which such Purchaser is a party and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto do not and will not (i) result in a violation of such Purchaser’s charter documents, bylaws, operating agreement, partnership agreement or other organizational documents or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of any agreement, indenture or instrument or obligation to which such Purchaser is a party or by which its properties or assets are bound, or result in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such Purchaser). Such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or any other Transaction Document to which such Purchaser is a party or to purchase the Units in accordance with the terms hereof, provided, that for purposes of the representation made in this sentence, such Purchaser is assuming and relying upon the accuracy of the relevant representations and agreements of the Company herein.

(d) Status of Purchasers . Each Purchaser is an “accredited investor” (“ Accredited Investor ”) as defined in Regulation D, or a “non-US person” as defined in Regulation S. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act and such Purchaser is not a broker-dealer, nor an affiliate of a broker-dealer.

(e) Acquisition for Investment . Each Purchaser is acquiring the Units, and the underlying Convertible Debentures and the Warrants solely for its own account for the purpose of investment and not with a view to or for sale in connection with a distribution. The Purchaser does not have a present intention to sell the Units, Convertible Debentures or the Warrants, nor a present arrangement (whether or not legally binding) or intention to effect any distribution of the Units, Convertible Debentures or the Warrants to or through any person or entity; provided , however , that by making the representations herein and subject to Section 2.2(h) below, such Purchaser does not agree to hold the Units, Convertible Debentures or the Warrants for any minimum or other specific term and reserves the right to dispose of the Units, Convertible Debentures or the Warrants at any time in accordance with federal and state securities laws applicable to such disposition. Each Purchaser acknowledges that it is able to bear the financial risks associated with an investment in the Units, Convertible Debentures and the Warrants and that it has been given full access to such records of the Company and any Subsidiary, and to the officers of the Company and any Subsidiary, and received such information as it has deemed necessary or appropriate to conduct its due diligence investigation and has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company’s stage of development so as to be able to evaluate the risks and merits of its investment in the Company. Each Purchaser further acknowledges that such Purchaser understands the risks of investing in companies domiciled and/or which operate primarily in the PRC and that the purchase of the Units, Convertible Debentures and Warrants involves substantial risks.

(f) Additional Representations and Warranties of Accredited Investors . Each Purchaser indicating that such Purchaser is an Accredited Investor, severally and not jointly, further makes the representations and warranties to the Company set forth on Exhibit B-1 .

(g) Additional Representations and Warranties of Non-U.S. Persons . Each Purchaser indicating that it is not a U.S. person, severally and not jointly, further makes the representations and warranties to the Company set forth on Exhibit B-2 .

(h) Opportunities for Additional Information . Each Purchaser acknowledges that such Purchaser has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company concerning the financial and other affairs of the Company.

(i) No General Solicitation . Each Purchaser acknowledges that the Units were not offered to such Purchaser by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which such Purchaser was invited by any of the foregoing means of communications.

(j) Rule 144 . Such Purchaser understands that the Units must be held indefinitely unless such Shares are registered under the Securities Act or an exemption from registration is available. Such Purchaser acknowledges that such Purchaser is familiar with Rule 144, of the rules and regulations of the Commission, as amended, promulgated pursuant to the Securities Act (“ Rule 144 ”), and that such person has been advised that Rule 144 permits resales only under certain circumstances. Such Purchaser understands that to the extent that Rule 144 is not available, such Purchaser will be unable to sell any Units without either registration under the Securities Act or the existence of another exemption from such registration requirement.

(k) General . Such Purchaser understands that the Units are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of such Purchaser to acquire the Units.

(l) Independent Investment . Except as may be disclosed in any filings with the Commission by the Purchasers under Section 13 and/or Section 16 of the Exchange Act, no Purchaser has agreed to act with any other Purchaser for the purpose of acquiring, holding, voting or disposing of the Units purchased hereunder for purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting independently with respect to its investment in the Units.

(m) Brokers . Other than the Placement Agent and selected dealers of the Placement Agent, no Purchaser has any knowledge of any brokerage or finder’s fees or commissions that are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other person or entity with respect to the transactions contemplated by this Agreement and the Transaction Documents.

(n) Confidential Information . Each Purchaser agrees that such Purchaser and its employees, agents and representatives will keep confidential and will not disclose, divulge or use (other than for purposes of monitoring its investment in the Company) any confidential information which such Purchaser may obtain from the Company pursuant to financial statements, reports and other materials submitted by the Company to such Purchaser pursuant to this Agreement, unless such information is (i) known to the public through no fault of such Purchaser or his or its employees or representatives; (ii) becomes part of the public domain other than by a breach of this Agreement; (iii) becomes known by the action of a third party not in breach of a duty of confidence; or (iv) is required to be disclosed to a third party pursuant to any applicable law, government resolution, or decision of any court or tribunal of competent jurisdiction; provided, however, that a Purchaser may disclose such information (i) to its attorneys, accountants and other professionals in connection with their representation of such Purchaser in connection with such Purchaser’s investment in the Company, (ii) to any prospective permitted transferee of the Units, or (iii) to any general partner or affiliate of such Purchaser, so long as the prospective transferee agrees to be bound by the provisions of this Section 2.2(n).

ARTICLE 3

COVENANTS

The Company covenants with each of the Purchasers as follows, which covenants are for the benefit of the Purchasers and their permitted assignees (as defined herein).

Section 3.1 Securities Compliance . The Company shall notify the Commission in accordance with its rules and regulations, of the transactions contemplated by this Agreement and the Transaction Documents, including filing a Form D with respect to the Units, as required under Regulation D and applicable “blue sky” laws if such Units are offered pursuant to Rule 506 of Regulation D (“ Regulation D ”) and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Units to the Purchasers or subsequent holders.

Section 3.2 Liquidation . Subject to the terms of the Transaction Documents, the Company covenants that it will take such further action as the Purchasers may reasonably request, all to the extent required from time to time to enable the Purchasers to sell the Units without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act, as amended.

Section 3.3 Keeping of Records and Books of Account . The Company shall keep and cause each Subsidiary to keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and its Subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made.

Section 3.4 Amendments . The Company shall not amend or waive any provision of the Articles or Bylaws of the Company in any way that would adversely affect the dividends rights, conversion rights, or redemption rights of the Convertible Debentures.

Section 3.5 Other Agreements . The Company shall not and shall cause its Subsidiaries, enter into any agreement the terms of which would restrict or impair the ability of the Company to perform its obligations under this Agreement and the Transaction Document.

Section 3.6 Reservation of Shares . So long as any of the Convertible Debentures or Warrants remain outstanding, the Company shall take all actions necessary to at all times have authorized, and reserved for the purpose of issuance, no less than one hundred ten percent (110%) of the aggregate number of shares of Common Stock needed to provide for the issuance of the Conversion Shares and the Warrant Shares.

Section 3.7 Disposition of Assets . So long as any Convertible Debentures remain outstanding, neither the Company, nor any of its Subsidiaries shall sell, transfer or otherwise dispose of any of its material properties, assets and rights including, without limitation, its software and intellectual property, to any person except for (i) sales to customers in the ordinary course of business (ii) sales or transfers between the Company, the Subsidiaries or (iii) otherwise with the prior written consent of the holders of a majority of the Convertible Debentures then outstanding.

Section 3.8 Reporting Status . So long as a Purchaser beneficially owns any of the Shares, the Company shall timely file all reports required to be filed with the Commission pursuant to the Exchange Act, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination.

Section 3.9 Disclosure of Transaction . The Company shall file with the Commission, the Form 8-K describing the material terms of the transactions contemplated hereby and all material non-public information disclosed to the Purchasers prior to the filing as soon as practicable after the Closing but in no event later than 5:30 P.M. (EDT) on the fourth Business Day following the Closing. In the event that the Company is unable to disclose specific non-public information in the Form 8-K, the Company shall include such information in its Form 10-Q for the interim period during which the Closing contemplated hereby occurs. “ Business Day ” means any day during which the NASDAQ (or other principal exchange) shall be open for trading.

Section 3.10 Sarbanes-Oxley Act . The Company shall be in compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002, and the rules and regulations promulgated thereunder, as required under such Act.

Section 3.11 No Integrated Offerings . The Company shall not make any offers or sales of any security (other than the securities being offered or sold hereunder) under circumstances that would require registration of the securities being offered or sold hereunder under the Securities Act.

Section 3.12 Right of Participation .

(a) For a period as long as any Convertible Debenture is outstanding, the Company covenants and agrees to promptly notify in writing (a “Rights Notice ”) the Purchasers who are in possession of outstanding Convertible Debenture(s) ( the “Eligible Purchaser(s)”) of the terms and conditions of any proposed offer or sale to, or exchange with (or other type of distribution to) any third party (a “Subsequent Financing ”), of Common Stock or any equity securities convertible, exercisable or exchangeable into Common Stock; provided , however , prior to delivering to each Eligible Purchaser a Rights Notice, the Company shall first deliver to each Eligible Purchaser a written notice of its intention to effect a Subsequent Financing ( “Pre-Notice ”) within three (3) Business Days of receiving an applicable offer, which Pre-Notice shall ask such Eligible Purchaser if it wants to review the details of such financing. Upon the request of an Eligible Purchaser, and only upon a request by such Eligible Purchaser within three (3) Business Days of receipt of a Pre-Notice, the Company shall promptly, but no later than two (2) Business Days after such request, deliver a Rights Notice to such Eligible Purchaser. The Rights Notice shall describe, in reasonable detail, the proposed Subsequent Financing, the names and investment amounts of all investors participating in the Subsequent Financing (if known), the proposed closing date of the Subsequent Financing, which shall be no earlier than ten (10) Business Days from the date of the Rights Notice, and all of the terms and conditions thereof and proposed definitive documentation to be entered into in connection therewith. The Rights Notice shall provide each Eligible Purchaser an option (the “Rights Option ”) during the five (5) Business Days following delivery of the Rights Notice (the “Option Period ”) to inform the Company whether such Eligible Purchaser will purchase up to its pro rata portion of all or a portion of the securities being offered in such Subsequent Financing on the same, absolute terms and conditions as contemplated by such Subsequent Financing, provided that, the amount of such purchase shall not exceed such Purchaser’s Purchase Price hereunder except as allowed by the following sentence. If any Eligible Purchaser elects not to participate in such Subsequent Financing, the other Eligible Purchasers may participate on a pro-rata basis so long as such participation in the aggregate does not exceed the total Purchase Price hereunder. For purposes of this Section, all references to “pro rata” means, for any Purchaser electing to participate in such Subsequent Financing, the percentage obtained by dividing (x) the face value of the then outstanding Convertible Debentures held by each Eligible Purchaser by (y) the dollar amount of proceeds raised in the Subsequent Financing so long as the combined participation in aggregate does not exceed the total subsequent financing amount. Delivery of any Rights Notice constitutes a representation and warranty by the Company that there are no other material terms and conditions, arrangements, agreements or otherwise except for those disclosed in the Rights Notice, to provide additional compensation to any party participating in any proposed Subsequent Financing, including, but not limited to, additional compensation based on changes in the Purchase Price or any type of reset or adjustment of a purchase or conversion price or to issue additional securities at any time after the closing date of a Subsequent Financing. If the Company does not receive notice of exercise of the Rights Option from any or all of Eligible Purchasers within the Option Period, the Company shall have the right to close the Subsequent Financing on the scheduled closing date set forth in the Rights Notice (or within sixty (60) days thereafter) without the participation of any or all of such Purchasers; provided that, all of the material terms and conditions of the closing are the same as those provided to the Purchasers in the Rights Notice. If the closing of the proposed Subsequent Financing does not occur on the scheduled closing date set forth in the Rights Notice (or within sixty (60) days thereafter), any closing of the contemplated Subsequent Financing or any other Subsequent Financing shall be subject to all of the provisions of this Section 3.12(a), including, without limitation, the delivery of a new Rights Notice. The provisions of this Section 3.12(a) shall not apply to issuances of securities in a Permitted Financing.

(b) For purposes of this Agreement, a Permitted Financing (as defined hereinafter) shall not be considered a Subsequent Financing. A “ Permitted Financing ” shall mean (i) securities issued pursuant to a bona fide acquisition of another business entity or business segment of any such entity by the Company pursuant to a merger, purchase of substantially all the assets or any type of reorganization (each an “ Acquisition ”) provided that (A) the Company will own more than fifty percent (50%) of the voting power of such business entity or business segment of such entity and (B) such Acquisition is approved by the Company’s Board of Directors; (ii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date of this Agreement or issued pursuant to this Agreement (so long as the terms governing the conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the Purchasers); (iii) securities issued in connection with bona fide strategic license agreements or other partnering arrangements so long as such issuances are not for the primary purpose of raising capital; (iv) Common Stock issued or the issuance or grants of options to purchase Common Stock, in each case, at no less than the then-applicable fair market value, pursuant to equity incentive plans that are adopted by the Company’s Board of Directors; (v) securities issued to any placement agent and its respective designees for the transactions contemplated by this Agreement; (vi) securities issued at no less than the then-applicable fair market value to advisors or consultants (including, without limitation, financial advisors and investor relations firms) in connection with any engagement letter or consulting agreement, provided that any such issuance is approved by the Company’s Board of Directors; (vii) securities issued to financial institutions or lessors in connection with reasonable commercial credit arrangements, equipment financings or similar transactions, provided that any such issue is approved by the Company’s Board of Directors; (viii) securities issued to vendors or customers or to other persons in similar commercial situations as the Company, provided that any such issue is approved by the Company’s Board of Directors; (ix) securities issued in connection with any recapitalization of the Company; or (x) securities issued pursuant to an underwritten public offering of its common stock.

Section 3.13 Board Observation . After the Closing as long as Convertible Debentures remain outstanding, the Purchasers who are in possession of more than fifty percent (50%) of Convertible Debentures then outstanding shall be entitled to appoint one individual with observation rights to the Board of Directors of the Company and to nominate one individual to shall serve as a member of the Board of Directors of the PRC subsidiary.

Section 3.14 Use of Proceeds . The Company covenants and agrees that the proceeds of the Offering shall be used for promotion of Chinese mobile applications, Asian partnerships and working capital.

Section 3.15 No Commissions in Connection with Conversion of Convertible Debenture . In connection with conversion of Convertible Debentures into the Conversion Shares, neither the Company nor any person acting on its behalf will take any action that would result in the Conversion Shares being exchanged by the Company other than with the then existing holders of Convertible Debentures exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting the exchange in compliance with Section 3(a)(9) of the Securities Act.

Section 3.16 Registration Rights for Registrable Securities. The Purchasers are entitled to the benefit of certain registration rights with respect to securities covering collectively (i) the shares of Common Stock issuable upon exercise of Class C Warrants; (ii) the shares of Common Stock issuable upon exercise of Class D Warrants; (iii) the shares of Common Stock issuable upon exercise of Performance Warrants, and (iv) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing (collectively referred herein as “Registrable Securities”) in accordance with the terms and provisions of Registration Right Agreement, between the Company and the Purchasers, of even date herewith.

Section 3.17 Registration Right for Other Securities . If at any time when there is not an effective Registration Statement covering (i) the Conversion Shares, or (ii) shares of Common Stock issuable as interest payment pursuant to the terms and conditions set forth in the Convertible Debenture, (collectively referred herein as “Other Securities”), the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, the Company shall send to each holder of outstanding Other Securities written notice of such determination and, if within ten (10) calendar days after receipt of such notice, or within such shorter period of time as may be specified by the Company in such written notice as may be necessary for the Company to comply with its obligations with respect to the timing of the filing of such registration statement, any such holder shall so request in writing (which request shall specify the Other Securities intended to be disposed of by the such holder), the Company will cause the registration under the Securities Act of all Other Securities which the Company has been so requested to register by the Holder, to the extent requisite to permit the disposition of the Other Securities so to be registered, provided that if at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to such Holder and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Other Securities in connection with such registration (but not from its obligation to pay expenses in accordance with Section 4 hereof), and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Other Securities being registered pursuant to this Section 7(d) for the same period as the delay in registering such other securities. The Company shall include in such registration statement all or any part of such Other Securities such holder requests to be registered; provided , however , that the Company shall not be required to register any Other Securities pursuant to this Section 3.14(d) that are eligible for sale pursuant to Rule 144 of the Securities Act. In the case of an underwritten public offering, if the managing underwriter(s) or underwriter(s) should reasonably object to the inclusion of the Other Securities in such registration statement, then if the Company after consultation with the managing underwriter should reasonably determine that the inclusion of such Registrable Securities would materially adversely affect the offering contemplated in such registration statement, and based on such determination recommends inclusion in such registration statement of fewer or none of the Registrable Securities of the holders, then (x) the number of Other Securities of the Holders included in such registration statement shall be reduced among such holders based upon the number of Other Securities requested to be included in the registration in the order set forth in Section 2(b) hereof, if the Company after consultation with the underwriter(s) recommends the inclusion of fewer Other Securities , or (y) none of the Other Securities of the holders shall be included in such registration statement, if the Company after consultation with the underwriter(s) recommends the inclusion of none of such Other Securities ; provided , however , that if securities are being offered for the account of other persons or entities as well as the Company, such reduction shall not represent a greater fraction of the number of Other Securities intended to be offered by the holders than the fraction of similar reductions imposed on such other persons or entities (other than the Company). For purposes of this Section 3.17, Other Securities shall include any shares means, collectively (i) the Conversion Shares ; (ii) the Common Stock issuable as interest payment of Convertible Debenture; and (iii) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided , that the holder has completed and delivered to the Company a Selling Stockholder Questionnaire, in a substantial form of Exhibit H; and provided , further , that the Conversion Shares and Common Stock Shares shall cease to be Other Securities upon the earlier to occur of the following: (A) sale pursuant to a Registration Statement or Rule 144 under the Securities Act (in which case, only such security sold shall cease to be a Registrable Security) or (B) becoming eligible for sale by the holder pursuant to Rule 144, without limitation.

