Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (“Agreement”) is made as of the 23 day of
June, 2015 by and among Aethlon Medical, Inc., a Nevada corporation (the
“Company”), and the Investors set forth on the signature pages affixed hereto
(each an “Investor” and collectively the “Investors”).

 

Recitals

 

A. The Company and the Investors are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Regulation D (“Regulation D”), as promulgated by the U.S.
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933,
as amended; and

 

B. The Investors wish to purchase from the Company, and the Company wishes to
sell and issue to the Investors, upon the terms and conditions stated in this
Agreement, (i) an aggregate of 952,381 shares of the Company’s Common Stock, par
value $0.001 per share (together with any securities into which such shares may
be reclassified, whether by merger, charter amendment or otherwise, the “Common
Stock”), at a purchase price of $6.30 per share, and (ii) warrants to purchase
an aggregate of 714,286 shares of Common Stock (subject to adjustment) at an
exercise price of $6.30 per share (subject to adjustment) in the form attached
hereto as Exhibit A (the “Warrants”); and

 

C. Contemporaneously with the sale of the Common Stock and Warrants, the parties
hereto will execute and deliver a Registration Rights Agreement, in the form
attached hereto as Exhibit B (the “Registration Rights Agreement”), pursuant to
which the Company will agree to provide certain registration rights to the
Investors with respect to the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.

 

In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

1. Definitions. In addition to those terms defined above and elsewhere in this
Agreement, for the purposes of this Agreement, the following terms shall have
the meanings set forth below:

 

“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries Controls, is controlled by, or
is under common Control with, such Person.

 

“Agent” means Roth Capital Partners, LLC.

 

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

 

1

 

 

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

 

“Company’s Knowledge” means the actual knowledge of the executive officers (as
defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.

 

“Confidential Information” means trade secrets, confidential information and
know-how (including but not limited to ideas, formulae, compositions, processes,
procedures and techniques, research and development information, computer
program code, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).

 

“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Effective Date” means the date on which the initial Registration Statement is
declared effective by the SEC.

 

“Equity Line of Credit” shall have the meaning ascribed to such term in Section
7.9(b).

 

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

 

“Insider” means each director, executive officer, other officer of the Company
participating in the offering, any beneficial owner of 20% or more of the
Company’s outstanding voting equity securities, calculated on the basis of
voting power, and any promoter connected with the Company in any capacity on the
date hereof.

 

“Intellectual Property” means all of the following items as disclosed or
required to be disclosed in the SEC Filings: (i) patents, patent applications,
patent disclosures and inventions (whether or not patentable and whether or not
reduced to practice); (ii) trademarks, service marks, trade dress, trade names,
corporate names, logos, slogans and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) registrations, applications and renewals for any of
the foregoing; and (v) proprietary computer software (including but not limited
to data, data bases and documentation).

 

“Lead Investor” means Alpha Capital Anstalt.

 

2

 

 

“Major Investor” means any Investor that, along with its Affiliates, has
purchased at the Closing hereunder Shares and Warrants with an aggregate
Purchase Price of at least $1,000,000.

 

“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents.

 

“Material Contract” means any contract, instrument or other agreement to which
the Company or any Subsidiary is a party or by which it is bound which is
material to the business of the Company and its Subsidiaries, taken as a whole,
including those that have been filed or were required to be filed as an exhibit
to the SEC Filings pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation
S-K.

 

“Money Laundering Laws” shall have the meaning ascribed to such term in Section
4.34.

 

“OFAC” means the Office of Foreign Assets Control of the U.S. Treasury
Department.

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

 

“Purchase Price” means up to Six Million Dollars ($6,000,000).

 

“Registration Statement” has the meaning set forth in the Registration Rights
Agreement.

 

“Required Investors” means (i) prior to Closing the Major Investors who,
together with their Affiliates, have agreed to purchase a majority of the
Securities to be sold to Major Investors hereunder, which must include the Lead
Investor, and (ii) from and after the Closing the Major Investors beneficially
owning (calculated in accordance with Rule 13d-3 under the 1934 Act without
giving effect to any limitation on exercise of the Warrants set forth therein) a
majority of the Shares and the Warrant Shares owned by Major Investors, which
must include the Lead Investor for so long as the Lead Investor hold Shares or
Warrant Shares acquired for not less than One Hundred Thousand Dollars
($100,000).

 

“SEC Filings” has the meaning set forth in Section 4.6.

 

“Securities” means the Shares, the Warrants and the Warrant Shares.

 

“Shares” means the shares of Common Stock being purchased by the Investors
hereunder.

 

3

 

 

“Subsidiary” of any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.

 

“Transaction Documents” means this Agreement, the Warrants and the Registration
Rights Agreement.

 

“Variable Priced Equity Linked Instruments” shall have the meaning ascribed to
such term in Section 7.9(b).

“Variable Rate Transaction” shall have the meaning ascribed to such term in
Section 7.9(b).

 

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

 

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

 

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

 

2. Purchase and Sale of the Shares and Warrants. Subject to the terms and
conditions of this Agreement, on the Closing Date, each of the Investors shall
severally, and not jointly, purchase, and the Company shall sell and issue to
the Investors, the Shares and Warrants in the respective amounts set forth
opposite the Investors’ names on the signature pages attached hereto in exchange
for the Purchase Price as specified in Section 3 below.

 

3. Closing. Upon confirmation that the other conditions to closing specified
herein have been satisfied or duly waived by the Investors, (i) the Company
shall deliver to each Investor a certificate or certificates, registered in such
name or names of Investors as such Investor may designate, representing the
Shares and Warrants purchased by such Investor, and (ii) such Investor shall
cause a wire transfer in same day funds to be sent to the account of the Company
as instructed in writing by the Company, in an amount representing such
Investor’s pro rata portion of the Purchase Price as set forth on the signature
pages to this Agreement. The closing of the purchase and sale of the Shares and
Warrants (the “Closing”) shall take place at the offices of Grushko & Mittman,
P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, or at such other
location and on such other date as the Company and the Investors shall mutually
agree. The date on which the Closing occurs is hereinafter referred to as the
“Closing Date.”