Section 3.18 Performance Warrant . In addition to the securities included in the Units, the Purchasers shall receive additional performance warrants (the “Performance Warrant(s)”), which shall vest and become exercisable based on the Company’s annual reported subscriber number at the twenty-four (24) month anniversary of the Final Closing Date, as reported in the Company’s annual report on Form 10-K for the years ended December 31, 2016 and 2015 ( the “Form 10-K”), provided that the Company does not achieve fifteen (15) million subscribers at that time.

(a) If the Company achieves less than five (5) million subscribers at December 31, 2016 (and as reflected in the Company’s Annual Report on Form 10-K for the year ending December 31, 2016, four hundred and fifty thousand (450,000) Performance Warrants shall vest and become exercisable;

(b) If the Company achieves more than five million but less than fifteen million subscribers at December 31, 2016 (and as reflected in the Company’s Annual Report on Form 10-K for the year ending December 31, 2016, a pro rata number of Performance Warrants shall vest based on four hundred and fifty thousand (450,000) Performance Warrants for five (5) million subscriber and zero (0) Performance Warrant for fifteen (15) million subscriber. If the Company has exceeded more than fifteen (15) million subscribers than no Performance warrants will be issued to investors;

(c) The Performance Warrants shall be exercisable at a price of the daily volume weighted average price for the Company’s Common Stock (the “VWAP”) for the thirty (30) trading day period ending the day prior to the date the Form 10-K is reported, subject to that the Purchasers shall not have the right to receive, upon exercise of any Performance Warrants, any shares of Common Stock, if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock the Company may issue upon exercise or conversion, as applicable, of the Convertible Debenture, any Warrants issuable pursuant to this Agreement, any interest payments payable in Common Stock pursuant to the terms and conditions set forth in the Convertible Debenture, or any Performance Warrant, which equals 19.99% of the number of shares outstanding on the Closing Date (the “Exchange Cap” under the rules or regulations of the Nasdaq OMX Market, except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the Nasdaq OMX Market for issuances of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the required holders. Until such approval or written opinion is obtained, no Purchaser shall be issued in the aggregate, upon exercise or conversion, as applicable, of the Convertible Debenture, interest payment of Convertible Debenture in Common Stock, Class C Warrant, Class D Warrant, or Performance Warrant if any, shares of Common Stock in an amount greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the purchase amount paid by such Purchaser pursuant to this Agreement on the Closing Date and the denominator of which is the aggregate offering amount pursuant to this Agreement on the Closing Date (with respect to each Purchaser, the "Exchange Cap Allocation").

Section 3.19 Each Purchaser shall be entitled to receive a pro rata number of Performance Warrants based on the amount such Purchaser invested as set forth in Exhibit A

Section 3.20 No Manipulation of Price . The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company.

Section 3.21 Best Efforts . The Company shall exert its best efforts to satisfy the closing conditions set forth in Section 4.1 hereof or cause such closing conditions to be satisfied at or before the Closing.

ARTICLE 4

CONDITIONS

Section 4.1 Conditions Precedent to the Obligation of the Company to Sell the Units . The obligation hereunder of the Company to issue and sell the Units, and the underlying Convertible Debentures and the Warrants to the Purchasers is subject to the satisfaction or waiver, at or before the Closing, of each of the conditions set forth below. These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion.

(a) Accuracy of Each Purchaser’s Representations and Warranties . The representations and warranties of each Purchaser in this Agreement and each of the other Transaction Documents to which such Purchaser is a party shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all material respects as of such date.

(b) Performance by the Purchasers . Each Purchaser shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Purchaser at or prior to the Closing.

(c) No Injunction . No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

(d) Delivery of Purchase Price . The Purchase Price for each of the Units sold shall have been delivered to the escrow agent pursuant to the Escrow Deposit Agreement.

(e) Delivery of Transaction Documents . The Transaction Documents to which the Purchasers are parties shall have been duly executed and delivered by the Purchasers to the Company.

Section 4.2 Conditions Precedent to the Obligation of the Purchasers to Purchase the Units . The obligation hereunder of each Purchaser to acquire and pay for the Units is subject to the satisfaction or waiver, at or before the Closing, of each of the conditions set forth below. These conditions are for each Purchaser’s sole benefit and may be waived by such Purchaser at any time in its sole discretion.

(a) Accuracy of the Company’s Representations and Warranties . Each of the representations and warranties of the Company in this Agreement and the other Transaction Documents that are qualified by materiality or by reference to any Material Adverse Effect shall be true and correct in all respects, and all other representations and warranties shall be true and correct in all material respects, as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all respects as of such date.

(b) Performance by the Company . The Company shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing.

(d) No Proceedings or Litigation . No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any Subsidiary, or any of the officers, directors or affiliates of the Company or any of non-PRC Subsidiaries and the PRC Subsidiary seeking to restrain, prevent or change the transactions contemplated by this Agreement and the Transaction Documents, or seeking damages in connection with such transactions.

(e) Certificates . The Company shall have executed and delivered to the Purchasers the certificates (in such denominations as such Purchaser shall request) for the Units being acquired by such Purchaser at the Closing (in such denominations as such Purchaser shall request) to such address set forth next to each Purchasers name on Exhibit A with respect to the Closing.

(f) Resolutions . The Board of Directors of the Company shall have adopted resolutions consistent with Section 2.1(b) hereof in a form reasonably acceptable to such Purchaser (the “ Resolutions ”).

(g) Reservation of Shares . As of the Closing Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Convertible Debentures and the exercise of the Warrants, a number of shares of Common Stock equal to one hundred ten percent (110%) of the aggregate number of Conversion Shares issuable upon conversion of the Convertible Debentures issued or to be issued pursuant to this Agreement and the number of Warrant Shares issuable upon exercise of the number of Warrants issued or to be issued pursuant to this Agreement.

(h) Secretary’s Certificate . The Company shall have delivered to such Purchaser a secretary’s certificate, dated as of the Closing Date, as to (i) the resolutions adopted by the Board of Directors of the Company consistent with Section 2.1(b), (ii) the Articles, (iii) the Bylaws, each as in effect at the Closing, and (v) the authority and incumbency of the officers of the Company executing this Agreement and the Transaction Documents and any other documents required to be executed or delivered in connection herewith and therewith.

(i) Officer’s Certificate . The Company shall have delivered to the Purchasers a certificate of an executive officer of the Company, dated as of the Closing Date, confirming the accuracy of the Company’s representations, warranties and covenants as of the Closing Date and confirming the compliance by the Company with the conditions precedent set forth in this Section 4.2 as of the Closing Date.

(j) Escrow Deposit Agreement . On the Closing Date, the Company and the escrow agent shall have executed and delivered the Escrow Deposit Agreement to each Purchaser.

(k) Material Adverse Effect . No Material Adverse Effect shall have occurred at or before the Closing Date.

(l) Stop Orders . No stop order or suspension of trading shall have been imposed by the Commission or any other governmental or regulatory body having jurisdiction over the Company or the Trading Market(s) where the Common Stock is listed or quoted, with respect to public trading in the Common Stock; and

ARTICLE 5

STOCK CERTIFICATE LEGEND

Section 5.1 Legend . Each certificate representing the Convertible Debentures, the Warrants and Warrant Shares and if appropriate, securities issued upon conversion or exercise thereof, shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):

“THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”

Each certificate representing the Convertible Debentures, the Conversion Shares, the Warrants and Warrant Shares and if appropriate, securities issued upon conversion or exercise thereof, if such securities are being offered to Purchasers in reliance upon Regulation S, shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

The restrictions on transfer contained in this Section 5.1 shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Agreement. Whenever a certificate representing the Conversion Shares or the Warrant Shares is required to be issued to a Purchaser without a legend, in lieu of delivering physical certificates representing the Conversion Shares or the Warrant Shares (provided that a registration statement under the Securities Act providing for the resale of the Warrant Shares and Conversion Shares is then in effect), the Company may cause its transfer agent to electronically transmit the Conversion Shares or Warrant Shares to a Purchaser by crediting the account of such Purchaser or such Purchaser’s prime broker with the DTC through its DWAC system (to the extent not inconsistent with any provisions of this Agreement).

ARTICLE 6

INDEMNIFICATION

Section 6.1 General Indemnity . The Company agrees to indemnify and hold harmless the Purchasers (and their respective directors, officers, managers, partners, members, shareholders, affiliates, agents, successors and assigns) from and against any and all losses, liabilities, deficiencies, costs, damages and expenses (including, without limitation, reasonable attorneys’ fees, charges and disbursements) incurred by the Purchasers as a result of any breach of the representations, warranties or covenants made by the Company herein. Each Purchaser severally but not jointly agrees to indemnify and hold harmless the Company and its directors, officers, affiliates, agents, successors and assigns from and against any and all losses, liabilities, deficiencies, costs, damages and expenses (including, without limitation, reasonable attorneys’ fees, charges and disbursements) incurred by the Company as a result of any breach of the representations, warranties or covenants made by such Purchaser herein. The maximum aggregate liability of each Purchaser pursuant to its indemnification obligations under this Article 6 shall not exceed the portion of the Purchase Price paid by such Purchaser hereunder. In no event shall any “Indemnified Party” (as defined below) be entitled to recover consequential or punitive damages resulting from a breach or violation of this Agreement.

Section 6.2 Indemnification Procedure . Any party entitled to indemnification under this Article 6 (an “ Indemnified Party ”) will give written notice to the indemnifying party of any matters giving rise to a claim for indemnification; provided , that the failure of any party entitled to indemnification hereunder to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Article 6 except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any action, proceeding or claim is brought against an Indemnified Party in respect of which indemnification is sought hereunder, the indemnifying party shall be entitled to participate in and, unless in the reasonable judgment of the Indemnified Party a conflict of interest between it and the indemnifying party may exist with respect of such action, proceeding or claim, to assume the defense thereof with counsel reasonably satisfactory to the Indemnified Party. In the event that the indemnifying party advises an Indemnified Party that it will contest such a claim for indemnification hereunder, or fails, within thirty (30) days of receipt of any indemnification notice to notify, in writing, such person of its election to defend, settle or compromise, at its sole cost and expense, any action, proceeding or claim (or discontinues its defense at any time after it commences such defense), then the Indemnified Party may, at its option, defend, settle or otherwise compromise or pay such action or claim. In any event, unless and until the indemnifying party elects in writing to assume and does so assume the defense of any such claim, proceeding or action, the Indemnified Party’s costs and expenses arising out of the defense, settlement or compromise of any such action, claim or proceeding shall be losses subject to indemnification hereunder. The Indemnified Party shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party which relates to such action or claim. The indemnifying party shall keep the Indemnified Party fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. If the indemnifying party elects to defend any such action or claim, then the Indemnified Party shall be entitled to participate in such defense with counsel of its choice at its sole cost and expense. The indemnifying party shall not be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided , however , that the indemnifying party shall be liable for any settlement if the indemnifying party is advised of the settlement but fails to respond to the settlement within thirty (30) days of receipt of such notification. Notwithstanding anything in this Article 6 to the contrary, the indemnifying party shall not, without the Indemnified Party’s prior written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof which imposes any future obligation on the Indemnified Party or which does not include, as an unconditional term thereof, the giving by the claimant or the plaintiff to the Indemnified Party of a release from all liability in respect of such claim. The indemnity agreements contained herein shall be in addition to (a) any cause of action or similar rights of the Indemnified Party against the indemnifying party or others, and (b) any liabilities the indemnifying party may be subject to pursuant to the law.

ARTICLE 7

MISCELLANEOUS

Section 7.1 Fees and Expenses . Except as otherwise set forth in this Agreement and the other Transaction Documents, each party shall pay the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay its counsel a legal fee of $15,000 on the Closing Date contemplated hereby.

Section 7.2 Specific Enforcement, Consent to Jurisdiction .

(a) The Company and the Purchasers acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement or the other Transaction Documents were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement or the other Transaction Documents and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.

(b) Each of the Company and the Purchasers (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Transaction Documents or the transactions contemplated hereby or thereby 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 Purchasers consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 7.2 shall affect or limit any right to serve process in any other manner permitted by law. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

Section 7.3 Entire Agreement; Amendment . This Agreement and the other Transaction Documents contain the entire understanding and agreement of the parties with respect to the matters covered hereby and, except as specifically set forth herein or in the Transaction Documents, neither the Company nor any of the Purchasers makes any representations, warranty, covenant or undertaking with respect to such matters and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein. No provision of this Agreement nor any of the Transaction Documents may be waived or amended other than by a written instrument signed by the Company and the holders of at least fifty percent (50%) of the Convertible Debentures then outstanding (the “ Majority Holders ”), and no provision hereof may be waived other than by a written instrument signed by the party against whom enforcement of any such waiver is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Convertible Debentures then outstanding. 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 or holders of Convertible Debentures, as the case may be.

Section 7.4 Notices . All notices, demands, consents, requests, instructions and other communications to be given or delivered or permitted under or by reason of the provisions of this Agreement and the Transaction Documents or in connection with the transactions contemplated hereby and thereby shall be in writing and shall be deemed to be delivered and received by the intended recipient as follows: (i) if personally delivered, on the business day of such delivery (as evidenced by the receipt of the personal delivery service), (ii) if delivered by overnight courier (with all charges having been prepaid), on the business day of such delivery (as evidenced by the receipt of the overnight courier service of recognized standing), or (iii) if delivered by facsimile transmission, on the business day of such delivery if sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time, on the next succeeding business day (as evidenced by the printed confirmation of delivery generated by the sending party’s telecopier machine). If any notice, demand, consent, request, instruction or other communication cannot be delivered because of a changed address of which no notice was given (in accordance with this Section 4), or the refusal to accept same, the notice, demand, consent, request, instruction or other communication shall be deemed received on the second business day the notice is sent (as evidenced by a sworn affidavit of the sender). All such notices, demands, consents, requests, instructions and other communications will be sent to the following addresses or facsimile numbers as applicable:

If to the Company:

One Horizon Group, Inc.

First Floor, 1 Duchess Street

London W1W 6AN

Attn: Martin Ward

Phone: 44 (0)20 7580 4294

with copies (which shall not constitute notice) to:

Hunter Taubman Weiss LLP

130 W 42 nd Street, Suite 1050

New York, NY 10038

Attn: Louis Taubman

Direct: (001) 917-512-0827

Email: LTaubman@htwlaw.com

If to any Purchaser: At the address of such Purchaser set forth on Exhibit A to this Agreement, as the case may be, with copies to Purchaser’s counsel as set forth on Exhibit A or as specified in writing by such Purchaser.

Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto.

Section 7.5 Waivers . No waiver by any party of any default with respect to any provision, condition or requirement of this Agreement and the other Transaction Documents shall be deemed to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof and thereof, nor shall any delay or omission of any party to exercise any right hereunder and thereunder in any manner impair the exercise of any such right accruing to it thereafter.

Section 7.6 Headings . The section headings contained in this Agreement (including, without limitation, section headings and headings in the exhibits and schedules) are inserted for reference purposes only and shall not affect in any way the meaning, construction or interpretation of this Agreement and the other Transaction Documents. Any reference to the masculine, feminine, or neuter gender shall be a reference to such other gender as is appropriate. References to the singular shall include the plural and vice versa.

Section 7.7 Successors and Assigns . This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Purchasers, as applicable, provided , however , that, subject to federal and state securities laws and as otherwise provided in the Transaction Documents, a Purchaser may assign its rights and delegate its duties hereunder in whole or in part (i) to a third party acquiring all or substantially all of its Shares or Warrants in a private transaction or (ii) to an affiliate, in each case, without the prior written consent of the Company or the other Purchasers, after notice duly given by such Purchaser to the Company provided , that no such assignment or obligation shall affect the obligations of such Purchaser hereunder and that such assignee agrees in writing to be bound, with respect to the transferred securities, by the provisions hereof that apply to the Purchasers. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party 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. If any Purchaser transfers the Convertible Debentures purchased hereunder, any such penalty shares or liquidated damages, as the case may be, pursuant to this Agreement shall similarly transfer to such transferee with no further action required by the purchaser or the Company.

Section 7.8 Rescission and Withdrawal Right . Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) this Agreement and the Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under this Agreement or a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

Section 7.9 Replacement of Securities . If any certificate or instrument evidencing any Unit is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Unit. If a replacement certificate or instrument evidencing any Unit is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.

Section 7.10 Limitation of Liability . Notwithstanding anything herein to the contrary, the Company acknowledges and agrees that the liability of any Purchaser arising directly or indirectly, under this Agreement and the other Transaction Documents of any and every nature whatsoever shall be satisfied solely out of the assets of such Purchaser, and that no trustee, officer, other investment vehicle or any other Affiliate of such Purchaser or any Purchaser, shareholder or holder of shares of beneficial interest of such a Purchaser shall be personally liable for any liabilities of such Purchaser.