 

4. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Investors that, except as set forth in the schedules
delivered herewith (collectively, the “Disclosure Schedules”):

 

4

 

 

 

4. 1 Organization, Good Standing and Qualification. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now
conducted and to own or lease its properties. Each of the Company and its
Subsidiaries is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property makes such qualification or leasing necessary
unless the failure to so qualify has not had and could not reasonably be
expected to have a Material Adverse Effect. The Company’s Subsidiaries are
listed on Schedule 4.1 hereto.

 

4.2 Authorization. The Company has full power and authority and has taken all
requisite action on the part of the Company, its officers, directors and
stockholders necessary for (i) the authorization, execution and delivery of the
Transaction Documents, (ii) the authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the Securities The
Transaction Documents constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors’
rights generally and to general equitable principles.

 

4.3 Capitalization. Schedule 4.3 sets forth as of the date hereof (a) the
authorized capital stock of the Company; (b) the number of shares of capital
stock issued and outstanding; (c) the number of shares of capital stock issuable
pursuant to the Company’s stock plans; and (d) the number of shares of capital
stock issuable and reserved for issuance pursuant to securities (other than the
Shares and the Warrants) exercisable for, or convertible into or exchangeable
for any shares of capital stock of the Company including all Common Stock
Equivalents. All of the issued and outstanding shares of the Company’s capital
stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights and were issued in compliance with
applicable state and federal securities law and any rights of third parties
except where failure to comply would not have a Material Adverse Effect. Except
as described on Schedule 4.3, all of the issued and outstanding shares of
capital stock of each Subsidiary have been duly authorized and validly issued
and are fully paid, nonassessable and free of pre-emptive rights, were issued in
compliance with applicable state and federal securities law (except where
failure to comply would not have a Material Adverse Effect) and any rights of
third parties and are owned by the Company, beneficially and of record, subject
to no lien, encumbrance or other adverse claim. Except as described on Schedule
4.3, no Person is entitled to pre-emptive or similar statutory or contractual
rights with respect to any securities of the Company. Except as described on
Schedule 4.3, there are no outstanding warrants, options, convertible securities
or other rights, agreements or arrangements of any character under which the
Company or any of its Subsidiaries is or may be obligated to issue any equity
securities of any kind and except as contemplated by this Agreement, neither the
Company nor any of its Subsidiaries is currently in negotiations for the
issuance of any equity securities of any kind. Except as described on Schedule
4.3 and except for the Registration Rights Agreement, there are no voting
agreements, buy-sell agreements, option or right of first purchase agreements or
other agreements of any kind among the Company and any of the securityholders of
the Company relating to the securities of the Company held by them. Except as
described on Schedule 4.3 and except as provided in the Registration Rights
Agreement, no Person has the right to require the Company to register any
securities of the Company under the 1933 Act, whether on a demand basis or in
connection with the registration of securities of the Company for its own
account or for the account of any other Person. Each Investor party to this
Agreement has either (i) waived any rights of first refusal or preemptive rights
it may have associated with the issuance and sale of the Securities, or (ii)
acknowledges by its signature hereto, that such rights have been fully satisfied
in favor of the Investor.

 

5

 

 

Except as described on Schedule 4.3, the issuance and sale of the Securities
hereunder will not obligate the Company to issue shares of Common Stock or other
securities to any other Person (other than the Investors) and will not result in
the adjustment of the exercise, conversion, exchange or reset price of any
outstanding security.

 

Except as described on Schedule 4.3, the Company does not have outstanding
stockholder purchase rights or “poison pill” or any similar arrangement in
effect giving any Person the right to purchase any equity interest in the
Company upon the occurrence of certain events.

 

4.4 Valid Issuance. The Shares have been duly and validly authorized and, when
issued and paid for pursuant to this Agreement, will be validly issued, fully
paid and nonassessable, and shall be free and clear of all encumbrances and
restrictions (other than those created by the Investors), except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws. The Warrants have been duly and validly authorized.
Upon the due exercise of the Warrants including the payment of the exercise
price or other exercise consideration thereunder, the Warrant Shares will be
validly issued, fully paid and non-assessable free and clear of all encumbrances
and restrictions, except for restrictions on transfer set forth in the
Transaction Documents or imposed by applicable securities laws and except for
those created by the Investors. The Company has reserved 692,308 shares of
Common Stock for issuance upon the exercise of the Warrants.

 

4.5 Consents. The execution, delivery and performance by the Company of the
Transaction Documents and the offer, issuance and sale of the Securities require
no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant to
applicable state and federal securities laws which the Company undertakes to
file within the applicable time periods. Subject to the accuracy of the
representations and warranties of each Investor set forth in Section 5 hereof,
the Company has taken all action necessary to exempt from the registration
requirements of the Securities Act (i) the issuance and sale of the Securities,
and (ii) the issuance of the Warrant Shares upon due exercise of the Warrants.

 

4.6 Delivery of SEC Filings; Business. The Company has made available to the
Investors through the EDGAR system, true and complete copies of the Company’s
most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2014
(the “10-K”), and all other reports filed by the Company pursuant to the 1934
Act since the filing of the 10-K and prior to the date hereof (collectively, the
“SEC Filings”). To the Company’s Knowledge, the SEC Filings are the only filings
required of the Company pursuant to the 1934 Act for such period. The Company
and its Subsidiaries are engaged in all material respects only in the business
described in the SEC Filings and the SEC Filings contain a complete and accurate
description in all material respects of the business of the Company and its
Subsidiaries, taken as a whole.

 

6

 

 

4.7 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Shares and Warrants hereunder for the purposes set forth on Schedule 4.7 and
shall not use such proceeds: (a) for the satisfaction of any portion of the
Company’s debt except as disclosed on Schedule 4.7 (other than payment of trade
payables in the ordinary course of the Company’s business and consistent with
prior practices), (b) for the redemption of any Common Stock or Common Stock
Equivalents, (c) for the settlement of any outstanding litigation or (d) in
violation of FCPA or OFAC regulations. In addition, the Company will not use the
net proceeds from the sale of the Shares and Warrants to pay outstanding board
compensation fees in the amount of $117,000 due to the directors of the Company
and will not pay such fees until at least ninety days following the Closing
Date.

 

4.8 No Material Adverse Change. Since March 31, 2014, except as described on
Schedule 4.8, there has not been:

 

(i) any change in the consolidated assets, liabilities, financial condition or
operating results of the Company from that reflected in the financial statements
included in the Company’s Quarterly Report on Form 10-Q for the quarter ended
December 31, 2014, except for changes in the ordinary course of business which
have not had and could not reasonably be expected to have a Material Adverse
Effect, individually or in the aggregate;

 

(ii) any declaration or payment of any dividend, or any authorization or payment
of any distribution, on any of the capital stock of the Company, or any
redemption or repurchase of any securities of the Company;

 

(iii) any material damage, destruction or loss, whether or not covered by
insurance to any assets or properties of the Company or its Subsidiaries;

 

(iv) any waiver, not in the ordinary course of business, by the Company or any
Subsidiary of a material right or of a material debt owed to it;

 

(v) any satisfaction or discharge of any lien, claim or encumbrance or payment
of any obligation by the Company or a Subsidiary, except in the ordinary course
of business and which is not material to the assets, properties, financial
condition, operating results or business of the Company and its Subsidiaries
taken as a whole (as such business is presently conducted and as it is proposed
to be conducted);

 

(vi) any change or amendment to the Company's Articles of Incorporation or
Bylaws, or material change to any material contract or arrangement by which the
Company or any Subsidiary is bound or to which any of their respective assets or
properties is subject;

 

7

 

 

(vii) any material labor difficulties or labor union organizing activities with
respect to employees of the Company or any Subsidiary;

 

(viii) any material transaction entered into by the Company or a Subsidiary
other than in the ordinary course of business;

 

(ix) the loss of the services of any key employee, or material change in the
composition or duties of the senior management of the Company or any Subsidiary;

 

(x) the loss or threatened loss of any customer which has had or could
reasonably be expected to have a Material Adverse Effect; or

 

(xi) any other event or condition of any character that has had or could
reasonably be expected to have a Material Adverse Effect.

 

4.9 SEC Filings.

 

(a) At the time of filing thereof, the SEC Filings complied as to form in all
material respects with the requirements of the 1934 Act and did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.

 

(b) Each registration statement and any amendment thereto filed by the Company
since January 1, 2011 pursuant to the 1933 Act and the rules and regulations
thereunder, as of the date such statement or amendment became effective,
complied as to form in all material respects with the 1933 Act and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein not misleading; and each prospectus filed pursuant to Rule 424(b)
under the 1933 Act, as of its issue date and as of the closing of any sale of
securities pursuant thereto did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

 

4.10 No Conflict, Breach, Violation or Default. The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and
sale of the Securities will not (i) conflict with or result in a breach or
violation of (a) any of the terms and provisions of, or constitute a default
under the Company’s Articles of Incorporation or the Company’s Bylaws, both as
in effect on the date hereof (true and complete copies of which have been made
available to the Investors through the EDGAR system), or (b) any statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company, any Subsidiary or any of their
respective assets or properties, or (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any lien, encumbrance or other adverse claim
upon any of the properties or assets of the Company or any Subsidiary or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any Material Contract.

 

8

 

 

4.11 Tax Matters. The Company and each Subsidiary has timely prepared and filed
all tax returns required to have been filed by the Company or such Subsidiary
with all appropriate governmental agencies and timely paid all taxes shown
thereon or otherwise owed by it. The charges, accruals and reserves on the books
of the Company in respect of taxes for all fiscal periods are adequate in all
material respects, and there are no material unpaid assessments against the
Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the
assessment of any additional taxes, penalties or interest for any fiscal period
or audits by any federal, state or local taxing authority except for any
assessment which is not material to the Company and its Subsidiaries, taken as a
whole. All taxes and other assessments and levies that the Company or any
Subsidiary is required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or third party
when due. There are no tax liens or claims pending or, to the Company’s
Knowledge, threatened against the Company or any Subsidiary or any of their
respective assets or property. Except as described on Schedule 4.11, there are
no outstanding tax sharing agreements or other such arrangements between the
Company and any Subsidiary or other corporation or entity.

 

4.12 Title to Properties. Except as described on Schedule 4.12, the Company and
each Subsidiary has good and marketable title to all real properties and all
other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof
by them; and except as described on Schedule 4.12, the Company and each
Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.

 

4.13 Certificates, Authorities and Permits. The Company and each Subsidiary
possess adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now operated
by it, and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or such
Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.

 

4.14 Labor Matters.

 

(a) Except as set forth on Schedule 4.14, the Company is not a party to or bound
by any collective bargaining agreements or other agreements with labor
organizations. The Company has not violated in any material respect any laws,
regulations, orders or contract terms, affecting the collective bargaining
rights of employees, labor organizations or any laws, regulations or orders
affecting employment discrimination, equal opportunity employment, or employees’
health, safety, welfare, wages and hours.

 

9

 

 

(b) (i) There are no labor disputes existing, or to the Company's Knowledge,
threatened, involving strikes, slow-downs, work stoppages, job actions,
disputes, lockouts or any other disruptions of or by the Company's employees,
(ii) there are no unfair labor practices or petitions for election pending or,
to the Company's Knowledge, threatened before the National Labor Relations Board
or any other federal, state or local labor commission relating to the Company's
employees, (iii) no demand for recognition or certification heretofore made by
any labor organization or group of employees is pending with respect to the
Company and (iv) to the Company's Knowledge, the Company enjoys good labor and
employee relations with its employees and labor organizations.

 

(c) The Company is, and at all times has been, in compliance in all material
respects with all applicable laws respecting employment (including laws relating
to classification of employees and independent contractors) and employment
practices, terms and conditions of employment, wages and hours, and immigration
and naturalization. There are no claims pending against the Company before the
Equal Employment Opportunity Commission or any other administrative body or in
any court asserting any violation of Title VII of the Civil Rights Act of 1964,
the Age Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or any other
federal, state or local Law, statute or ordinance barring discrimination in
employment.