Section 7.11 No Third Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

Section 7.12 Governing Law . This Agreement and the other Transaction Documents shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Agreement and the other Transaction Documents shall not be interpreted or construed with any presumption against the party causing this Agreement and the other Transaction Documents to be drafted.

Section 7.13 Survival . The representations and warranties of the Company hereunder and under the other Transaction Documents shall survive the execution and delivery hereof and the Closing hereunder for a period of three (3) years following the Closing Date.

Section 7.14 Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

Section 7.15 Severability . The provisions of this Agreement and the Transaction Documents are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement or the Transaction Documents shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement or the Transaction Documents and such provision shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

Section 7.16 Further Assurances . From and after the date of this Agreement, upon the request of any Purchaser or the Company, each of the Company and the Purchasers shall execute and deliver such instrument, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement and the other Transaction Documents.

Section 7.17 Currency . Unless otherwise indicated, all dollar amounts referred to in this Agreement are in United States Dollars (“ US Dollars ”). All amounts owed under this Agreement or any Transaction Document shall be paid in US Dollars. All amounts denominated in other currencies shall be converted in the US Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into US Dollars pursuant to this Agreement, the US Dollar exchange rate as published by the People’s Bank of China on the relevant date of calculation.

Section 7.18 Termination . This Agreement may be terminated prior to the Closing:

(a) by mutual written agreement of the Purchasers and the Company, a copy of which shall be provided to the escrow agent appointed under the Escrow Deposit Agreement; and

(b) by the Company or a Purchaser (as to itself but no other Purchaser) upon written notice to the other, with a copy to the Escrow Agent, if the Closing shall not have taken place by 5:00 p.m. Eastern time on December 31, 2014, unless extended to a later date by the mutual consent of the Company and the Placement Agent; provided, that the right to terminate this Agreement under this Section 7.18(b) shall not be available to any person whose failure to comply with its obligations under this Agreement has been the cause of or resulted in the failure of the Closing to occur on or before such time.

(c) In the event of a termination pursuant to Section 7.18(a) or 7.18(b), each Purchaser shall have the right to a return of up to its entire Purchase Price deposited with the Escrow Agent pursuant to this Agreement and the Escrow Deposit Agreement, without interest or deduction. The Company covenants and agrees to cooperate with such Purchaser in obtaining the return of its Purchase Price, and shall not communicate any instructions to the contrary to the Escrow Agent.

(d) In the event of a termination pursuant to this Section 7.18, the Company shall promptly notify all non-terminating Purchasers. Upon a termination in accordance with this Section 7.18, the Company and the terminating Purchaser(s) shall not have any further obligation or liability (including as arising from such termination) to the other and no Purchaser will have any liability to any other Purchaser under the Transaction Documents as a result therefrom.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

ONE HORIZON GROUP, INC.

COMPANY SIGNATURE PAGE TO

SECURITIES PURCHASE AGREEMENT

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.

One Horizon Group, Inc.

By:__________________________

Name: Brian Collins

Title: Chief Executive Officer

ONE HORIZON GROUP, INC.

PURCHASER SIGNATURE PAGE TO

SECURITIES PURCHASE AGREEMENT

Purchaser hereby elects to purchase a total of ____ of Units in an amount of $___________.

Date (NOTE: To be completed by the Purchaser): , 2014

If the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as

TENANTS IN COMMON, or as COMMUNITY PROPERTY:


Print Name(s)		Social Security Number(s)

Signature(s) of Purchaser(s)		Signature

Date		Address

If the Purchaser is a PARTNERSHIP, CORPORATION, LIMITED LIABILITY COMPANY or TRUST:


Name of Partnership, Federal Taxpayer Corporation, LimitedIdentification Number Liability Company or Trust		Federal Taxpayer Identification Number
By:
Name: Title:		State of Organization

Date		Address

EXHIBIT A TO THE

SECURITIES PURCHASE AGREEMENT

Purchasers

Investor	Investment Amount	Convertible Debenture	Class C Warrants	Class D Warrants	Notes



Total

EXHIBIT B TO THE

SECURITIES PURCHASE AGREEMENT

DEFINITION OF “ACCREDITED INVESTOR”

The term “accredited investor” means:

A bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 (the “Investment Company Act”) or a business development company as defined in Section 2(a)(48) of the Investment Company Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of US $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of US $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

2)	A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

3)	An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US $5,000,000.

4)	A director or executive officer of the Company.

5)	A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his or her purchase exceeds US $1,000,000.

6)	A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of US $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

A trust, with total assets in excess of US $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) (i.e., a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment).

8)	An entity in which all of the equity owners are accredited investors. (The Purchaser, as an entity, must identify each equity owner and provide statements signed by each demonstrating how each is qualified as an accredited investor.)

EXHIBIT B-1 TO THE

SECURITIES PURCHASE AGREEMENT

EXHIBIT B-1

ACCREDITED INVESTOR REPRESENTATIONS AND ACKNOWLEDGEMENT

ACCREDITED INVESTOR CERTIFICATION

For Individual Investors Only

(All individual investors must INITI A L where appropriate. Where there are joint investors both parties must INITI A L ):

Initial _________

I certify that I have a “net worth” of at least $1 million either individually or through aggregating my individual holdings and those in which I have a joint, community property or other similar shared ownership interest with my spouse. For purposes hereof, “net worth” shall be deemed to include all of your assets, liquid or illiquid (excluding the value of your principal residence), minus all of your liabilities (excluding the amount of indebtedness secured by your principal residence up to its fair market value).

Initial _________

I certify that I have had an annual gross income for the past two

years of at least $200,000 (or $300,000 jointly with my spouse) and

expect my income (or joint income, as appropriate) to reach the same

level in the current year.

For Non-Individual Investors

(all Non-Individual Investors must INITI A L where appropriate):

Initial _________

The undersigned certifies that it is a partnership, corporation, limited liability company or business trust that is 100% owned by persons who meet either of the criteria for Individual Investors, above.

Initial _________

The undersigned certifies that it is a partnership, corporation, limited liability company or business trust that has total assets of at least $5,000,000 and was not formed for the purpose of investing in Company.

Initial _________

The undersigned certifies that it is an employee benefit plan whose investment decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings and loan association, insurance company or registered investment adviser.

Initial _________

The undersigned certifies that it is an employee benefit plan whose total assets exceed $5,000,000 as of the date of the Purchase Agreement.

Initial _ ________

The undersigned certifies that it is a self-directed employee benefit plan whose investment decisions are made solely by persons who meet either of the criteria for Individual Investors, above.

Initial _ ________

The undersigned certifies that it is a U.S. bank, U.S. savings and loan association or other similar U.S. institution acting in its individual or fiduciary capacity.

Initial _ ________

The undersigned certifies that it is a broker-dealer registered pursuant to §15 of the Securities Exchange Act of 1934.

Initial _ ________

The undersigned certifies that it is an organization described in §501(c)(3) of the Internal Revenue Code with total assets exceeding $5,000,000 and not formed for the specific purpose of investing in Company.

Initial _ ________

The undersigned certifies that it is a trust with total assets of at least $5,000,000, not formed for the specific purpose of investing in Company, and whose purchase is directed by a person with such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.

Initial _ ________

The undersigned certifies that it is a plan established and maintained by a state or its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, and which has total assets in excess of $5,000,000.

Initial _ ________

The undersigned certifies that it is an insurance company as defined in §2(a)(13) of the Securities Act of 1933, as amended, or a registered investment company.

EXHIBIT B-2 TO THE

SECURITIES PURCHASE AGREEMENT

NON U.S. PERSON REPRESENTATIONS AND ACKNOWLEDGEMENT FORM

Name of Recipient: ______________________

ONE HORIZON GROUP, INC..

Ladies and Gentlemen:

1.	Purchaser . I (sometimes referred to herein as the "Purchaser") hereby agree to purchase the Shares pursuant to Regulation S from Freedom Petroleum, Inc., a Nevada corporation (the "Company”), on the terms and conditions described herein.

Disclosure . (a) I understand that this offering is made outside the United States and may not be made to any “U.S. person” as defined in Rule 902(k) under the Securities Act of 1933, as amended (“Securities Act”) (a “Non-U.S. Person”); (b) The Company may not register any transfer of the Shares not made in accordance with Regulation S of the Securities Act (“Regulation S”), pursuant to registration under the Securities Act, or pursuant to an available exemption to registration; provided, however, that if the Shares are in bearer form or foreign law prevents the Company from refusing to register the Shares transfers, other reasonable procedures are implemented to prevent any transfer of the Shares not made in accordance with the Provisions of Regulation S.

3.	Purchaser Representations and Warranties. I acknowledge, represent and warrant to, and agree with, the Company as follows:

(a)	(i) my principal address is outside the United States, (ii) I was located outside the United States at the time any offer to buy the Shares was made to me and at the time that the buy order was originated by me, and (iii) I am not a “U.S. person” (as defined in Rule 902(k) under the Securities Act;

(b)	Any purchase of the Shares by me will be for my own account or for the account of one or more other Non U.S. Persons located outside of the United States at the time any offer to buy the Shares was made and at the time that the buy order was originated by me;

(c)	I and any accounts for which I am acting are acquiring the Shares for investment purposes and not with a view to distribution thereof or with any present intention of offering or selling any of the Shares in violation of the Securities Act;

(d)	I will not engage in hedging transactions involving the Shares unless in compliance with the Securities Act;

(e)	I understand that the Shares are being offered in a transaction not involving any public offering within the United States within the meaning of the Securities Act and that the Shares have not been registered under the Securities Act and that the Shares will bear the following legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED. THE SHARES WERE ISSUED IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PURSUANT TO REGULATION S PROMULGATED UNDER IT. THE SHARES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. TRANSFERS OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. FURTHER, HEDGING TRANSACTIONS WITH REGARD TO THE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

(f)	I agree to resell the Shares only in accordance with the provisions of Regulation S pursuant to registration under the Securities Act, or pursuant to an available exemption from registration;

(g)	I acknowledge that you, the Company and others will rely upon my confirmation, acknowledgments and agreements set forth herein and I agree to notify you promptly if any of my representations or warranties herein cease to be accurate and complete; and

(h)	I understand that the Company is entitled to rely upon this Acknowledgment and is irrevocably authorized to produce this Acknowledgment or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

Date:

__________________________

Recipient Signature

___________________________

Recipient Name (Please print)

Address to which correspondence should be directed:

______________________________________________________

EXHIBIT C TO THE

SECURITIES PURCHASE AGREEMENT

FORM OF SERIES A CONVERTIBLE DEBENTURE

EXHIBIT D TO THE

SECURITIES PURCHASE AGREEMENT

FORM OF CLASS C WARRANT

EXHIBIT E TO THE

SECURITIES PURCHASE AGREEMENT

FORM OF CLASS D WARRANT

EXHIBIT F TO THE

SECURITIES PURCHASE AGREEMENT

FORM OF ESCROW DEPOSIT AGREEMENT

EXHIBIT G TO THE

SECURITIES PURCHASE AGREEMENT

IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

as of December [ ], 2014

Nevada Agency and Transfer Company

50 West Liberty Street, Suite 880

Reno NV 89501

775-322-0626

Ladies and Gentlemen:

Reference is made to that certain Securities Purchase Agreement (the “ Purchase Agreement ”), dated as of December [ ], 2014, by and among One Horizon Group, Inc, a Delaware corporation (the “ Company ”), and each of the Purchasers of Units whose names are set forth on Exhibit A hereto (individually, a “ Purchaser ” and collectively, the “ Purchasers ”), pursuant to which the Company is issuing to the Purchasers units (the “Units”), consisting of (i) one share of its Series A Convertible Debenture (the “ Convertible Debenture ”) and (ii) one (1) Class C Warrant and one Class D Warrant (the “ Warrants ”), each of which to purchase one share of the Company’s common stock, par value $0.0001 per share (the “ Common Stock ”) in an aggregate amount up to $5,000,000. This letter shall serve as our irrevocable authorization and direction to you (provided that you are the transfer agent of the Company at such time) to issue shares of Common Stock upon conversion of the Convertible Debenture (the “ Conversion Shares ”) and exercise of the Warrants (the “ Warrant Shares ”) to or upon the order of a Purchaser from time to time upon (i) surrender to you of a properly completed and duly executed Conversion Notice or Exercise Notice, as the case may be, (ii) in the case of the conversion of Convertible Debenture, a copy of Convertible Debenture (with the original Convertible Debenture delivered to the Company) representing Convertible Debenture being converted or, in the case of Warrants being exercised, a copy of the Warrants (with the original Warrants delivered to the Company) being exercised (or, in each case, an indemnification undertaking with respect to such share certificates or the warrants in the case of their loss, theft or destruction), and (iii) delivery of a treasury order or other appropriate order duly executed by a duly authorized officer of the Company. So long as you have previously received (x) written confirmation from counsel to the Company that a registration statement covering resales of the Conversion Shares or Warrant Shares, as applicable, has been declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “ 1933 Act ”), and no subsequent notice by the Company or its counsel of the suspension or termination of its effectiveness and (y) a copy of such registration statement, and if the Purchaser represents in writing that the Conversion Shares or the Warrant Shares, as the case may be, were sold pursuant to the Registration Statement, then certificates representing the Conversion Shares and the Warrant Shares, as the case may be, shall not bear any legend restricting transfer of the Conversion Shares and the Warrant Shares, as the case may be, thereby and should not be subject to any stop-transfer restriction. Provided, however, that if you have not previously received those items and representations listed above, then (i) the certificates to each Purchaser that are not designated with an asterisk as “Non-U.S. Investor” listed on Exhibit A for the Conversion Shares and the Warrant Shares shall bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”; and

(ii) the certificates to each Purchaser that are designated with an asterisk as “Non-U.S. Investors” listed on Exhibit A for the Conversion Shares and the Warrant Shares shall bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

Please be advised that the Purchasers are relying upon this letter as an inducement to enter into the Purchase Agreement and, accordingly, each Purchaser is a third party beneficiary to these instructions.

Please execute this letter in the space indicated to acknowledge your agreement to act in accordance with these instructions. Should you have any questions concerning this matter, please contact me at martin.ward@onehorizongroup.com .

	Very truly yours,

	One Horizon Group, Inc.

	By:

	Name:	Martin Ward

	Title:	Chief Financial Officer

ACKNOWLEDGED AND AGREED:

Nevada Agency and Transfer Company

By:

Name:

Title:

Date:

EXHIBIT G TO THE

SECURITIES PURCHASE AGREEMENT

SELLING STOCKHOLDER NOTICE AND QUESTIONNAIRE

The undersigned understands that One Horizon Group, Inc(the “ Company ”) intends to file with the Securities and Exchange Commission a registration statement (the “ Resale Registration Statement ”) for the registration and the resale under Rule 415 of the Securities Act of 1933, as amended (the “ Securities Act ”), of the Registrable Securities in accordance with the terms of the Securities Purchase Agreement entered into by the Company and the undersigned (the “ Agreement ”). All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Agreement.

In order to sell or otherwise dispose of any Registrable Securities pursuant to the Resale Registration Statement, a holder of Registrable Securities generally will be required to be named as a selling stockholder in the related prospectus or a supplement thereto (as so supplemented, the “ Prospectus ”), deliver the Prospectus to purchasers of Registrable Securities (including pursuant to Rule 172 under the Securities Act) and be bound by the provisions of the Agreement (including certain indemnification provisions, as described below). Holders must complete and deliver this Notice and Questionnaire in order to be named as selling stockholders in the Prospectus. Holders of Registrable Securities who do not complete, execute and return this Notice and Questionnaire within ten (10) Business Days following the date of the Agreement (1) will not be named as selling stockholders in the Resale Registration Statement or the Prospectus and (2) may not use the Prospectus for resales of Registrable Securities.

Certain legal consequences arise from being named as a selling stockholder in the Resale Registration Statement and the Prospectus. Holders of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not named as a selling stockholder in the Resale Registration Statement and the Prospectus.

NOTICE

The undersigned holder (the “ Selling Stockholder ”) of Registrable Securities hereby gives notice to the Company of its intention to sell or otherwise dispose of Registrable Securities owned by it and listed below in Item (3), unless otherwise specified in Item (3), pursuant to the Resale Registration Statement. The undersigned, by signing and returning this Notice and Questionnaire, understands and agrees that it will be bound by the terms and conditions of this Notice and Questionnaire and the Agreement.

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate and complete:

QUESTIONNAIRE

Name.

(a)

Full Legal Name of Selling Stockholder:

(b)

Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held:

(c)

Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire):

2.	Address for Notices to Selling Stockholder:

Telephone:

Fax:

Contact Person:

E-mail address of Contact Person:________________________________________________

3.	Beneficial Ownership of Registrable Securities:

(a)

Type and Number of Registrable Securities beneficially owned:

___________________________________________________________________________

(b)

Number of shares of Common Stock to be registered pursuant to this Notice for resale:

___________________________________________________________________________

4.	Broker-Dealer Status:

(a)

Are you a broker-dealer?

Yes o No o

(b) If “yes” to Section 4(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?

Yes o No o

Note:

If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

(c)

Are you an affiliate of a broker-dealer?

Yes o No o

Note:

If yes, provide a narrative explanation below:

(d)

If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

Yes o No o

Note:

If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

5.	Beneficial Ownership of Other Securities of the Company Owned by the Selling Stockholder.

Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item 3.