 

(d) Except as described on Schedule 4.14, the Company is not a party to, or
bound by, any employment or other contract or agreement that contains any
severance, termination pay or change of control liability or obligation,
including, without limitation, any “excess parachute payment,” as defined in
Section 280G(b) of the Internal Revenue Code.

 

(e) Except as described on Schedule 4.14, each of the Company's employees is a
Person who is either a United States citizen or a permanent resident entitled to
work in the United States. To the Company's Knowledge, the Company has no
liability for the improper classification by the Company of such employees as
independent contractors or leased employees prior to the Closing.

 

4.15 Intellectual Property.

 

(a) All Intellectual Property of the Company and its Subsidiaries is currently
in compliance with all legal requirements (including timely filings, proofs and
payments of fees) and is valid and enforceable, except where the failure to so
comply would not cause a Material Adverse Effect. No Intellectual Property of
the Company or its Subsidiaries which is necessary for the conduct of Company’s
and each of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted has been or is now involved in any
cancellation, dispute or litigation, and, to the Company’s Knowledge, no such
action is threatened. No patent of the Company or its Subsidiaries has been or
is now involved in any interference, reissue, re-examination or opposition
proceeding.

 

10

 

 

(b) All of the licenses and sublicenses and consent, royalty or other agreements
concerning Intellectual Property which are necessary for the conduct of the
Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted to which the Company or any
Subsidiary is a party or by which any of their assets are bound (other than
 generally commercially available, non-custom, off-the-shelf software
application programs having a retail acquisition price of less than $10,000 per
license) (collectively, “License Agreements”) are valid and binding obligations
of the Company or its Subsidiaries that are parties thereto and, to the
Company’s Knowledge, the other parties thereto, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors’ rights generally, and
there exists no event or condition which will result in a material violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default by the Company or any of its Subsidiaries under any such License
Agreement.

 

(c) The Company and its Subsidiaries own or have the valid right to use all of
the Intellectual Property that is necessary for the conduct of the Company’s and
each of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted and for the ownership, maintenance and
operation of the Company’s and its Subsidiaries’ properties and assets, free and
clear of all liens, encumbrances, adverse claims or obligations to license all
such owned Intellectual Property and Confidential Information, other than
licenses entered into in the ordinary course of the Company’s and its
Subsidiaries’ businesses. The Company and its Subsidiaries have a valid and
enforceable right to use all third party Intellectual Property and Confidential
Information used or held for use in the respective businesses of the Company and
its Subsidiaries.

 

(d) To the Company’s Knowledge, the conduct of the Company’s and its
Subsidiaries’ businesses as currently conducted does not infringe or otherwise
impair or conflict with (collectively, “Infringe”) any Intellectual Property
rights of any third party or any confidentiality obligation owed to a third
party, and, to the Company’s Knowledge, the Intellectual Property and
Confidential Information of the Company and its Subsidiaries which are necessary
for the conduct of Company’s and each of its Subsidiaries’ respective businesses
as currently conducted or as currently proposed to be conducted are not being
Infringed by any third party. There is no litigation or order pending or
outstanding or, to the Company’s Knowledge, threatened or imminent, that seeks
to limit or challenge or that concerns the ownership, use, validity or
enforceability of any Intellectual Property or Confidential Information of the
Company and its Subsidiaries and the Company’s and its Subsidiaries’ use of any
Intellectual Property or Confidential Information owned by a third party, and,
to the Company’s Knowledge, there is no valid basis for the same.

 

(e) The consummation of the transactions contemplated hereby and by the other
Transaction Documents will not result in the alteration, loss, impairment of or
restriction on the Company’s or any of its Subsidiaries’ ownership or right to
use any of the Intellectual Property or Confidential Information which is
necessary for the conduct of Company’s and each of its Subsidiaries’ respective
businesses as currently conducted or as currently proposed to be conducted.

 

11

 

 

(f) The Company and its Subsidiaries have taken reasonable steps to protect the
Company’s and its Subsidiaries’ rights in their Intellectual Property and
Confidential Information. Each employee and consultant who has had access to
Confidential Information of the Company which is necessary for the conduct of
Company’s and each of its Subsidiaries’ respective businesses as currently
conducted or as currently proposed to be conducted has executed an agreement to
maintain the confidentiality of such Confidential Information and has executed
appropriate agreements that are substantially consistent with the Company’s
standard forms thereof. Except under confidentiality obligations, there has been
no material disclosure of any of the Company’s or its Subsidiaries’ Confidential
Information to any third party.

 

4.16 Environmental Matters. Neither the Company nor any Subsidiary is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), owns or operates any real
property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, or is subject to any claim relating to any Environmental
Laws, which violation, contamination, liability or claim has had or could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate; and there is no pending or, to the Company’s Knowledge, threatened
investigation that might lead to such a claim.

 

4.17 Litigation. Except as described on Schedule 4.17, there are no pending
actions, suits or proceedings against or affecting the Company, its Subsidiaries
or any of its or their properties; and to the Company’s Knowledge, no such
actions, suits or proceedings are threatened or contemplated. Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or since
January 1, 2009 has been the subject of any action involving a claim of
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the Company’s Knowledge,
there is not pending or contemplated, any investigation by the SEC involving the
Company or any current or former director or officer of the Company. The SEC has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the 1933 Act
or the 1934 Act.

 

4.18 Financial Statements. The financial statements included in each SEC Filing
comply in all material respects with applicable accounting requirements and the
rules and regulations of the SEC with respect thereto as in effect at the time
of filing (or to the extent corrected by a subsequent restatement) and present
fairly, in all material respects, the consolidated financial position of the
Company as of the dates shown and its consolidated results of operations and
cash flows for the periods shown, and such financial statements have been
prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis (“GAAP”) (except as may be disclosed
therein or in the notes thereto, and, in the case of quarterly financial
statements, as permitted by Form 10-Q under the 1934 Act). Except as set forth
in the financial statements of the Company included in the SEC Filings filed at
least ten (10) days prior to the date hereof or as described on Schedule 4.18,
neither the Company nor any of its Subsidiaries has incurred any liabilities,
contingent or otherwise, except those incurred in the ordinary course of
business, consistent (as to amount and nature) with past practices since the
date of such financial statements, none of which, individually or in the
aggregate, have had or could reasonably be expected to have a Material Adverse
Effect.

 

12

 

 

4.19 Insurance Coverage. The Company and each Subsidiary maintains in full force
and effect insurance coverage that is customary for comparably situated
companies for the business being conducted and properties owned or leased by the
Company and each Subsidiary, and the Company reasonably believes such insurance
coverage to be adequate against all liabilities, claims and risks against which
it is customary for comparably situated companies to insure.

 

4.20 Compliance with Listing Requirements. The Common Stock is registered
pursuant to Section 12(g) of the 1934 Act and is quoted on OTCQB maintained by
OTC Markets Group Inc. (the “OTCQB”), and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the Common Stock under the 1934 Act or removal from quotation of the Common
Stock from the OTCQB, nor has the Company received any notification that the
SEC, the OTCQB or the Financial Industry Regulatory Authority, Inc. is
contemplating terminating such registration or quotation.

 

4.21 Brokers and Finders. No Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission,
due diligence fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of the Company except as set forth
in Section 9.5 and on Schedule 4.21. The Company shall pay all fees and expenses
of the Lead Investor as described on Schedule 4.21.

 

4.22 No Directed Selling Efforts or General Solicitation. Neither the Company
nor any Affiliate of the Company nor any Person acting on their behalf has
conducted any general solicitation or general advertising (as those terms are
used in Regulation D) in connection with the offer or sale of any of the
Securities being sold under this Agreement.

 

4.23 No Integrated Offering.

 

(a) Neither the Company nor any of its Affiliates nor any Person acting on their
behalf has, directly or indirectly, made any offers or sales of any Company
security or solicited any offers to buy any security, under circumstances that
would impair reliance by the Company on Section 4(a)(2) for the exemption from
registration for the transactions contemplated hereby, or would require
registration of the Securities under the 1933 Act.

 

(b) On April 17, 2015, the Company filed a Registration Statement on Form S-1,
File No. 333-203487(the "Abandoned Offering Registration Statement") which it
later withdrew pursuant to a Form RW filed on May 1, 2015 (the "Abandoned
Offering"). No securities were sold within the Abandoned Offering. The
withdrawal of the Abandoned Offering Registration Statement was completed in
compliance with Rule 477, as promulgated under the 1933 Act, as in effect at the
time of the withdrawal. Pursuant to the applicable Rules under the 1933 Act, the
effective date of the withdrawal of the Abandoned Offering Registration
Statement was May 1, 2015, and neither the Company nor any person acting on its
behalf commenced the private offering that is the subject of this Agreement
within 30 days of May 1, 2015.

 

13

 

 

(c) In connection with the Abandoned Offering and subsequent offering as
contemplated hereby (the "Offering"), the Company notifies each Investor that:
(i) the Offering is not registered under the 1933 Act; (ii) the securities
issued under this Agreement will be “restricted securities” (as that term is
defined in Rule 144(a)(3), as promulgated under the 1933 Act) and may not be
resold unless they are registered under the 1933 Act or an exemption from
registration is available; and (iii) Investors in the Offering do not have the
protection of Section 11 of the 1933 Act.

 

(d) No disclosure document has been used or provided by the Company in
conjunction with the Offering.

 

4.24 Rule 506 Compliance. To the Company's Knowledge, neither the Company nor
any Insider is subject to any of the “Bad Actor” disqualifications described in
Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2)(i) or (d)(3) of
the 1933 Act. The Company is not disqualified from relying on Rule 506 of
Regulation D under the 1933 Act (“Rule 506”) for any of the reasons stated in
Rule 506(d) in connection with the issuance and sale of the Securities to the
Investors pursuant to this Agreement. The Company has exercised reasonable care,
including without limitation, conducting a factual inquiry that is appropriate
in light of the circumstances, into whether any such disqualification under Rule
506(d) exists. The Company has furnished to each Investor, a reasonable time
prior to the date hereof, a description in writing of any matters relating to
the Company and the Insiders that would have triggered disqualification under
Rule 506(d) but which occurred before September 23, 2013, in each case, in
compliance with the disclosure requirements of Rule 506(e). The Company has
exercised reasonable care, including without limitation, conducting a factual
inquiry that is appropriate in light of the circumstances, into whether any such
disqualification under Rule 506(d) would have existed and whether any disclosure
is required to be made to Investor under Rule 506(e). Any outstanding securities
of the Company (of any kind or nature) that were issued in reliance on Rule 506
at any time on or after September 23, 2013 have been issued in compliance with
Rule 506(d) and (e).

 

4.25 Private Placement. Assuming the accuracy of the representations and
warranties of the Investors set forth in Section 5, and in reliance thereon, the
offer and sale of the Securities to the Investors as contemplated hereby is
exempt from the registration requirements of the 1933 Act.

 

4.26 Shell Company Status. The Company is not, and has never been, an issuer
identified in Rule 144(i)(1).

 

4.27 Questionable Payments. Neither the Company nor any of its Subsidiaries nor,
to the Company’s Knowledge, any of their respective current or former
stockholders, directors, officers, employees, agents or other Persons acting on
behalf of the Company or any Subsidiary, has on behalf of the Company or any
Subsidiary or in connection with their respective businesses: (a) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment of
any nature.

 

14

 

 

4.28 Transactions with Affiliates. Except as described on Schedule 4.28, none of
the officers or directors of the Company and, to the Company’s Knowledge, none
of the employees of the Company is presently a party to any transaction with the
Company or any Subsidiary (other than as holders of stock options and/or
warrants, and for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the Company’s Knowledge, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.