Type and amount of other securities beneficially owned:

6.	Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

7.	Plan of Distribution:

The undersigned has reviewed the form of Plan of Distribution attached as Exhibit A to the Agreement, and hereby confirms that, except as set forth below, the information contained therein regarding the undersigned and its plan of distribution is correct and complete.

State any exceptions here:

***********

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof and prior to the effective date of any applicable Resale Registration Statement. All notices hereunder shall be made in writing, by hand delivery, confirmed or facsimile transmission, first-class mail or air courier guaranteeing overnight delivery at the address set forth below. In the absence of any such notification, the Company shall be entitled to continue to rely on the accuracy of the information in this Notice and Questionnaire.

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items (1) through (7) above and the inclusion of such information in the Resale Registration Statement and the Prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of any such Registration Statement and the Prospectus.

By signing below, the undersigned acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the rules and regulations thereunder, particularly Regulation M in connection with any offering of Registrable Securities pursuant to the Resale Registration Statement. The undersigned also acknowledges that it understands that the answers to this Questionnaire are furnished for use in connection with Registration Statements filed pursuant to the Agreement and any amendments or supplements thereto filed with the Commission pursuant to the Securities Act.

The undersigned hereby acknowledges and is advised of the following Interpretation A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations regarding short selling:

“An Issuer filed a Form S-3 registration statement for a secondary offering of common stock which is not yet effective. One of the selling stockholders wanted to do a short sale of common stock “against the box” and cover the short sale with registered shares after the effective date. The issuer was advised that the short sale could not be made before the registration statement become effective, because the shares underlying the short sale are deemed to be sold at the time such sale is made. There would, therefore, be a violation of Section 5 if the shares were effectively sold prior to the effective date.”

By returning this Questionnaire, the undersigned will be deemed to be aware of the foregoing interpretation.

I confirm that, to the best of my knowledge and belief, the foregoing statements (including without limitation the answers to this Questionnaire) are correct.

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated:_________________________		Beneficial Owner: _______________

		By:__________________________
		Name:
		Title:

NEITHER THE OFFER NOR SALE OF THE SECURITIES REPRESENTED BY THIS DEBENTURE HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE “1933 ACT”). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE 1933 ACT.

此证书代表的证券没有在修订的 1933 年证券法（“ 1933 年美国证券法”）或任何州证券法下登记。此证券不可出售、转让或抵押，除非其已根据有效的证券登记申请表进行登记或取得法律意见书说明其不需要根据美国证券法进行登记或者可以根据 1933 年美国证券法下的 144 规则进行销售。

ONE HORIZON GROUP, INC.

8% Series A CONVERTIBLE DEBENTURE

8%A 系列可转换债券

DUE: December [ ], 2017

到期日： 2017 年 12 月 ___ 日

No. __ December [], 2014 (the " Issuance Date ")

编号： 2014 年 12 月 ___ 日（“发行日”）

$[ ] New York, New York

________ 美元纽约州，纽约市

FOR VALUE RECEIVED, the undersigned, ONE HORIZON GROUP, INC. (herein called the “ Company ”), a Delaware corporation, promises to pay to the order of __________ , or his or its registered assigns (the “ Holder” or “Holders” ), the principal sum of _____________ (US$________), as such amount is reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise (the “ Principal ”), on December [ ], 2017 (the “ Maturity Date ”), together with interest (computed on the basis of a 365-day year) on the outstanding principal amount at the rate of eight percent (8%) per annum (the “ Interest Rate ”) from the date hereof, payable on March [ ], 2015, and, thereafter, quarterly in arrears, until the principal hereof shall have become due and payable.

据已讫金额，下列签署人， ONE HORIZON GROUP, INC. （“ 公司 ”），根据特拉华州法律设立并存续，承诺于2017年12月__日（“ 期满日 ”）付予___________或其注册的受让人（“ 持有人 ”）总额为_______美元的本金 (US$_________) ，根据赎回条款，转换或其他情况而减少的本金将相应去除（“本金”），及基于本金的百分之八（ 8% ）年利率（“ 利率 ”）的利息（以一年为 365 天来计算），利息到期日始于 2015 年 3 月 ___ 日，此后按每个季度支付，直至本金到期。

1. Securities Purchase Agreement. This Debenture has been issued pursuant to the terms and conditions set forth in the Securities Purchase Agreement dated as of December [], 2014 by and among the Company and , inter alia, the Holder, (as from time to time amended, the “ Securities Purchase Agreement ”). All of the terms and conditions of such Securities Purchase Agreement are incorporated herein by this reference, and all capitalized terms not separately defined in this Debenture, shall have the same meanings as defined in the Securities Purchase Agreement.

证券购买合同。此债券是根据公司与各购买人于 2014 年 12 月 __ 日签署的证券购买合同（并经时不时的修正，“ 证券购买合同 ”）下的条款和条件发行的。证券购买合同下的所有条款和条件都参引合并于此，并且在本债券证书未被另行定义但已使用的黑体字词具有与其在证券购买合同中相同的释义。

2. Debenture. Payments of principal of, and interest on, this Debenture are to be made in lawful money of the United States of America at such place as provided in the Securities Purchase Agreement. This Debenture is one of a series of Debentures of up to $5,000,000 aggregate amount of eight percent (8%) Series A Convertible Debentures (herein called the “ Debentures ”) issued pursuant to the Securities Purchase Agreement, and is subject to other terms as set forth in the Securities Purchase Agreement.

债券。此债券的本金和利息应通过美国的合法金钱在证券购买合同中规定的地方支付。此债券是根据证券购买合同发行的总额高达五百万美元的 A 系列百分之八（ 8% ）可转换债券（“ 债券 ”）之一，并且受证券购买合同下其他条款所限制。

3. Interest . Interest on this Debenture shall commence accruing on the Issuance Date, shall accrue daily at the Interest Rate on the outstanding Principal amount from time to time, shall be computed on the basis of a 365-day year comprised of twelve (12) months and shall be payable in arrears upon the earlier of (i) the last day of each March, June, September and December, commencing on the Issuance Date, until the principal hereof shall have become due and payable and, (ii) the date of conversion into Common Stock in accordance with Section 5 herein below.

利息。该债券的利息需从本证书发行之日开始按照此债券未付本金按日累积计算，以 365 日为一年的基础上累加计算，支付将按下面的规定中更早的一个日期， (i) 自发行日后的每个三月，六月，九月和十二月的最后一天，直到本金到期应付为止，和(ii)根据第五条中的规定，债券转为普通股的日期。

(a)

Subject to the conditions set forth in Section 5(e), the Holder is entitled to elect to receive interest payment either (i) in cash, or (ii) by issuing to the Holder of Debenture such number of shares of Common Stock valued at 90% of the average of the daily volume weighted average price ( the “VWAP”) for the Company’s Common Stock for the twenty (20) trading day period ending the day prior to the applicable interest payment date; or (iii) in a combination of cash and shares of Common Stock.

受限于第五条(e)中的规定，持有人可以选择如下获得利息的方式（i）现金，或（ii）股票，与持有人所持有的债券相对应的股票，每股普通股的价值为利息支付到期日之前的二十个交易日日加权平均价 (“VWAP”) 的 90% ；或（iii）现金与股票相结合。

(b)	If the Holder elects to receive interest payment in stock, a written notice shall be delivered to the Company at least five (5) trading days prior to the applicable interest payment date.

如果持有人选择接受以普通股的形式获得利息，持有人必须在利息支付到期日的五（ 5 ）个交易日之前以书面的形式通知公司这一决定。

4. Prepayment . Following the twelve (12) month anniversary of the Closing Date, Company shall have the right to prepay this Debenture in full or any portion thereof at the rate of 120% of the then outstanding principal balance, including all accrued interest, prior to the Maturity Date, provided that the Company give written notice to the Purchasers at least ten (10) business days before the prepayment and; provided further that Purchasers may during five (5) business days of receipt of such notice elect to convert the Debentures in accordance with their terms set forth herein, although such conversion shall not be effective until sixty-one (61) days following the date of Purchasers’ notice of election.

提前付款。债券发行交割后的第十二（ 12 ）个月，只需在此之前十（ 10 ）个工作日书面通知即可，公司有权选择按本金的 120% 的比例提前支付所有债券本金余额，包括所有到期日之前的累积利息，在收到书面通知的五个工作日之内，持有者有权选择根据相关条款的规定将债券转换成普通股，但是该转换将于做出选择的六十一（ 61 ）天后正式生效。

5.	Conversion into Common Stock

转换为普通股

a. General .

一般条款

(i) Conversion into Common Stock . Subject to the provisions of Section 5(a)(iii) and 5(e), on any one or more occasions on or after the date hereof, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and non-assessable shares of common stock of the Company, par value $0.0001 per share (the “Common Stock”), or any shares of capital stock or other securities of the Company into which such Common Stock shall hereafter be changed, exchanged or reclassified in accordance with Section 5(c), at the Conversion Rate (as defined below) then in effect. The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount. Any such conversion set forth in a conversion notice dated prior thereto, shall be deemed to be effective as of the date of such conversion notice (the “ Conversion Date ”).

转换为普通股。根据第五条 (a)(iii) 以及 (e) 的相关规定，此债券的持有人在任何时间或时不时都有权力转换此债券的未付本金及任何累积且未付利息（下文将定义）的全部或部分为全额支付及不可催缴的公司票面值为$ 0.0001 美元 / 股的普通股（“普通股”）普通股，或者根据第五条（c）中规定的同等价值的被改变，交换或重新分类的公司其他股本或证券，按相应的转换比例（下文将定义）转换。所有在注明日期的转股声明中所列的转股都被认为是在转股声明所注之日生效。在任何转股过程中公司不可发行一股普通股的一部分。如果转股的过程中，不可避免有分数股的情况，公司应该根据分数上浮到最近的一股。公司应当支付所有跟转股发行和传送相关的所有过户费用，邮寄费用和相关税费。在转股通知中所设立的日期，将被视为转换日期（“ 转换日期 ”）。

(ii) Conversion Rate . The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 5(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”). The Conversion Amount shall be subject from time to time to adjustment as described below.

转换比例。转换后发行的普通股数目由第 5 (a) 条款所定义的转换数量决定，即用转换数量 (x) 除以转换价格（ y ）（“转换比例”）。转换数量将时不时根据下面的规定进行调整。

1. “ Conversion Amount ” means the sum of (A) the portion of the Principal to be converted, amortized, redeemed or otherwise with respect to which this determination is being made, and (B) any accrued and unpaid Interest.

“ 转换数量 ”是指（ A ）本金中需被转换的那部分或者持有人需兑现的部分和（ B ）任何累积的切未付的利息之和。

2. “ Conversion Price ” means, as of any Conversion Date (as defined below) or other date of determination, $2.25 per share, subject to adjustment as provided herein.

“ 转换价格 ”是指在转换日（下文定义）或任何其他决定的日期，以 2.25 美元美股，受限于本文提及的调整。

(iii) Conversion Limit . Notwithstanding anything to the contrary set forth in this Debenture, at no time may a Holder of this Debenture convert this Debenture into Common Stock if the number of shares of Common Stock to be issued pursuant to such conversion would cause the number of shares of Common Stock owned by such Holder at such time to exceed, when aggregated with all other shares of Common Stock owned by such Holder and its affiliates at such time, the number of shares of Common Stock which would result in such Holder, its affiliates, any investment manager having discretionary investment authority over the accounts or assets of such Holder, or any other persons whose beneficial ownership of Common Stock would be aggregated with such Holder’s for purposes of Section 13(d) and Section 16 of the 1934 Act, beneficially owning (as determined in accordance with Section 13(d) of the 1934 Act and the rules thereunder) in excess of 9.99% of the then issued and outstanding shares of Common Stock (the "Holder Cap").

转股限制。根据 1934 年证券交易法下第 13(d) 节及第 16 节法规所规定，即使跟本债券其他条款相冲突，在任何情况下，如果转换后将要发行的股票数目会导致持有人或其关联人，对持有人资产具有自主性交易权利的投资经理，实质性持有的股票超过公司已发行普通股的 9.99% （“持有者上限”），则持有人不允许转换超过限额部分的债券。此协议中所提及的实质性所有权由 1934 年证券交易法下第 13(d) 节法规所定义。

(iv) Effect of Conversion. Upon conversion of this Debenture in full in the manner provided by this Section 5 (c) below, this Debenture shall be deemed fully satisfied and cancelled.

转换生效。根据第五节 (c) 中的规定，该债券完全转换为普通股后，该债券将被视为已满足条件偿还，被取消。

b. Authorized Shares . The Company covenants that during the period the conversion right exists, the Company will reserve from its authorized and unissued Common Stock, free from preemptive rights, to provide for the issuance of 110% of the number of shares of Common Stock upon the full conversion of the Holder’s Debenture and the other Debentures issued pursuant to the Securities Purchase Agreement (the “Reserved Amount”). If the Company shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Debentures shall be convertible at the then current Conversion Price, the Company shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Debentures. The Company (i) acknowledges that it has irrevocably authorized by its Board of Directors to issue certificates for the Common Stock issuable upon conversion of the Holder’s Debenture, and (ii) agrees that its issuance of the Holder’s Debenture shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of the Holder’s Debenture.

核准发行的股票。公司允诺在转股权存在期间内，公司会从其核准发行但未发行的普通股中保留 110% 于以涵括持有人转换全部债券和根据此协议发行的其他债券可发行的普通股（“保留股份数目”）。如果公司发行任何证券或改变其股权结构，导致根据目前的转换价格债券可以转换成的普通股的数目发生变化，则公司应该同时制定适当的条款使从那之后有足够数目的核准发行及保留的普通股，不受制于优先购买权，以涵括债券可以转换成的普通股的数目。公司 (i) 声明经公司董事会不可撤回授权批准，在转换债券的情况下，公司将向持有人签发普通股股权证书，且 (ii) 同意其向持有人发行的债券包含了向负责签发普通股股权证书的管理人员和代理人授以十足的相关权力。

c. Method of Conversion .

转换方法。

(i) Mechanics of Conversion . Subject to Section 5(a), the Holder’s Debenture may be converted by the Holder in whole or in part, by (i) submitting to the Company a conversion notice (by facsimile or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (ii) subject to Section 5(c)(ii), surrendering the Holder’s Debenture at the principal office of the Company.

转换手续。受第 5(a) 节限制，持有人的债券可以全部或部分转换，手续是： (i) 向公司提交转股通知（通过传真或其他可知会公司的方式在转股日的纽约时间下午 6 点前送达）和 (ii) 受第 5(c)(ii) 节限制，向公司的主要办公地点交出持有人的债券证书。

(ii) Surrender of Debenture Upon Conversion . Notwithstanding anything to the contrary set forth herein, upon conversion of the Holder’s Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender the Holder’s Debenture to the Company unless the entire unpaid principal amount of the Holder’s Debenture is so converted. The Holder and the Company shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of the Holder’s Debenture upon each such conversion. In the event of any dispute or discrepancy, such records of the Company shall be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of the Holder’s Debenture is converted as aforesaid, the Holder may not transfer the Holder’s Debenture unless the Holder first physically surrenders the Holder’s Debenture to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Debenture of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of the Holder’s Debenture. The Holder and any assignee, by acceptance of the Holder’s Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of the Holder’s Debenture, the unpaid and unconverted principal amount of the Holder’s Debenture represented by the Holder’s Debenture may be less than the amount stated on the face hereof.

转股后交还债券证书。尽管有上述规定，持有人不必向公司交回债券证书本身，除非转换了全部未付清的债券金额。持有人与公司应当记录每次转换的债券金额以及日期，或使用其他持有人和公司认为满意的记录方式，以致不需每次转换债券都要向公司交回债券证书本身。在有争议和记录有出入的情况下，如果公司的记录没有明显错误则以公司的记录为准。虽然有上述规定，如果持有人转换了部分债券，持有人不能转让剩余的债券，除非其将债券证书交还给公司，然后公司会根据持有人的要求签发新的债券证书（持有人需支付因转让产生的相关税款）以代表剩余没有支付的债券。持有人和其指定人员在收到债券以后，承认并同意在转换了部分债券以后，实际的未付的或未转换的本金数目将会比该债券的面值要少。

(iii) Delivery of Common Stock Upon Conversion . Upon receipt by the Company from the Holder of a facsimile transmission (or other reasonable means of communication) of a conversion notice meeting the requirements for conversion as provided in this Section 5(c), the Company shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) Business Days (such third Business Day being hereinafter referred to as the “Deadline”) in accordance with the terms hereof and the Securities Purchase Agreement.

转股后普通股的递送。当公司收到持有人以传真的方式（或其他合理的联系方式）提供的符合第 5(c) 节要求的转股通知，公司应当在三（ 3 ）个工作日内（第三个工作日成为“截止日期”）根据证券购买合同签发并递送转股后的普通股股权证书。

(iv) Obligation of Company to Deliver Common Stock . Upon delivery by the Holder to the Company of a Conversion notice, the Holder shall be deemed to be the Holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on that portion of the Holder’s Debenture being converted shall be reduced to reflect such conversion, and, unless the Company defaults on its obligations under this Section 5, all rights with respect to the portion of the Holder’s Debenture being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a conversion notice as provided herein, the Company’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any Person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Company to the Holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Company, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with such conversion. The Conversion Date specified in the conversion notice shall be the Conversion Date so long as the conversion notice is received by the Company before 6:00 p.m., New York, New York time, on such date.