 

4.29 Internal Controls. The Company is in material compliance with the
provisions of the Sarbanes-Oxley Act of 2002 currently applicable to the
Company. The Company has established disclosure controls and procedures (as
defined in 1934 Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
such disclosure controls and procedures to ensure that material information
relating to the Company, including the Subsidiaries, is made known to the
Company’s certifying officers by others within those entities. The Company has
established internal control over financial reporting (as defined in 1934 Act
Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP. The Company's certifying officers
have evaluated the effectiveness of the Company's disclosure controls and
procedures as of the end of the period covered by the Company’s most recently
filed periodic report under the 1934 Act (such date, the “Disclosure Controls
Evaluation Date”). The Company presented in its most recently filed periodic
report under the 1934 Act the conclusions of the certifying officers about the
effectiveness of such disclosure controls and procedures based on their
evaluations as of the Disclosure Controls Evaluation Date. The Company's
certifying officers have evaluated the effectiveness of the Company's internal
control over financial reporting as of the end of the Company’s most recent
fiscal year (such date, the “Internal Control Evaluation Date”). The Company
presented in its most recently filed annual report under the 1934 Act the
conclusions of the certifying officers about the effectiveness of such internal
control over financial reporting based on their evaluations as of the Internal
Control Evaluation Date. Since the Disclosure Controls Evaluation Date, there
have been no significant changes in the Company's internal control over
financial reporting or, to the Company's Knowledge, in other factors that could
significantly affect the Company's internal control over financial reporting.
The Company maintains and will continue to maintain a standard system of
accounting established and administered in accordance with GAAP and the
applicable requirements of the 1934 Act.

 

4.30 Disclosures. Neither the Company nor any Person acting on its behalf has
provided the Investors or their agents or counsel with any information that
constitutes or might constitute material, non-public information, other than the
terms of the transactions contemplated hereby. The written materials delivered
to the Investors in connection with the transactions contemplated by the
Transaction Documents do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.

 

15

 

 

4.31 Investment Company. The Company is not required to be registered as, and is
not an Affiliate of, and immediately following the Closing will not be required
to register as, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

4.32 FDA. The Company and each of its Subsidiaries have operated and currently
are in compliance with all applicable rules and regulations of the FDA or any
other federal, state, local or foreign governmental body exercising comparable
authority, except where the failure to so operate or be in compliance would not
have a Material Adverse Effect. All preclinical and clinical studies conducted
by or, to the Company’s Knowledge, on behalf of the Company to support approval
for commercialization of the Company’s products have been conducted by the
Company, or to the Company’s Knowledge by third parties, in compliance with all
applicable federal, state or foreign laws, rules, orders and regulations, except
for such failure or failures to be in compliance which could not reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect. The
descriptions of the tests and preclinical and clinical studies, and results
thereof, conducted by or, to the Company’s Knowledge, on behalf of the Company
contained in the SEC Filings are accurate and complete in all material respects;
and the Company has not received any oral or written notice or correspondence
from the FDA or any foreign, state or local governmental body exercising
comparable authority requiring the termination, suspension, or clinical hold of
any tests or preclinical or clinical studies, or such written notice or
correspondence from any Institutional Review Board or comparable authority
requiring the termination or suspension of a clinical study, conducted by or on
behalf of the Company, which termination, suspension, or clinical hold would
reasonably be expected to have a Material Adverse Effect.

 

4.33 Office of Foreign Assets Control. Neither the Company nor any Subsidiary
nor, to the Company's Knowledge, any director, officer, agent, employee or
affiliate of the Company is currently subject to any U.S. sanctions administered
by the OFAC.

 

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

 

16

 

 

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

 

4.36 Solvency. Based on the consolidated financial condition of the Company as
of the Closing Date, and the Company’s good faith estimate of the fair market
value of its assets, after giving effect to the receipt by the Company of the
proceeds from the sale of the Common Stock and Warrants hereunder: (i) the fair
saleable value of the Company’s 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 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, consolidated 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 liabilities when such
amounts 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). To the
Company’s Knowledge, there are no facts or circumstances which lead the Company
to believe that it will file for reorganization or liquidation under the
bankruptcy or reorganization laws of any jurisdiction within one year from the
Closing Date.

 

5. Representations and Warranties of the Investors. Each Investor hereby
severally, and not jointly, represents and warrants to the Company that:

 

5.1 Organization and Existence. Such Investor is a validly existing corporation,
limited partnership or limited liability company, if other than an individual,
and has all requisite corporate, partnership or limited liability company or
other applicable power and authority to invest in the Securities pursuant to
this Agreement.

5.2 Authorization. The execution, delivery and performance by such Investor of
the Transaction Documents to which such Investor is a party have been duly
authorized and each will constitute the valid and legally binding obligation of
such Investor, enforceable against such Investor in accordance with their
respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors’ rights generally.

 

17

 

 

5.3 Purchase Entirely for Own Account. The Securities to be received by such
Investor hereunder will be acquired for such Investor’s own account, not as
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the 1933 Act, and such Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same in
violation of the 1933 Act without prejudice, however, to such Investor’s right
at all times to sell or otherwise dispose of all or any part of such Securities
in compliance with applicable federal and state securities laws. Nothing
contained herein shall be deemed a representation or warranty by such Investor
to hold the Securities for any period of time. Such Investor is not a
broker-dealer registered with the SEC under the 1934 Act or an entity engaged in
a business that would require it to be so registered.

 

5.4 Investment Experience. Such Investor acknowledges that it can bear the
economic risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated hereby.

 

5.5 Disclosure of Information. Such Investor has had an opportunity to receive
all information related to the Company requested by it and to ask questions of
and receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Securities. Such Investor
acknowledges receipt of copies of the SEC Filings. Neither such inquiries nor
any other due diligence investigation conducted by such Investor shall modify,
limit or otherwise affect such Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement.

 

5.6 Restricted Securities. Such Investor understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.

 

5.7 Legends. It is understood that, except as provided below, certificates
evidencing the Securities may bear the following or any similar legend:

 

(a) “The securities represented hereby have not been registered with the
Securities and Exchange Commission or the securities commission of any state in
reliance upon an exemption from registration under the Securities Act of 1933,
as amended, and, accordingly, may not be transferred unless (i) such securities
have been registered for sale pursuant to the Securities Act of 1933, as
amended, (ii) such securities may be sold pursuant to Rule 144, or (iii) the
Company has received an opinion of counsel reasonably satisfactory to it that
such transfer may lawfully be made without registration under the Securities Act
of 1933, as amended.”