公司递送普通股的责任。当持有人向公司送达转股通知时，持有人被认为是转股后可得普通股的持有人，其债券的未付本金及累积和未付利息应当相应减少以反映转股的发生；以及，除非公司未能履行第 5 节下的义务，所有被转换部分的债券相关的权利应当终止，除了根据转股能够得到普通股或其他证券、现金或其他资产的权利。一旦持有人给了转股通知，公司签发及递送普通股股权证书的责任将是绝对的和无条件的，无论持有人有无行动去使其执行，有无对于任何规定的弃权或同意，有无对任何人的诉讼追偿，公司有无对持有人实施义务的未执行或拖延，持有人对公司有无任何质押权、反诉、扣除、限制或终止、或任何违约或声称违约，以及无论有无其他可能与此转股有关的可能限制公司对持有人这项责任的情况。转股通知中所列的日期是转股日期，只要此转股通知于当天纽约时间下午 6:00 之前送达于公司。

(vi) Pro Rata Conversion; Disputes . In the event that the Company receives a Conversion Notice from more than one holder of Debentures for the same Conversion Date and the Company can convert some, but not all, of such portions of the Debentures submitted for conversion, the Company, subject to Section 5(a)(iii) and 5(e), shall convert from each holder of Debentures electing to have Debentures converted on such date a pro rata amount of such holder’s portion of its Debentures submitted for conversion based on the principal amount of Debentures submitted for conversion on such date by such holder relative to the aggregate principal amount of all Debentures submitted for conversion on such date. In the event of a dispute as to the number of shares of Common Stock issuable to the Holder in connection with a conversion of this Debenture, the Company shall issue to the Holder the number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 19.

按比例转换：争议。当公司在同一个转换日期收到多余一份债券的转换通知，公司可以转换部分，但不是全部被要求转换的债券。公司应当根据第 5(a) 和 5(e) 节的要求，结合当日收到转换债券的总数，按照比例为每位债券持有者转换相应比例的债券。如果公司应该发行相应的股数，以保证发行的股数将不于第 19 节的要求相冲突。如果公司与持有人就应转换的普通股股权数额有争议，公司应该就无争议的部分先发行普通股，有争议的部分根据本债券条款第 19 条处理。

d. Certain Adjustments.

一些调整。

(i) Subdivision or Combination of Common Stock . If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a greater number of shares, then, after the date of record for effecting such subdivision, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by any reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a smaller number of shares, then, after the date of record for effecting such combination, the Conversion Price in effect immediately prior to such combination will be proportionately increased.

普通股的分拆或合并。如果公司在任何时候将于此协议下可获得的普通股分拆（通过分股、红利、资本重组、重组、重新分类或其他方式）成更大数目的股份，则，此分拆记录日之后，分拆发生之前的转换价格将会按比例减少。如果公司在任何时候将于此协议下可获得的普通股合并（通过缩股、资本重组、重组、重新分类或其他方式）成更小数目的股份，则此合并记录日之后，合并之前的转换价格将会按比例增加。

(ii) Reclassification, Exchange, and Substitution . If at any time or from time to time after the date upon which this Debenture was issued by the Company (the “ Original Issue Date ”), the shares of Common Stock issuable upon the conversion of this Debenture shall be changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification, reorganization, merger, exchange, consolidation, sale of assets or otherwise, then, in any such event, each holder of the Debentures shall have the right thereafter to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification, reorganization, merger, exchange, consolidation, sale of assets, distribution of assets or other change by a holder of the number of shares of Common Stock into which such shares of this Debenture could have been converted immediately prior to such recapitalization, reclassification, reorganization, merger, exchange, consolidation, sale of assets, distribution of assets or other change, or with respect to such other securities or property by the terms thereof.

重新分类，交换和替代。在公司发行债券后（“ 初始发行日期 ”）的任何时候或时不时，当此债券已发行且未付清的任何时候，如果有合并、兼并、交换股份、资本重组、重组或其他类似事件，导致公司的普通股变为公司或另一个企业的同样或不同数目的另一类别或几个类别的股票，则此债券的持有人有权在转换债券之后，根据于此所列的基础及条款和条件，获得假设持有人在此事件发生之前就已经转换债券可得的普通股的替代股票、证券或资产。

(iii) Subsequent Equity Sales . If, at any time while this Debenture is outstanding, the Company sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at a price per share that is lower than the then Conversion Price (such lower price, the “ Base Conversion Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at a price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 5(d)(iii) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(d)(iii), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(d)(iii), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.

后续股权增发。当此债券已发行且未付清的任何时候，如果公司出售或赠与期权，购买股权的权利，或重新定价的权利，发行（或宣布任何销售，赠与任何购买处置权的权利），能以比转换价格低的价格（这个低价，“ 基础转换价格 ”以及这种发行，“ 摊薄发行 ”）购买公司普通股， ( 如果股票或股票等同物的持有者在任何时候享有价格调整，重新定价条款，浮动转换条款，交换价格等权利，或由此发行产生的期权能以低于转换价格获得股票，这样的发行也将被认定为低于转换价格的摊薄发行），则转换价格马上降低到基础转换价格。该调整需在普通股或普通股的等同物发行之时进行。但如果是根据第 5(d)(iii) 所规定的豁免发行中的情况，则无需进行调整。公司需在股票或股票等同物发行之后的一个交易日之内，根据第 5(d)(iii) 的规定，书面通知持有人，其通知应包括发行价格，或适用的重新定价后的价格，换股价格，转换价格和其他跟价格相关的条款（该通知成为“ 摊薄发行通知 ”）。进一步说明，不管公司是否按照第 5(d)(iii) 的要求提供摊薄发行通知，持有者都拥有在摊薄发行当日或之后以基础转换价格转换债券成普通股的权利，不论持有人在其转换通知上所引用的基础转换价格是否正确。

(iv) Subsequent Rights Offerings . If the Company, at any time while the Debenture is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to the Holders, otherwise than the Company’s employees, consultants and strategic partners) entitling them to subscribe for or purchase shares of Common Stock at a price per share that is lower than the VWAP on the record date referenced below, then the Conversion Price shall be multiplied by a fraction of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming delivery to the Company in full of all consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP. Such adjustment shall be made whenever such rights, options or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants.

后继共股。如果公司在本债券存在期间的任何时候，向普通股的所有普通股股东（而不是债券持有人，或公司的员工，顾问和战略合作伙伴）发行权益、期权使他们有权以低于记录日加权平均 VWAP 的价格购买普通股，那么本债券的转股价格应乘以一个比例，该比例的分母为这些权益、期权发行日公司全部流通的普通股的股数加上增发的普通股股数，其分子为这些权益、期权发行日公司全部流通的普通股的股数加上融资中全部购买价格下发行的股票权益下按加权平均 VWAP 购买的普通股股权数（包括期权可行权股数，权益可转换股数，假设在行权时公司会获得全部的行权对价）。该调整必须在权益、期权发行之时立即做出，并在股东获得各项发行权益、期权时即时生效。

(v) Exceptions to Adjustment . No adjustment to the Exercise Price shall be effected as a result of an Exempt Issuance. “Exempt Issuance” shall mean, collectively, (i) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital and in which holders of such securities or debt are not at any time granted registration rights; (ii) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants, pursuant to plans which are constituted on the date of the initial issuance of this Debenture; (iii) securities issued (other than for cash) in connection with a merger, acquisition, or consolidation; (iv) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date of the Securities Purchase Agreement; (v) any securities, including the Debenture, Warrants and Performance Warrants, as well as any shares of common stock issued as interest payment on the Debenture, issued pursuant to the Securities Purchase Agreement (so long as the conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the Holders); (vi) the shares of Common Stock underlying the Debenture, the Warrants and the Performance Warrants; (vii) any shares of Common Stock issued as payment of dividends; (viii) any warrants issued to the Placement Agent or the shares of common stock underlying same, and (ix) shares issued pursuant to a Permitted Financing.

调整的例外事项。以下豁免发行情况下，行权价格将不被调整。“豁免发行”是指，如果（ i ）因战略许可协议和其他合作安排而发行证券，只要该等发行不以筹集资金为目的，且该证券或债券的所有者任何时候都不将被予以注册权； (ii) 因公司通过股权激励计划对公司员工，高管，及顾问发行普通股或发行普通股的买入期权；（iii）由并购，收购或整合所发行的股票而非现金；(iv)因转换或行使在证券购买合同之日或之前已发行的可转换债券或可行使证券而发行证券；(v) 根据证券购买合同所发行的债券，期权和业绩期权，以及因作为债券利息而支付的股票（只要其规定该等证券的转换或行权价格的条款未修订为降低该等价格或对持有人不利）；(vi)与债券，期权和业绩期权相对应的普通股；（vii）任何作为股息分红发行的股票；（viii）为完成证券购买合同项下的交易向任何私募代理人及其指定人发行的任何期权，和（ix）由被允许的融资所发行的股份。

(vi) Calculations . All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

计算。所有本条款 5 下的计算应当到股份的百分位。在本条款下，特别特定日期的所有发行流通普通股是指当日所有的发行的并在流通的普通股（不包括保留股份）。

(vii) Notice of Adjustments . Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this Section 5(d), the Company, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder of this Debenture a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. Failure to give such notice or any defect therein shall not effect the legality or validity of the subject adjustment.

调整通知。如果根据本条款 5(d) 的规定对转股价格进行调整或再调整，公司在自行承担费用的基础上应及时计算相关的调整或再调整，并准备和向持有人提供一份证明，说明调整或再调整，以及所依据的事实细节和调整依据。公司未提供这样的通知或通知有缺陷并不影响调整本身的合法性或有效性。

e. Exchange Cap .

交易所限制。

(i) Notwithstanding anything to the contrary set forth in this Debenture, the Company shall not be obligated to issue any shares of Common Stock upon conversion of this Debenture or as interest payments or otherwise, and the holder of this Debenture shall not have the right to receive, upon such conversion or interest payment, any shares of Common Stock, if the issuance of such shares of Common Stock would exceed the aggregate number of Shares of Common Stock which the Company may issue upon exercise or conversion, as applicable, of this Debenture, any Warrants issuable pursuant to the Purchase Agreement , any interest payments payable pursuant to this Debenture, or any Performance Warrant, to remain in compliance with the Company's obligations under the rules or regulations of the Nasdaq OMX Market, which rules and regulations limit the amount of shares of Common Stock that the Company may issue to no more than an aggregate of 19.99% of the number of shares outstanding on the Closing Date (the "Exchange Cap"), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of the Nasdaq OMX Market for issuances of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the required holders. Until such approval or written opinion is obtained, no Purchaser shall be issued in the aggregate, upon exercise or conversion, as applicable, of this Convertible Debenture, Class C Warrant, Class D Warrant, or Performance Warrant if any, shares of Common Stock in an amount greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the Purchase Price paid by the Holder pursuant to the Purchase Agreement on the Closing Date and the denominator of which is the aggregate offering amount pursuant to the Purchase Agreement on the Closing Date (with respect to each Holder, the "Exchange Cap Allocation"). In the event that the Holder shall sell or otherwise transfer any portion of this Debenture, the transferee shall be allocated a pro rata portion of the Holder’s Exchange Cap Allocation, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated to such transferee.

不管本债券有任何相反的规定，公司在以下情况下不应进行债转股或者发行普通股作为本债券利息，本债券持有人也无权接受本债券转成的普通股或作为股息的普通股。该情况就是如果发行这些普通股将使公司因为根据证券购买合同发行的期权（包括 C 类和 D 类期权，任何业绩期权）行权，和可转债转股，以及发行的任何作为可转债利息的普通股的所有普通股股权数超过公司在交割日流通股股权数的 19.99% 。 19.99% 是公司保持符合其股票挂牌交易市场纳斯达克 OMX 市场规则的一个限制标准（“交易所限制”），限制公司一次可以发行的股票比例，除非（ A ）公司获得公司股东的同意发行更多的股票，或者（ B ）公司获得外部律师的法律意见书，证明公司的发行不受交易所限制的规定约束，该法律意见书应使要求的持有人满意。除非获得了股东同意或法律意见书，本债券持有人不得获得根据自己的投资比例相对应的交易所限制下所能发行的最大额的普通股股权，相对应的计算应为该购买人在交割日支付的购买价格除以本次融资在交割日的融资总额再乘以交易所限制（对于每个债券持有人，“交易所限制的分担比例”）。如果本债券持有人出售或转让本债券的任何一部分，受让人将按转让比例受到交易所限制的分担比例的约束。

(ii) Failed Conversion . In the event that the Holder converts this Debenture in whole or in part pursuant to any provision of Section 5 hereof, and the Company is unable or otherwise fails to deliver all or part of the shares of Common Stock pursuant to a Conversion Notice (a “ Failed Conversion ”) due to Exchange Cap, then the Company shall be obligated to (i) promptly, but in no event later than one hundred twenty (120) days from such Failed Conversion, obtain the required stockholder approval to remove the Exchange Cap, and (ii) on the first date that such Exchange Cap no longer apply, deliver to the Holder the number of shares of Common Stock required by the Failed Conversion (without regard to the Exchange Cap); provided , however , that the Holder may elect to retract the Failed Conversion at any time prior to the delivery of the shares of Common Stock, whereupon the Holder shall retain all rights under this Debenture as if the Failed Conversion had never occurred. If such approval is required, the Company shall not be obligated to issue any Shares until such approval is received.

转股失败。如果本债券持有人根据本债券第五条进行全部或部分转股，但是公司因为受交易所限制的约束不能或未能根据转股通知书送达全部或部分的普通股（“ 转股失败 ”），公司有义务（ i ）及时，但在任何情况下不得超过转股失败后的一百二十（ 120 ）天，获得股东同意免除交易所限制的约束，以及 (ii) 在免除约束的第一天，将转股失败中应转的普通股股份发行给持有人（不考虑交易所限制），但是，持有人有权在此之前取消转股要求。在这样的情况下，持有人应对债券享有转股失败前所有的权利。如果发行股票需要取得股东同意，在未取得股东同意之前，公司没有义务发行普通股。

f. Concerning the Shares.

与股票有关事项

(i) Legend . The shares of Common Stock issuable upon conversion of the Debenture may not be sold or transferred unless (A) such shares are sold pursuant to an effective registration statement under the Securities Act, or (B) the Company or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions and from an attorney that regularly practices securities law) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, or (C) such shares are sold or transferred pursuant to Rule 144 under the Securities Act (or a successor rule) (“Rule 144”), or (D) such shares are sold or transferred outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, or (E) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Company who agrees to sell or otherwise transfer the shares only in accordance with this Section 5(e). Except as otherwise provided in this Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of the Debenture have been registered under the Securities Act as contemplated by the Registration Rights Agreement, otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of the Debenture that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

限售条款。转换持有人的债券可发行的普通股不能出售或转让，除非 (A) 这些股票在证券法下根据有效的证券登记申请表出售， (B) 法律顾问向公司或其股票过户代理人提供法律意见（此意见书的格式、内容和范围都应与在类似交易中法律顾问出具的意见书相似），说明该证券不需根据证券法登记， (C) 这些股票可根据证券法（或继任规则）下的 144 规则（“ 144 规则”）出售， (D) 这些股票可以在美国境外根据证券法下的条例 S 的 904 规则出售或转让，或 (E) 这些股票转让给公司的“关联人”（如 144 规则所定义），关联人同意只有在符合此第 5(e) 节的情况下才出售或转让股票。除非本协议另有说明（并受限于以下的消除条款），直到转换持有人的债券可发行的普通股根据登记权协议在证券法下登记，否则可以根据 144 规则没有限制地出售于某一日允许出售的数目的股票。如果转换持有人的债券后签发的普通股没有被列于有效的证券登记申请表，或没有根据有效的证券登记申请表出售，或没有可移除限售条款的豁免可适用，则每一张股权证书都应该标注类似下文的限售条款：

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) WITHIN THE UNITED STATES AFTER REGISTRATION OR IN ACCORDANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) WITHIN THE UNITED STATES IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND THE HOLDER HAS PRIOR TO SUCH SALE FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION.

此证书代表的证券没有在修订的 1933 年证券法（“美国证券法”）或任何州证券法下登记。证券持有人不可要约、出售、转让、抵押或以其他方式处置，除非 (X) 证券登记申请表已生效或 (Y) 根据以下情况处置 (A) 对象是公司， (B) 在美国境外，根据美国证券法的 S 规则（“规则 S ”）下的 904 条文以及相应的当地法律法规， (C) 在美国境内，根据 (1) 美国证券法下的 144A 规则或 (2) 美国证券法下的 144 规则或相应的州证券法，或 (D) 在另一个不需要根据美国证券法或相应的州证券法登记的交易中；但是，在根据以上 (C)(2) 或 (D) 处置的情况下，应首先取得公司满意的法律意见书。

(ii) Removal of Legend . The legend set forth above shall be removed and the Company shall issue to the Holder a new certificate therefor free of any transfer legend if (A) the Company or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act and the shares are so sold or transferred, or (B) in the case of the Common Stock issuable upon conversion of the Holder’s Debenture, such security is registered for sale by the Holder under an effective registration statement filed under the Securities Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly after the effective date of any registration statement under the Securities Act registering the resale of the Common Stock issuable upon conversion of the Debenture if required by the Company’s transfer agent to effect the removal of the legend hereunder. Nothing in the Debenture shall (x) limit the Company’s obligation under the Registration Rights Agreement or (y) affect in any way the Holder’s obligations to comply with applicable prospectus delivery requirements upon the resale of the securities referred to herein.