 

(b) If required by the authorities of any state in connection with the issuance
of sale of the Securities, the legend required by such state authority.

 

18

 

 

5.8 Investor Status. At the time such Investor was offered the Securities, it
was, and at the date hereof it is, an “accredited investor” as defined in Rule
501(a) under the 1933 Act. Such Investor is not a registered broker dealer
registered under Section 15(a) of the Exchange Act, or a member of the Financial
Industry Regulatory Authority, Inc. (“FINRA”) or an entity engaged in the
business of being a broker dealer. Except as otherwise disclosed in writing to
the Company on or prior to the date of this Agreement, such Investor is not
affiliated with any broker dealer registered under Section 15(a) of the 1934
Act, or a member of FINRA or an entity engaged in the business of being a broker
dealer. Such Investor maintains its principal executive office at the location
specified on its signature page hereto. The Investor acknowledges that it will
be required to represent that it is an “accredited investor” as defined in Rule
501(a) under the 1933 Act upon the exercise of the Warrant (other than pursuant
to a “cashless exercise” and prior to the issuance of the Warrant Shares to the
Investor.

 

5.9 No General Solicitation. To its knowledge, such Investor did not learn of
the investment in the Securities as a result of any general solicitation or
general advertising. Such Investor was not solicited or induced to participate
in the transactions contemplated hereby by, nor did such Investor learn of the
transactions contemplated hereby from, the Abandoned Offering Registration
Statement.

 

5.10 Brokers and Finders. Except as set forth in Section 9.5 and on Schedule
4.21, no Person will have, as a result of the transactions contemplated by the
Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of such Investor.

 

5.11 Prohibited Transactions. Since the earlier of (a) such time as such
Investor was first contacted by the Company or any other Person acting on behalf
of the Company regarding the transactions contemplated hereby or (b) thirty (30)
days prior to the date hereof, neither such Investor nor any Affiliate of such
Investor which (x) had knowledge of the transactions contemplated hereby, (y)
has or shares discretion relating to such Investor’s investments or trading or
information concerning such Investor’s investments, including in respect of the
Securities, or (z) is subject to such Investor’s review or input concerning such
Affiliate’s investments or trading (collectively, “Trading Affiliates”) has,
directly or indirectly, effected or agreed to effect any short sale, whether or
not against the box, established any “put equivalent position” (as defined in
Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock, granted any
other right (including, without limitation, any put or call option) with respect
to the Common Stock or with respect to any security that includes, relates to or
derived any significant part of its value from the Common Stock or otherwise
sought to hedge its position in the Securities (each, a “Prohibited
Transaction”).

 

5.12 Notice of Abandoned Offering. Such Investor acknowledges that it has read
and understood the facts set forth in Section 4.23 or has received notice from
the Company of the facts set forth in Section 4.23 in connection with the
Abandoned Offering and the Offering contemplated by this Agreement. Such
Investor acknowledges that is not being provided the protections of Section 11
of the 1933 Act in connection with this Offering.

 

19

 

 

5.13 The Agent. Such Investor understands that the Agent has acted solely as the
agent of the Company in the placement of the Securities, and that the Agent
makes no representation or warranty with regard to the merits of this
transaction or as to the accuracy of any information such Investor may have
received in connection therewith. Such Investor acknowledges that it has not
relied on any information or advice furnished by or on behalf of the Agent.

 

6. Conditions to Closing.

 

6.1 Conditions to the Investors’ Obligations. The obligation of each Investor to
purchase the Shares and the Warrants at the Closing is subject to the
fulfillment to such Investor’s satisfaction, on or prior to the Closing Date, of
the following conditions, any of which may be waived by such Investor (as to
itself only):

 

(a) The representations and warranties made by the Company in Section 4 hereof
qualified as to materiality shall be true and correct at all times prior to and
on the Closing Date, except to the extent any such representation or warranty
expressly speaks as of an earlier date, in which case such representation or
warranty shall be true and correct as of such earlier date, and, the
representations and warranties made by the Company in Section 4 hereof not
qualified as to materiality shall be true and correct in all material respects
at all times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Company shall have performed in all
material respects all obligations and covenants herein required to be performed
by it on or prior to the Closing Date.

 

(b) The Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase and sale of the Securities and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall be in
full force and effect.

 

(c) The Company shall have executed and delivered the Registration Rights
Agreement.

 

(d) The Company shall have received from the Investors gross proceeds from the
sale of the Shares and Warrants as contemplated hereby of Six Million Dollars
($6,000,000).

 

(e) No judgment, writ, order, injunction, award or decree of or by any court, or
judge, justice or magistrate, including any bankruptcy court or judge, or any
order of or by any governmental authority, shall have been issued, and no action
or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents.

 

(f) The Company shall have delivered a Certificate, executed on behalf of the
Company by its Chief Executive Officer or its Chief Financial Officer, dated as
of the Closing Date, certifying to the fulfillment of the conditions specified
in subsections (a), (b), (e) and (i) of this Section 6.1.

 

20

 

 

(g) The Company shall have delivered a Certificate, executed on behalf of the
Company by its Secretary, dated as of the Closing Date, certifying the
resolutions adopted by the Board of Directors of the Company approving the
transactions contemplated by this Agreement and the other Transaction Documents
and the issuance of the Securities, certifying the current versions of the
Articles of Incorporation and Bylaws of the Company and certifying as to the
signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company.

 

(h) The Investors shall have received an opinion from Raines Feldman LLP, the
Company's counsel, dated as of the Closing Date, in form and substance
reasonably acceptable to the Investors and addressing such legal matters as the
Investors may reasonably request.

 

(i) No stop order or suspension of trading shall have been imposed by OTCQB, the
SEC or any other governmental or regulatory body with respect to public trading
in the Common Stock.

 

6.2 Conditions to Obligations of the Company. The Company's obligation to sell
and issue the Shares and the Warrants at the Closing is subject to the
fulfillment to the satisfaction of the Company on or prior to the Closing Date
of the following conditions, any of which may be waived by the Company:

 

(a) The representations and warranties made by the Investors in Section 5
hereof, other than the representations and warranties contained in Sections 5.3,
5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the “Investment Representations”), shall be
true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investment
Representations shall be true and correct in all respects when made, and shall
be true and correct in all respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investors shall have
performed in all material respects all obligations and covenants herein required
to be performed by them on or prior to the Closing Date.