限售条款的移除。公司应该移除上述限售条款并签发给持有人新的股权证书，如果 (A) 公司或其股票过户代理人收到格式、内容和范围都与在类似交易中法律顾问出具的意见书相似的法律意见书，说明公开销售或转让这些普通股不需要根据证券法进行注册，或 (B) 在转换债券发行普通股的情况下，这些证券列于有效的证券登记申请表中，或可以根据 144 规则没有限制地出售于某一日允许出售的数目的股票。公司应使其法律顾问在证券登记申请表有效后马上向股票过户代理人出具法律意见书以移除限售条款。持有人的债券不应 (x) 限制公司于登记权协议下的义务或 (y) 以任何方式影响持有人遵循招股说明书下规定的出售股票的送达要求。

(g) Distribution Of Assets; Rights Upon Issuance Of Purchase Rights And Other Corporate Events .

针对分派的调整；购买权利发行时的权利和其他公司事件。

(i) Distribution of Assets . If the Company shall declare or make any dividend or other distributions of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (the “ Distributions ”), then the Holder will be entitled to such Distributions as if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately prior to the date on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for such Distributions (provided, however, to the extent that the Holder’s right to participate in any such Distributions would result in the Company exceeding the Exchange Cap, then the Holder shall not be entitled to participate in such Distribution to such extent (or the beneficial ownership of any such shares of Common Stock as a result of such Distribution to such extent) and such Distribution to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Company exceeding the Exchange Cap).

针对分派的调整。当此债券已发行且未付清的任何时候，如果公司宣布或导致其资产（或其获得资产的权利）作为红利、股份回购、返还股本或其他（包括向公司股东以子公司的现金或股票（或获得股票的权利）的方式发放红利）向普通股股东分派（“ 分派 ”），则此债券的持有者有权利在股东有资格取得此分派的记录日之后完成其债券转换并获得资产，假设持有人在此事件发生之日就已经拥有了转换债券可得的普通股因而有资格获得分派，并且其债券将会以分派的合理价格来偿还（如果持有人参与分派会导致公司发行超过交易所的限制，则持有人不得就超过部分（或者其持有的普通股权益比例相应超过交易所限制部分）享有分派权，当然这部分被搁置的权益在将来公司发行不会产生超过交易所限制的前提下仍可以实行。

(ii) Purchase Rights . If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “ Purchase Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately prior to the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Distributions would result in the Company exceeding the Exchange Cap, then the Holder shall not be entitled to participate in such Distribution to such extent (or the beneficial ownership of any such shares of Common Stock as a result of such Distribution to such extent) and such Distribution to such extent shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Company exceeding the Exchange Cap).

购买权利。任何时候公司向现有记录的任何普通股股东，按照比例赠与，发行或出售任何期权，可转换证券或权利以购买股票，期权，证券或其他资产（ ” 购买权利 ” ，）则持有者也具有同样的权利，假设持有者如果在该赠与，发行或出售该购买权利记录日之前，如果没有该记录日，则取该购买权利的决定日，将当时持有的债券全部转换为普通股（不考虑转换的各种限制以及是否能转换的可能性），（但是，如果持有者的购买权利参与将导致公司超过了交易所限制，则持有者不能参与，超过交易所限制的部分将不被允许。（如果持有人参与分派会导致公司发行超过交易所的限制，则持有人不得就超过部分（或者其持有的普通股权益比例相应超过交易所限制部分）享有分派权，当然这部分被搁置的权益在将来公司发行不会产生超过交易所限制的前提下仍可以实行。

(iii) Other Corporate Events . In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “ Corporate Event ”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the majority of then outstanding Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Debenture. For purposes of this Debenture, “ Fundamental Transaction ” means that (i) the Company or any of its Subsidiaries shall, directly or indirectly, in one or more related transactions, (1) consolidate or merge with or into (whether or not the Company or any of its Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially all of its respective properties or assets to any other person, or (3) allow any other Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of voting stock of the Company (not including any shares of voting stock of the Company held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (4) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other Person acquires more than 50% of the outstanding shares of voting stock of the Company (not including any shares of voting stock of the Company held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), or (5) reorganize, recapitalize or reclassify the Common Stock, or (ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding voting stock of the Company or (iii) without the prior written consent of the then outstanding majority of Holders, the individuals who were directors of the Company on the initial Issuance Date shall cease for any reason at any time to constitute a majority of the board of directors of the Company.

其他公司事件。除了本债券下的权益之外，在公司采取任何公司普通股股东有权享有转换普通股的重大交易行为（“ 公司事件 ”）有，公司应确保持有人有权在本债券转股是（ i ）除了本身根据转股有权获得的普通股之外，其他根据公司事件有权获得的证券或资产，（ ii ）在转股是，持有人如果在一开始获得本债券就转为普通股的情况下，根据公司事件所应获得的权益。根据本条款进行的分配需要使本债券持有人的绝大多数满意，并且不受转股或实现本债券条款的限制。在本债券中，“ 基础交易 ”是指（ i ）公司或其子公司直接或间接在一次或多次交易中， (1) 于其他公司整合或合并（不论公司或其子公司是否为存续实体），或（ 2 ）出售，出租，分配，转移，或其他处理所有或近乎所有资产给其他人，或（ 3 ）经超过 50% 以上的具有投票权的股东（不包括由该人或其关联人所持有的具有投票权的普通股）投票决定，允许其他人出价购买或交换，或（ 4 ）开始股票或股权购买合同或其他经营重组（包括但不限于，重组，资产重组，分割）导致任何人获得公司有投票权股份的 50% 以上（ 5 ）重组，重整资产，或对普通股重新划分股权，（ ii ）任何“个人”或“团体”（个人和团体的定义适用 1934 年证券交易法第 13(d) 和 14(d) 以及其规则的定义和解释），成为拥有公司 50% 以上投票权的权益持有人（定义适用范围 1934 年证券交易法 13d-3 ）或者（ iii ）在没有本债券持有人绝大多数书面同意的前提下，在发行日的董事大多数不再组成董事大多数成员。

6. Status as Shareholder . Upon submission of a conversion notice by the Holder of this Debenture, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or cause the Company to exceed the Exchange Cap) shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted portion of the Holder’s Debenture shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Company to comply with the terms of the Holder’s Debenture. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the third (3 rd ) Business Day after the Deadline, Holder may elect at such Holder’s option to regain the rights of a Holder of the Holder’s Debenture with respect to such attempted converted portions of the Holder’s Debenture and the Company shall, as soon as practicable, return such attempted converted Debenture to the Holder or, if the Debenture has not been surrendered, adjust its records to reflect that such portion of the Holder’s Debenture has not been converted. In all cases, the Holder shall retain all of its rights and remedies for the Company’s failure to convert the Holder’s Debenture.

股东身份。一旦持有人递交转股通知书， (i) 转股通知书下要求的转股部分应视为普通股（除去任何可能的因为超过该持有人应持有的保留的普通股的比例或超过公司发行最大额限制的部分的普通股股份） ,(ii) 持有人在转股部分的债券下的持有人权利应终止，除了其有权获得相应数额的普通股以及因为公司未能履行债券义务其应享有的补救权益之外。虽然有以上的规定，如果持有人在到期日的前 3 天仍未收到普通股股权证书，持有人可以选择撤回这一部分的改股要求，公司应在最大限度内及时将这一部分的债券还给持有人，如果持有人未递交债券，公司应及时调整其记录，准确反映这一部分债券未进行转股。不管怎么，因为公司未能及时转股，持有人应恢复其在债券下所有的权利和补救权益。

7. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.

适用法，管辖同意和放弃陪审团审理。

a. This Debenture shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof. Each of the parties of the Debenture hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Debenture. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Debenture. Each of the parties of this Debenture irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS DEBENTURE AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

本债券应适用纽约州实体法，不包括纽约州冲突适用法。债券各方当事人在此不可逆转的同意位于纽约郡的纽约州州法院和美国地区法院纽约南部法院对本债券相关的诉讼，法律行为或司法程序有排他管辖权。关于法律文件的送达各方当事人同意接受国际送达，送达方式适用本债券规定的通知方式。本债券各方当事人在此不可逆转的同意接受以上法院的管辖权。各方当事人在此不可逆转的放弃请求陪审团审理与本债券相关的诉讼，法律行为或程序的权利。各方当事人在此放弃陪审团审理的决定已经咨询过各自的律师。

b. Each party shall bear its own expenses in any litigation conducted under this section.

本债券各方当事人各自承担诉讼费用。

c. The Company consents to accept service of process by the certified mail, return receipt requested in the event of litigation. The Company further consents to accept service of process via recognized international courier in the case that the Company is not able to accept service by the certified mail provided a receipt of delivery is available.

公司同意在诉讼的情况下接受以挂号信要求回持方式进行的送达。公司进一步同意如果公司无法接受挂号信要求回持方式的送达，公司也可以接受知名的国际快运公司进行的送达。

8. Facsimile Signatures . This Debenture may be executed by facsimile signature which shall, for all purposes be deemed to be as legally valid and binding upon the Company as an original signature.

传真签名。本债券可以传真签名的方式生效，与原始签名有同样的法律效力。

9. Event of Default . An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

违约事件。如果发生下述任一情况，将视为“违约事件”：

a. Following the Holder’s written demand for payment, the Company shall fail to pay in full the entire outstanding principal amount of this Debenture and all interest accrued hereon within thirty (30) Days after such written demand for payment is given to Holder; or

在债券持有人要求进行支付的情况下，公司在收到书面支付要求的三十（ 30 ）天内未支付全部应付债券本金和利息；或

b. Subject to Section 5(a)(iii) and 5(e), the Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within ten (10) Business Days after the applicable Conversion Date or (B) notice, written or oral, to any holder of the Debentures, including by way of public announcement or through any of its agents, at any time, of its intention not to comply with a request for conversion of any Debentures into shares of Common Stock that is tendered in accordance with the provisions of the Debentures;

在本债券第 5(a)(iii) 和 5(e) 的前提下，公司（ A ）在适用的债券可转股日的十（ 10 ）天内未能送交一定数额的普通股，从而未能解决转股失败的问题，（ B ）明示，口头或书面，通过公告或代理，在任何时间表达将不会按照债券的规定将债券转为普通股；

c. At any time following the tenth (10 th ) consecutive Business Day that the Reserved Amount is less than the number of shares of Common Stock that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Debenture (without regard to any limitations on conversion set forth in Section 5(a)(iii) or otherwise and except as limited by Section 5(e)).

在预留普通股不能满足全部债券转股要求的情况出现后的第 10 个连续工作日未解决这一短缺问题（无论债券第 5(a)(iii) 和 5(e) 条中规定的转股限制）。

d. The Company defaults in the performance of or compliance with its obligations under any of this Debenture, the Securities Purchase Agreement or any of the Transaction Documents and such default has not been cured for thirty (30) days after written notice of default is given to the Company; or

公司在履行和执行本债券，证券购买合同，或其他融资文件下的义务时有违约行为，并且在书面通知下达后的三十（ 30 ）天内未能补救。

e. Any representation or warranty made by or on behalf of the Company or the Holder in this Debenture, the Securities Purchase Agreement or any of the Transaction Documents proves to have been false or incorrect in any material respect on the date as of which made, and such condition has not been cured for sixty (60) Business Days after written notice of default is given to the other party; or

公司或债券持有人在本债券，证券购买合同和其他融资文件中做的承诺和声明中有重大虚伪或不实信息，并且在违约书面通知下达后的六十（ 60 ）个工作日内未能补救。

f. The Company (i) admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or

公司（ i ）书面表示其无能力在债券到期日进行还款； (ii) 在任何法律管辖区申请，或者同意第三方的申请进行重组，破产，清算，或者利用相关法律，（ iii ）为了应付公司的债权人而进行转让， (iv) 同意将自身或者财产的任何实质部分交办托管，信托或者其他类似处置， (v) 被强制破产或即将被强制破产，或者 (vi) 出于以上任何目的采取相关公司行为，或者

g. A court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company, or any such petition shall be filed against such party and such petition shall not be dismissed within six (6) months.

法院或其他相关有权政府部门在不需要公司同意的情况下下令公司或公司的任何实质财产交托管，代理，信托或其他有类似职能的部门处理，或者下令解除或同意解除公司债务，或者进行重组，或清算，以及其他类似的处置，并且该命令在下达六（ 6 ）个月后仍未解除。

10. Remedies Following An Event Of Default . Upon occurrence of an Event of Default defined in subsection (a) to (g) of Section 9, this Debenture and all accrued Interest to the date of such default shall, at the option of the Holder, immediately become due and payable without presentment, protest or notice of any kind, all of which are waived by the Company.

违约事件后的补救。如果发生本债券第 9 条所列的（ a ）至 (g) 中任一违约事件，本债券的本金和所有累积的利息立即到期，公司免除任何通知义务。

11. Vote To Issue, Or Change The Terms Of, Debentures . The written consent of the Holders of at least 51% of the holders of the then outstanding Debentures shall be required for any change, modification or amendment to any of the Debentures, unless the change shall only effect the Holder and the Company shall have offered such change to all holders of Debentures, in which case only the consent of the Holder is required.

对债券重发和修改的投票。本债券的任何修改需要经过当时存在的债券的持有人的 51% 以上书面同意，除非该修改只影响特定持有人而公司也已通知其他持有人这一修改的存在。

12. Intentionally Left Blank .

特意留空。

13. Noncircumvention . The Company hereby covenants and agrees that the Company will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Debenture, and will at all times in good faith carry out all of the provisions of this Debenture and take all action as may be required to protect the rights of the Holder of this Debenture.

不得归避。公司在此承诺并同意不会通过修改公司成立章程，章程，重组，转移资产，合并，收购，其他资产处置，解散，发行或出售证券，或任何其他自愿的行为来避免或试图避免履行公司在本债券下的义务，并承诺在任何时间都将诚信的履行本债券，采取必要的公司行为保护债券持有人的利益。

14. Intentionally left blank.

特意留空。

15. Reissuance Of This Debenture.

本债券的重发。

a. Lost, Stolen or Mutilated Debenture . Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section 15(c)) representing the outstanding Principal.

债券证书遗失，被盗或损坏。公司在收到可信服的证据证明本债券遗失，被盗，损坏的情况下，如果本债券遗失，被盗或损坏，持有人应该按照惯例向公司提供赔偿，如果是毁损，持有人应向公司提交旧的债券证书，并取消该证书，（遵从第 15(c) 的规定）公司将执行并递送给持有者一份新的债券证书以体现最新的本金数目。

b. Debenture Exchangeable for Different Denominations . This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section 15(c) and in principal amounts of at least $10,000) representing in the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principal as is designated by the Holder at the time of such surrender.

债券可换面额值不同的债券。本债券持有人可以持本债券在公司主营业部门将债券换为不同金额的债券（根据条款 15(c) 的规定以及最小本金额为一万美元）。

c. Issuance of New Debentures . Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 15(b), the Principal designated by the Holder which, when added to the principal represented by the other new Debentures issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture, and (v) shall represent accrued and unpaid Interest, if any, on the Principal of this Debenture, from the Issuance Date.

重发的新债券。公司在任何时候需要根据本债券的规定重发新债券时，新债券（ i ）应与本债券的内容一致， (ii) 新债券的面值总体应代表本债券未兑现的本金值（如果是根据条款 15(b) 发的新债券，所有新债券代表的本金面值不得超过全部未总现的本金值）， (iii) 新债券的发行日应为本债券的发行日， (iv) 新债券的权利和条件应与本债券一样， (v) 应带有从发行日以来产生而未支付的全部利息。

16. Payment Of Collection, Enforcement And Other Costs . If (a) this Debenture is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Debenture or to enforce the provisions of this Debenture or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Debenture, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, attorneys’ fees and disbursements.

收账，强制执行和其他费用的支付。如果 (a) 本债券是通过律师或其他法律程序进行收账或强制执行，或 (b) 公司存在破产，重组，被接收或其他程序影响公司债权人的利益并产生对本债券的诉求，公司应支付本债券持有人应由收账，强制执行或其他与破产，重组，接收或程序产生的费用，包括但不限于律师费和开销报销垫付。

17. Construction; Headings . This Debenture shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Debenture are for convenience of reference and shall not form part of, or affect the interpretation of, this Debenture.

起草，标号。本债券是由公司和持有人双方共同起草，不存在适用对起草人不利原则的情况。本债券的标号是为了阅读的方便，本身不构成债券的内容也不影响本债券的解释。

18. Failure Or Indulgence Not Waiver . No failure or delay on the part of the Holder 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. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

未能执行或片面执行不构成放弃。持有人未能或未能及时行使本债券的权力，权利或特权并不构成放弃，持有人行使单一或部分权力，权利或特权也构成对其他或后继权力，权利或特权的放弃。

19. Dispute Resolution . In the case of a dispute as to the arithmetic calculation of the Conversion Price or Conversion Amount, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within one (1) Business Day of receipt, or deemed receipt, of the Conversion Notice or other event giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation within one (1) Business Day of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within one Business Day submit via facsimile the disputed arithmetic calculation of the Conversion Price or Conversion Amount to the Company’s independent, outside accountant. The Company shall cause the accountant to perform the determinations or calculations and notify the Company and the Holder of the results no later than five (5) Business Days from the time it receives the disputed determinations or calculations. Such accountant’s determination or calculation shall be binding upon all parties absent demonstrable error. The party, whose calculation is furthest from the accountant’s determination or calculation, shall be obligated to pay the fees and expenses of such accountant.

争议解决。如果债券双方对于转股价格或数额的计算有争议，公司应在收到转股通知书的一（ 1 ）个工作日内将不同的结论或计算方法交给债券持有人。如果在此之后一（ 1 ）个工作日，双方无法达成合议，公司应在一（ 1 ）个工作日内将争议的计算交给公司的独立审计师。公司应要求审计师进行计算或核算计算，并在收到公司要求的五（ 5 ）个工作日内将计算结果告知公司和债券持有人。除非有证据证明审计师计算有错误，该计算结果对双方有约束力。与审计师计算结果误差大的一方有义务支付应此产生的审计师的费用和开销。

20. Notices; Payments .

通知；付款。

a. Notices . Whenever notice is required to be given under this Debenture, unless otherwise provided herein, such notice shall be given in the same manner provided in the subsection headed “Notices” in the Securities Purchase Agreement, the terms of which are incorporated herein by reference.

通知。无论在任何情况下根据债券的要求进行通知时，除非另有规定，通知应安排证券购买合同中“通知”条款规定的进行。

d. Payments . Except as otherwise provided in this Debenture, whenever any payment of cash is to be made by the Company to any Person pursuant to this Debenture, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the Company and sent via overnight courier service to such Person at such address as previously provided to the Company in writing; provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any amount expressed to be due by the terms of this Debenture is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day.

付款。除非本债券另有规定，如果公司需要根据本债券对任何人支付现金付款，该付款应是美国的合法钱币，以支票，当夜加急快递的方式支付对方，地址应为对方之前书面提供给公司的地址，除非对方选择通过银行汇款，并书面提供汇款银行信息。如果付款日不是工作日，付款日应顺延至该日结束后的第一个工作日。

21. Cancellation . After all Principal and other amounts at any time owed on this Debenture have been paid in full, this Debenture shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

取消。在本债券的所有本金和应付其他数额都全额付清后，本债券应自动取消，持有人应将债券返回公司进行取消，本债券不得重新签发。

22. Waiver Of Notice . To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Debenture and the Securitas Purchase Agreement.

放弃通知。在法律允许的前提下，公司在此放弃有关本债券和证券购买合同的送达，接受，履行，违约或执行的要求，通知，抗议或其他需求和通知。

23. Currency . All principal, interest and other amounts owing under this Debenture or any Transaction Document that, in accordance with their terms, are paid in cash shall be paid in U.S. dollars. All amounts denominated in other currencies shall be converted in the U.S. dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “ Exchange Rate ” means, in relation to any amount of currency to be converted into U.S. dollars pursuant to this Debenture, the U.S. dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).

币种。本债券和其他融资文件适用的币种是美元。所有以其他流通币记录的钱币应换算为美元，汇率为换算当天的汇率。 “ 汇率 ”指，根据本债券规定将外币兑换为美元时，换算日华尔街日报公布的兑换汇率（如果需要兑换的金额产生有时间跨度，应使用该跨度的最后一天的汇率）。

24. Language . This Debenture is written in Chinese and English but if there is any conflict between the Chinese and English version, English version shall prevail.

语言。本债券以中文和英文签署，但中英文本如有冲突，以英文为准。

25. Severability . If any provision of this Debenture is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Debenture so long as this Debenture as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

有效性。如果本债券的任何条款因为被法律禁止或者由有管辖权的法院认定无效或无执行力，这一条款应视为修改以保持其最大程度的有效性和执行力。此外，该条款的禁制和无执行力不得影响本债券其他条款的效力，只要本债券通过修改能实现当事人最初的实质目的而无重大变更，特定的条款被禁制或无执行力不会实质性的影响各自的预期或义务以及追求的实质利益。双方将诚信地就修改或替换特定条款进行协商。

[Signature Page Follows]

[ 签名页随后 ]

IN WITNESS WHEREOF, the Company has executed and delivered this Debenture the date and year first above written.

鉴于此，公司在债券上注定的特定日期签署并发行该债券。

	ONE HORIZON GROUP, INC.

	By:	/s/
		Name: Martin Ward
		Title: The Chief Financial Officer

T HIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

CLASS C WARRANT TO PURCHASE

SHARES OF COMMON STOCK

ONE HORIZON GROUP, INC.

Expires December [ ], 2018

No.: ____ Number of Shares: ___________

Date of Issuance: December ____, 2014

FOR VALUE RECEIVED, the undersigned, One Horizon Group, Inc., a Delaware corporation (together with its successors and assigns, the “ Issuer ” or the “ Company ” ), hereby certifies that ____ ________ or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), up to __ ____ ___ shares (subject to adjustment as hereinafter provided) of the duly authorized, validly issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise price per share equal to the Warrant Price then in effect, subject, however, to the provisions and upon the terms and conditions hereinafter set forth. This Warrant is being issued pursuant to the terms of that certain Securities Purchase Agreement of even date herewith (the “Purchase Agreement”), to which the Company and the Holder (or the Holder’s predecessor in interest) are parties. Capitalized terms used in this Warrant and not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement .

1. Term . The term of this Warrant shall commence on December [ ], 2014 and shall expire at 6:00 p.m., Eastern Time, on December [ ], 2018 (such period being the “ Term ” ).

2.	Method of Exercise; Payment; Issuance of New Warrant; Transfer and Exchange .

(a) Time of Exercise . The purchase rights represented by this Warrant may be exercised in whole or in part during the Term.

(b) Method of Exercise . The Holder hereof may exercise this Warrant, in whole or in part, by delivery to the Company (or such other office or agency of the Issuer as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Issuers) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (“ Notice of Exercise Form ”); and, within three (3) Trading Days of the date said Notice of Exercise Form is delivered to the Company, the Company shall have received payment of an amount of consideration therefor equal to the Warrant Price in effect on the date of such exercise multiplied by the number of shares of Warrant Stock with respect to which this Warrant is then being exercised, payable at such Holder’s election by certified or official bank check or by wire transfer to an account designated by the Issuer. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant, or an indemnification reasonably acceptable to the Issuer undertaking with respect to such Warrant in the case of its loss, theft or destruction, to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise Form is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. Subject to all rights of the Holder herein, the Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice and such objection shall contain the reason for such objection along with documentation supporting the Company’s reason for objecting. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error.

(c) Issuance of Stock Certificates . In the event of any exercise of this Warrant in accordance with and subject to the terms and conditions hereof, certificates for the shares of Warrant Stock so purchased shall be dated the date of such exercise and delivered to the Holder’s Prime Broker as specified in the Holder’s exercise form within a reasonable time, not exceeding five (5) Trading Days after such exercise (the “ Delivery Date ”) or, at the request of the Holder (provided that a registration statement under the Securities Act providing for the resale of the Warrant Stock is then in effect or that the shares of Warrant Stock are otherwise exempt from registration), issued and delivered to the Depository Trust Company (“ DTC ”) account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“ DWAC ”) within a reasonable time, not exceeding five (5) Trading Days after such exercise, and the Holder hereof shall be deemed for all purposes to be the holder of the shares of Warrant Stock so purchased as of the date of such exercise. Notwithstanding the foregoing to the contrary, the Issuer or its transfer agent shall only be obligated to issue and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise is in connection with sale in reliance upon an effective Registration Statement or other exemption from registration by which the shares may be issued without a restrictive legend and the Issuer and its transfer agent are participating in DTC through the DWAC system.

(d) Transferability of Warrant . Subject to Section 2(f) hereof, this Warrant may be transferred by a Holder, in whole or in part, without the consent of the Issuer. If transferred pursuant to this paragraph, this Warrant may be transferred on the books of the Issuer by the Holder upon surrender of this Warrant at the principal office of the Issuer or its designated agent, properly endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. This Warrant is exchangeable for Warrants to purchase the same aggregate number of shares of Warrant Stock, each new Warrant to represent the right to purchase such number of shares of Warrant Stock as the Holder hereof shall designate at the time of such exchange. All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of shares of Warrant Stock issuable pursuant thereto.

(e) Continuing Rights of Holder . The Issuer shall, at the time of or at any time after each exercise of this Warrant, upon the request of the Holder hereof, acknowledge in writing the extent, if any, of its continuing obligation to afford to such Holder all rights to which such Holder shall continue to be entitled after such exercise in accordance with the terms of this Warrant, provided that if any such Holder shall fail to make any such request, the failure shall not affect the continuing obligation of the Issuer to afford such rights to such Holder.

(f) Compliance with Securities Laws.

(i) The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Warrant Stock to be issued upon exercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Warrant Stock to be issued upon exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under the Securities Act and any applicable state securities laws.

(ii) Except as provided in paragraph (iii) below, this Warrant and all certificates representing shares of Warrant Stock issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form:

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

(iii) The Issuer agrees to reissue this Warrant or certificates representing any of the Warrant Stock, without the legend set forth above, if at such time, prior to making any transfer of any such securities, the Holder shall give written notice to the Issuer describing the manner and terms of such transfer and demonstrating that the following conditions are satisfied. Such proposed transfer will not be effected until: (a) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that the registration of such securities under the Securities Act is not required in connection with such proposed transfer, (ii) a registration statement under the Securities Act covering such proposed disposition has been filed by the Issuer with the Securities and Exchange Commission and has become and remains effective under the Securities Act, (iii) the Issuer has received other evidence reasonably satisfactory to the Issuer that such registration and qualification under the Securities Act and state securities laws are not required, or (iv) the holder provides the Issuer with reasonable assurances that such security can be sold pursuant to Rule 144(i) under the Securities Act, and (b) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that registration or qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or “blue sky” laws has been effected or a valid exemption exists with respect thereto. The Issuer shall respond to any such notice from a holder within five (5) Trading Days. In the case of any proposed transfer under this Section 2(f) , the Issuer shall use reasonable efforts to comply with any such applicable state securities or “blue sky” laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, (y) to take any action that would subject it to tax or to the general service of process in any state where it is not then subject, or (z) to comply with state securities or “blue sky” laws of any state for which registration by coordination is unavailable to the Issuer. Whenever a certificate representing the Warrant Stock is required to be issued to the Holder without a legend, in lieu of delivering physical certificates representing the Warrant Stock, the Issuer shall cause its transfer agent to electronically transmit the Warrant Stock to the Holder by crediting the account of the Holder or Holder’s Prime Broker with DTC through its DWAC system (to the extent not inconsistent with any provisions of this Warrant or the Purchase Agreement).

(g) Accredited Investor Status . At the time of the exercise of this Warrant, the Holder (1) shall be an “accredited investor” as defined in Regulation D under the Securities Act, or (2) exempt from registration under Regulation S.

3. Adjustment of Warrant Price . The Warrant Price shall be subject to adjustment from time to time as set forth in this Section 3 . The Issuer shall give the Holder written notice of any event described below which requires an adjustment pursuant to this Section 3 in accordance with the notice provisions set forth in Section 11 .

(a) Adjustments for Stock Splits, Combinations, Certain Dividends and Distributions . If the Issuer shall, at any time or from time to time after the Original Issue Date, effect a split of the outstanding Common Stock (or any other subdivision of its shares of Common Stock into a larger number of shares of Common Stock), combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, or make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, in each event (i) the number of shares of Common Stock for which this Warrant shall be exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock that a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (ii) the Warrant Price then in effect shall be adjusted to equal (A) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment.

(b) Adjustment for Other Dividends and Distributions . If the Issuer shall, at any time or from time to time after the Original Issue Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in (i) cash, (ii) any evidences of indebtedness, or any other securities of the Company or any property of any nature whatsoever, other than, in each case, shares of Common Stock; or (iii) any warrants or other rights to subscribe for or purchase any evidences of indebtedness, or any other securities of the Company or any property of any nature whatsoever, other than, in each case, shares of Common Stock, then, and in each event, (A) the number of shares of Common Stock for which this Warrant shall be exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such adjustment multiplied by a fraction (1) the numerator of which shall be the Per Share Market Value of Common Stock at the date of taking such record and (2) the denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board and supported by an opinion from an investment banking firm mutually agreed upon by the Issuer and the Holder) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (B) the Warrant Price then in effect shall be adjusted to equal (1) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (2) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment. A reclassification of the Common 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 Common Stock and shares of any other class of stock shall be deemed a distribution by the Issuer to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 3(b) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common 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 Common Stock within the meaning of Section 3(a) .

(c) Adjustments for Reclassification, Exchange or Substitution . If the Common Stock for which this Warrant is exercisable at any time or from time to time after the Original Issue Date shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for in Section 3(a) , Section 3(b) , or a reorganization, merger, consolidation, or sale of assets provided for in Section 3(d) ), then, and in each event, an appropriate revision to the Warrant Price shall be made and provisions shall be made (by adjustments of the Warrant Price or otherwise) so that, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, in lieu of Warrant Stock, the kind and amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by holders of the number of shares of Common Stock for which this Warrant was exercisable immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.

(d) Adjustments for Reorganization, Merger, Consolidation or Sales of Assets . If at any time or from time to time after the Original Issue Date there shall be (i) a capital reorganization of the Issuer (other than by way of a stock split or combination of shares or stock dividends or distributions provided for in Section 3(a) , and Section 3(b) , or a reclassification, exchange or substitution of shares provided for in Section 3(c) ), or (ii) a merger or consolidation of the Issuer with or into another corporation, where the holders of the Issuer’s outstanding voting securities prior to such merger or consolidation do not own over 50% of the outstanding voting securities of the merged or consolidated entity, immediately after such merger or consolidation, or (iii) the sale of all or substantially all of the Issuer’s properties or assets to any other person (an “ Organic Change ”), then, as a part of such Organic Change an appropriate revision to the Warrant Price shall be made if necessary and provision shall be made if necessary (by adjustments of the Warrant Price or otherwise) so that, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, in lieu of Warrant Stock, the kind and amount of shares of stock and other securities or property of the Issuer or any successor corporation resulting from the Organic Change. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3(d) with respect to the rights of the Holder after the Organic Change to the end that the provisions of this Section 3(d) (including any adjustment in the Warrant Price then in effect and the number of shares of stock or other securities deliverable upon exercise of this Warrant) shall be applied after that event in as nearly an equivalent manner as may be practicable. In any such case, the resulting or surviving corporation (if not the Issuer) shall expressly assume the obligations to deliver, upon the exercise of this Warrant, such securities or property as the Holder shall be entitled to receive pursuant to the provisions hereof, and to make provisions for the protection of the rights of the Holder as provided above.

(e) Adjustments for Issuance of Additional Shares of Common Stock . For so long as this Warrant remains outstanding (the “Anti-Dilution Period”), in the event the Company shall issue or sell any additional shares of Common Stock (otherwise than as provided in the foregoing subsections (a) through (d) of this Section 3 ) (“ Additional Shares of Common Stock ”) at a price per share less than the then-applicable Exercise Price or without consideration, then the Exercise Price upon each such issuance shall be reduced to that price (rounded to the nearest cent) determined by multiplying the Exercise Price by a fraction: (1) the numerator of which shall be equal to the sum of (A) the number of shares of Outstanding Common Stock, as hereinafter defined, immediately prior to the issuance of such Additional Shares of Common Stock plus (B) the number of shares of Common Stock (rounded to the nearest whole share) which the aggregate consideration for the total number of such Additional Shares of Common Stock so issued would purchase at a price per share equal to the outstanding Exercise Price in effect immediately prior to such issuance; and (2) the denominator of which shall be equal to the number of shares of Outstanding Common Stock immediately after the issuance of such Additional Shares of Common Stock. No adjustment of the Exercise Price shall be made upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any Common Stock Equivalents, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Common Stock Equivalents (or upon the issuance of any warrant or other rights therefore). For purposes of this Warrant, " Outstanding Common Stock" means, at any given time, the aggregate amount of outstanding shares of Common Stock, assuming full exercise, conversion or exchange (as applicable) of all Common Stock Equivalents that are outstanding at such time.

(f) Issuance of Common Stock Equivalents . If at any time during the Anti-Dilution Period, the Company or any subsidiary thereof, as applicable, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition of) any Common Stock, preferred shares convertible into Common Stock, or debt, warrants, options or other instruments or securities which are convertible into or exercisable for shares of Common Stock (collectively, the “ Common Stock Equivalents ”) at a price per share less than the applicable Exercise Price then in effect, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the applicable Exercise Price in effect at the time of such amendment or adjustment, then the applicable Exercise Price upon each such issuance or amendment shall be adjusted as provided in Section 3(e) . No adjustment shall be made to the Exercise Price upon the issuance of any Common Stock pursuant to the exercise, conversion or exchange of any Convertible Security or Common Stock Equivalent where an adjustment to the Conversion Price was made as a result of the issuance or purchase of such Convertible Security or Common Stock Equivalent.

(g) Exceptions to Adjustment . Notwithstanding the provisions of Sections 3(e) and 3(f), no adjustment to the Exercise Price shall be effected as a result of an Excepted Issuance. “ Excepted Issuances ” shall mean, collectively, (i) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital and in which holders of such securities or debt are not at any time granted registration rights; (ii) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants,; (iii) securities issued (other than for cash) in connection with a merger, acquisition, or consolidation, (iv) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date of the Purchase Agreement, (v) any securities, including the Debenture, Warrants and Performance Warrants, as well as any shares of common stock issued as interest payment on the Debenture, issued pursuant to the Purchase Agreement (so long as the conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the Holders), (v) the shares of Common Stock underlying the Debenture, the Warrants and the Performance Warrants, (vi) any shares of Common Stock issued as payment of dividends, (vii) any warrants issued to the Placement Agent or the shares of common stock underlying same, and (viii) shares issued pursuant to a Permitted Financing.

(h) Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

(i) Record Date . In case the Issuer shall take record of the holders of its Common Stock or any other preferred stock for the purpose of entitling them to subscribe for or purchase Common Stock or securities convertible into or exchangeable for, directly or indirectly, Common Stock, then the date of the issue or sale of the shares of Common Stock shall be deemed to be such record date.

(j) No Impairment . The Issuer shall not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect against impairment the right of the Holder to exercise this Warrant. In the event the Holder shall elect to exercise this Warrant, in whole or in part, as provided herein, the Issuer cannot refuse exercise based on any claim that the Holder or anyone associated or affiliated with such holder has been engaged in any violation of law, unless (i) the Issuer receives an order from the Securities and Exchange Commission prohibiting such exercise or (ii) an injunction from a court, on notice, restraining and/or adjoining exercise of this Warrant.

(k) Certificates as to Adjustments . Upon occurrence of each adjustment or readjustment of the Warrant Price or number of shares of Common Stock for which this Warrant is exercisable pursuant to this Section 3 , the Issuer at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The Issuer shall, upon written request of the Holder, at any time, furnish or cause to be furnished to the Holder a like certificate setting forth such adjustments and readjustments, the Warrant Price in effect at the time, and the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon the exercise of this Warrant. Notwithstanding the foregoing, the Issuer shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one percent of such adjusted amount; if the Issuer so postpones delivering a certificate, such prior adjustment shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 3 and not previously made, would result in an adjustment of one percent or more.

(l) Issue Taxes . The Issuer shall pay any and all issue and other taxes, excluding federal, state or local income taxes, that may be payable in respect of any issue or delivery of shares of Common Stock on exercise of this Warrant; provided , however , that the Issuer shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion.

(m) Fractional Shares . No fractional shares of Common Stock shall be issued upon exercise of this Warrant. In lieu of any fractional shares to which the Holder would otherwise be entitled, the Holder shall round the number of shares to be issued upon exercise up to the nearest whole number of shares.

(n) Reservation of Common Stock . The Issuer shall, during the period within which this Warrant may be exercised, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the exercise of this Warrant, such number of shares of Common Stock equal to at least one hundred ten percent (110%) of the aggregate number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant.

(o) Retirement of this Warrant . Exercise of this Warrant shall be deemed to have been effected on the date of exercise hereof. Upon exercise of this Warrant only in part, the Issuer shall issue and deliver to the Holder, at the expense of the Issuer, a new Warrant covering the unexercised balance of the Warrant Stock.

(p) Regulatory Compliance . If any shares of Common Stock to be reserved for the purpose of exercise of this Warrant require registration or listing with or approval of any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise before such shares may be validly issued or delivered upon conversion, the Issuer shall, at its sole cost and expense, in good faith and as expeditiously as possible, endeavor to secure such registration, listing or approval, as the case may be.

4. No Preemptive Rights . The Holder shall not be entitled to rights to subscribe for, purchase or receive any part of any new or additional shares of any class, whether now or hereinafter authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares of any class, but all such new or additional shares of any class, or any bond, debentures or other evidences of indebtedness convertible into or exchangeable for shares, may be issued and disposed of by the Board on such terms and for such consideration (to the extent permitted by law), and to such person or persons as the Board in its absolute discretion may deem advisable.

5. Intentionally Left Blank

(a) Exercise Limit . Notwithstanding anything to the contrary set forth in this Warrant, the Company shall not be obligated to issue any shares of Common Stock upon exercise of this Warrant, and the holder of this Warrant shall not have the right to receive, upon such exercise, any shares of Common Stock, if the issuance of such shares of Common Stock would exceed the aggregate number of Shares of Common Stock which the Company may issue upon exercise or conversion, as applicable, of this Warrant, the other Warrants issuable pursuant to the Purchase Agreement, the Debentures, any interest payments payable pursuant to the Debentures, or any Performance Warrants, to remain in compliance with the Company's obligations under the rules or regulations of the Nasdaq OMX Market, which rules and regulations limit the amount of shares of Common Stock that the Company may issue to no more than an aggregate of 19.99% of the number of shares outstanding on the Closing Date (the "Exchange Cap"), except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required by the applicable rules of NASDAQ for issuances of Common Stock in excess of such amount or (B) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to majority stockholders. Until such approval or written opinion is obtained, no Purchaser shall be issued in the aggregate, upon exercise or conversion, as applicable, of this Warrant, the Debenture, the Class C Warrant or the Performance Warrant, if any, shares of Common Stock in an amount greater than the product of the Exchange Cap multiplied by a fraction, the numerator of which is the Purchase Price paid by such Purchaser pursuant to the Purchase Agreement on the Closing Date and the denominator of which is the aggregate offering amount pursuant to the Purchase Agreement on the Closing Date (with respect to each Purchaser, the "Exchange Cap Allocation"). In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser's Warrant, the transferee shall be allocated a pro rata portion of such Purchaser's Exchange Cap Allocation, and the restrictions of the prior sentence shall apply to such transferee with respect to the portion of the Exchange Cap Allocation allocated to such transferee. In the event that any holder of this Warrant shall exercise all of such holder's Warrant into a number of shares of Common Stock which, in the aggregate, is less than such holder's Exchange Cap Allocation, then the difference between such holder's Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Exchange Cap Allocations of the remaining holders of this Warrant on a pro rata basis in proportion to the aggregate exercise price of shares of this Warrant then held by each such holder.

(b) Failed Exercise . In the event that the Holder exercises this Warrant in whole or in part pursuant to any provision of Section 2 hereof, and the Company is unable or otherwise fails to deliver all or part of the Warrant Shares (a “ Failed Exercise ”) due to limitations imposed on the Company by virtue of the NASDAQ Rule 5635 (the “ Rule 5365 Limitations ”), then the Company shall be obligated to (i) promptly, but in no event later than one hundred twenty (120) days from such Failed Exercise, obtain the required stockholder approval to remove the Rule 5635 Limitations, and (ii) on the first date that such Rule 5635 Limitations no longer apply, deliver to the Holder the number of Warrant Shares required by the Failed Exercise (without regard to the Rule 5635 Limitations); provided , however , that the Holder may elect to retract the Failed Exercise at any time prior to the delivery of the Warrant Shares, whereupon the Holder shall retain all rights under this Warrant as if the Failed Exercise had never occurred. If such approval is required, the Company shall not be obligated to issue any Shares until such approval is received

7. Definitions . For the purposes of this Warrant, the following terms have the following meanings:

“ Board ” shall mean the Board of Directors of the Issuer.

“ Capital Stock ” means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type.

“ Articles of Incorporation ” means the Articles of Incorporation of the Issuer, as amended, as in effect on the Original Issue Date, and as hereafter from time to time amended, modified, supplemented or restated in accordance with the terms hereof and thereof and pursuant to applicable law.

“ Common Stock ” means the Common Stock, $0.0001 par value per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed.

“ Governmental Authority ” means any governmental, regulatory or self-regulatory entity, department, body, official, authority, commission, board, agency or instrumentality, whether federal, state or local, and whether domestic or foreign.

“ Holders ” mean the Persons who shall from time to time own any Warrant. The term “ Holder ” means one of the Holders.

“ Independent Appraiser ” means a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Issuer) that is regularly engaged in the business of appraising the Capital Stock or assets of corporations or other entities as going concerns, and which is not affiliated with either the Issuer or the Holder of any Warrant.

" NASDAQ " means the NASDAQ Capital Markets .

“ Original Issue Date ” means December [], 2014.

“ Performance Warrants ” means those warrants specified as Performance Warrants issuable pursuant to Purchase Agreement.

“ Person ” means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint venture, Governmental Authority or other entity of whatever nature.

“ Per Share Market Value ” means on any particular date (a) the last closing bid price per share of the Common Stock on such date on NASDAQ or any registered national stock exchange on which the Common Stock is then listed, or if there is no such price on such date, then the closing bid price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on the NASDAQ or other registered national stock exchange, the last closing bid price for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or by Pink OTC Markets Inc. or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or (c) if the Common Stock is not then reported by the OTC Bulletin Board or by Pink OTC Markets Inc. (or similar organization or agency succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for the five (5) Trading Days preceding such date of determination, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by the Board.

“ Purchasers ” means the purchasers of the Debentures and the Warrants issued by the Issuer pursuant to the Purchase Agreement.

“ Securities ” means any debt or equity securities of the Issuer, whether now or hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security, and any option, warrant or other right to purchase or acquire any Security. “Security” means one of the Securities.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Subsidiary ” means any corporation at least 50% of whose outstanding Voting Stock shall at the time be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

“ Term ” has the meaning specified in Section 1 hereof.

“ Trading Day ” means (a) a day on which the Common Stock is traded on NASDAQ or other registered national stock exchange, or (b) if the Common Stock is not traded on NASDAQ or other registered national stock exchange, a day on which the Common Stock is traded on the OTC Bulletin Board, or (c) if the Common Stock is not traded on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by Pink OTC Markets Inc. (or any similar organization or agency succeeding its functions of reporting prices); provided , however , that in the event that the Common Stock is not listed or quoted as set forth in (a) (b) or (c) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

“ Voting Stock ” means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the Board (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency.

“ Warrants ” means the Warrants issued and sold pursuant to the Purchase Agreement, including, without limitation, this Warrant and the Class D Warrants (as defined in the Purchase Agreement), and any other warrants of like tenor issued in substitution or exchange for any thereof pursuant to the provisions of Section 2(d) , 2(e) or 2(f) hereof or of any of such other Warrants.

“ Warrant Price ” initially means $3.00, as such price may be adjusted from time to time as shall result from the adjustments specified in this Warrant, including Section 3 hereof.

“ Warrant Share Number ” means at any time the aggregate number of shares of Warrant Stock which may at such time be purchased upon exercise of a Warrant, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof.

“ Warrant Stock ” means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.

8. Other Notices . In case at any time:

(i) the Issuer shall make any distributions to the holders of Common Stock; or

(ii) the Issuer shall authorize the granting to all holders of its Common Stock of rights to subscribe for or purchase any shares of Capital Stock of any class or other rights; or

(iii) there shall be any reclassification of the Capital Stock of the Issuer; or

(iv) there shall be any capital reorganization by the Issuer; or

(v) there shall be any (i) consolidation or merger involving the Issuer or (ii) sale, transfer or other disposition of all or substantially all of the Issuer’s property, assets or business (except a merger or other reorganization in which the Issuer shall be the surviving corporation and its shares of Capital Stock shall continue to be outstanding and unchanged and except a consolidation, merger, sale, transfer or other disposition involving a wholly-owned Subsidiary); or

(vi) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any partial liquidation of the Issuer or distribution to holders of Common Stock;

then, in each of such cases, the Issuer shall give written notice to the Holder of the date on which (i) the books of the Issuer shall close or a record shall be taken for such dividend, distribution or subscription rights or (ii) such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be, shall take place. Such notice also shall specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their certificates for Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or winding-up, as the case may be. Such notice shall be given at least twenty (20) days prior to the action in question and not less than ten (10) days prior to the record date or the date on which the Issuer’s transfer books are closed in respect thereto. This Warrant entitles the Holder to receive copies of all financial and other information distributed or required to be distributed to the holders of the Common Stock.

9. Amendment and Waiver . Any term, covenant, agreement or condition in this Warrant may be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instruments executed by (a) the Issuer and (b) the Holders of a majority of the Warrants then outstanding; provided , however , that no such amendment or waiver shall reduce the Warrant Share Number, increase the Warrant Price, shorten the period during which this Warrant may be exercised or modify any provision of this Section 9 without the consent of the Holder of this Warrant. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of this Warrant unless the same consideration is also offered to all holders of the Warrants.

10. Governing Law; Jurisdiction . This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Warrant shall not be interpreted or construed with any presumption against the party causing this Warrant to be drafted. The Issuer and the Holder agree that venue for any dispute arising under this Warrant will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue. The Issuer and the Holder irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York. The Issuer and the Holder consent 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 Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 10 shall affect or limit any right to serve process in any other manner permitted by law. The Issuer and the Holder hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Warrant or the Purchase Agreement, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party. The parties hereby waive all rights to a trial by jury.

11. Notices . All notices and other communications hereunder shall be given in the same manner provided in the subsection headed “Notices” in the Purchase Agreement, the terms of which are incorporated herein by reference.

Any party hereto may from time to time change its address for notices by giving written notice of such changed address to the other party hereto.

12. Warrant Agent . The Issuer may, by written notice to each Holder of this Warrant, appoint an agent having an office in New York, New York for the purpose of issuing shares of Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to Section 13 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

13. Lost or Stolen Warrant . Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver new Warrant of like tenor and date; provided , however , that the Company shall not be obligated to re-issue warrant(s) if the Holder contemporaneously exercise this Warrant to purchase shares of Common Stock.

14. Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief . The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including 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 Holder’s right to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof 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 harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

15. Specific Shall Not Limit General; Construction . No specific provision contained in this Warrant shall limit or modify any more general provision contained herein. This Warrant shall be deemed to be jointly drafted by the Company and all initial purchasers of the Warrant and shall not be construed against any person as the drafter hereof.

16. Successors and Assigns . This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and assigns of the Issuer, the Holder hereof and (to the extent provided herein) the Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any such Holder or Holder of Warrant Stock.

17. Modification and Severability . If, in any action before any court or agency legally empowered to enforce any provision contained herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make it enforceable by such court or agency. If any such provision is not enforceable as set forth in the preceding sentence, the unenforceability of such provision shall not affect the other provisions of this Warrant, but this Warrant shall be construed as if such unenforceable provision had never been contained herein.

18. Headings . The headings of the Sections of this Warrant are for convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

IN WITNESS WHEREOF, the Issuer has executed this Class C Warrant as of the day and year first above written.

	ONE HORIZON GROUP, INC.

	By:
		Name: Martin Ward
		Title: Chief Financial Officer

ONE HORIZON GROUP, INC.

The undersigned _______________, pursuant to the provisions of the accompanying Class C Warrant, hereby elects to purchase _____ shares of Common Stock (the “Warrant Shares”) of One Horizon Group, Inc. covered by the accompanying Class C Warrant.

Dated: _________________	Signature______________________________________________

	Address_______________________________________________
	_______________________________________________

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: _________________________

The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended. □ Yes □ No

The undersigned is a not a U.S. person and certifies that the warrant is not being exercised on behalf of a U.S. person. □ Yes □ No

The Holder shall pay the sum of $________ by certified or official bank check (or via wire transfer) to the Issuer in accordance with the terms of the Warrant.

The certificate(s) representing the Warrant Shares shall be delivered by

(a)	certified mail to the above address, or

(b)	certified mail to the prime broker of the Holder at

Name: _____________________________________

Address:____________________________________

Attention: __________________________________

Tel. No.: ___________________________________

(c)	electronically (DWAC Instructions: ____________________), or

(d)	other (specify) _____________________________________

If the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s Assignee as below indicated and delivered to the address stated below.

Dated: _________________

Note: The signature must correspond with Signature:______________________

the name of the Holder as written

on the first page of the Warrant in every ______________________________

particular, without alteration or enlargement Name (please print)

or any change whatever, unless the Warrant

has been assigned. ______________________________

______________________________

Federal Identification or SSN.

Signature:______________________

____________________________

______________________________

Federal Identification or SSN

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the accompanying Class C Warrant and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer said Class C Warrant on the books of the corporation named therein.

Dated: _________________	Signature______________________________________________

	Address_______________________________________________
	_______________________________________________

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ shares of Warrant Stock evidenced by the accompanying Class C Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of said Class C Warrant on the books of the corporation named therein.

Dated: _________________	Signature______________________________________________

	Address_______________________________________________
	_______________________________________________

FOR USE BY THE ISSUER ONLY:

This Warrant No. ________ canceled (or transferred or exchanged) this _____ day of ___________, _____, shares of Common Stock issued therefor in the name of _______________, Warrant No. ________ issued for ____ shares of Common Stock in the name of _______________.

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

CLASS D WARRANT TO PURCHASE

SHARES OF COMMON STOCK

ONE HORIZON GROUP, INC.

Expires December [ ], 2018

No.: ____ Number of Shares: ___________

Date of Issuance: December ____, 2014

1. Term . The term of this Warrant shall commence on December [ ], 2014 and shall expire at 6:00 p.m., Eastern Time, on December [ ], 2018 (such period being the “ Term ” ).

2.	Method of Exercise; Payment; Issuance of New Warrant; Transfer and Exchange .

(a) Time of Exercise . The purchase rights represented by this Warrant may be exercised in whole or in part during the Term.

(f) Compliance with Securities Laws.

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

5. Intentionally Left Blank

7. Definitions . For the purposes of this Warrant, the following terms have the following meanings:

“ Board ” shall mean the Board of Directors of the Issuer.

“ Common Stock ” means the Common Stock, $0.0001 par value per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed.

“ Holders ” mean the Persons who shall from time to time own any Warrant. The term “ Holder ” means one of the Holders.