 

(b) The Investors shall have executed and delivered the Registration Rights
Agreement.

 

(c) The Investors shall have delivered the Purchase Price to the Company.

 

6.3 Termination of Obligations to Effect Closing; Effects.

 

(a) The obligations of the Company, on the one hand, and the Investors, on the
other hand, to effect the Closing shall terminate as follows:

 

(i) Upon the mutual written consent of the Company and the Major Investors;

 

21

 

 

(ii) By the Company if any of the conditions set forth in Section 6.2 shall have
become incapable of fulfillment, and shall not have been waived by the Company;

 

(iii) By an Investor (with respect to itself only) if any of the conditions set
forth in Section 6.1 shall have become incapable of fulfillment, and shall not
have been waived by the Investor; or

 

(iv) By either the Company or any Investor (with respect to itself only) if the
Closing has not occurred on or prior to June 30, 2015;

 

provided, however, that, except in the case of clause (i) above, the party
seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement or the other Transaction Documents if such breach
has resulted in the circumstances giving rise to such party’s seeking to
terminate its obligation to effect the Closing.

 

(b) In the event of termination by the Company or any Investor of its
obligations to effect the Closing pursuant to this Section 6.3, written notice
thereof shall forthwith be given to the other Investors by the Company and the
other Investors shall have the right to terminate their obligations to effect
the Closing upon written notice to the Company. Nothing in this Section 6.3
shall be deemed to release any party from any liability for any breach by such
party of the terms and provisions of this Agreement or the other Transaction
Documents or to impair the right of any party to compel specific performance by
any other party of its obligations under this Agreement or the other Transaction
Documents.

 

7. Covenants and Agreements of the Company.

 

7.1 Reservation of Common Stock. The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of providing for the exercise of the Warrants, such number of shares
of Common Stock as shall from time to time equal the number of shares sufficient
to permit the exercise of the Warrants issued pursuant to this Agreement in
accordance with their respective terms, and on a cash basis.

 

7.2 Reports. The Company will furnish to the Investors and/or their assignees
such information relating to the Company and its Subsidiaries as from time to
time may reasonably be requested by the Investors and/or their assignees;
provided, however, that the Company shall not disclose material nonpublic
information to the Investors, or to advisors to or representatives of the
Investors, unless prior to disclosure of such information the Company identifies
such information as being material nonpublic information and provides the
Investors, such advisors and representatives with the opportunity to accept or
refuse to accept such material nonpublic information for review and any Investor
wishing to obtain such information enters into an appropriate confidentiality
agreement with the Company with respect thereto.

 

22

 

 

7.3 No Conflicting Agreements. The Company will not take any action, enter into
any agreement or make any commitment that would conflict or interfere in any
material respect with the Company’s obligations to the Investors under the
Transaction Documents.

 

7.4 Insurance. The Company shall not materially reduce the insurance coverages
described in Section 4.19.

 

7.5 Compliance with Laws. The Company will comply in all material respects with
all applicable laws, rules, regulations, orders and decrees of all governmental
authorities.

 

7.6 Listing of Underlying Shares and Related Matters. Promptly following the
date hereof, the Company shall take all necessary action to cause the Shares and
the Warrant Shares to be included for quotation on the OTCQB no later than the
Closing Date. Further, if the Company applies to have its Common Stock or other
securities traded on any other stock exchange or market, it shall include in
such application the Shares and the Warrant Shares and will take such other
action as is necessary to cause such Common Stock to be so listed. The Company
will use commercially reasonable efforts to continue the public listing and
trading of its Common Stock and, in accordance, therewith, will use commercially
reasonable efforts to comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of such market or
exchange as the Common Stock is then listed or quoted, as applicable.

 

7.7 Termination of Covenants. The provisions of Section 7.2 shall terminate and
be of no further force and effect on the date on which the Company’s obligations
under the Registration Rights Agreement to register or maintain the
effectiveness of any registration covering the Registrable Securities (as such
term is defined in the Registration Rights Agreement) shall terminate.

 

23

 

 

7.8 Removal of Legends. In connection with any sale or disposition of the
Securities by an Investor pursuant to Rule 144 or pursuant to any other
exemption under the 1933 Act such that the purchaser acquires freely tradable
shares and upon compliance by the Investor with the requirements of this
Agreement, the Company shall or, in the case of Common Stock, shall cause the
transfer agent for the Common Stock (the “Transfer Agent”) to issue replacement
certificates without restrictive legends. In addition, upon the earlier of (i)
the effectiveness of the registration for resale pursuant to the Registration
Rights Agreement or (ii) the Shares becoming freely tradable by a non-affiliate
pursuant to Rule 144, the Company shall (A) deliver to the Transfer Agent
irrevocable instructions that the Transfer Agent shall reissue a certificate
without legends upon receipt by such Transfer Agent of the legended certificates
for such shares, together with, solely with respect to a request to remove
restrictive legends pursuant to Rule 144, customary representations by the
Investor that the requisite holding period under Rule 144 with respect to the
shares of Common Stock represented thereby has been met and that the Investor is
not, and has not been, an Affiliate of the Company within a the ninety day
period preceding the proposed legend removal date, and (B) cause its counsel to
deliver to the Transfer Agent an opinion with respect to the Shares, and with
respect to the shares of Common Stock issued or issuable pursuant to the
Warrants, held by the requesting Investor to the effect that the removal of such
legends on such Shares and shares of Common Stock in such circumstances may be
effected under the 1933 Act. The Investor agrees to deliver the representations
under clause (ii) of the foregoing sentence in form and substance reasonably
requested by counsel to the Company. In addition, upon the reasonable request of
the Company, the Investor will represent that it has, or will comply with, the
prospectus delivery requirements (including any exemptions therefrom) for the
sale of the Shares and shares of Common Stock issuable pursuant to the Warrants
under the Registration Statement, if applicable. From and after the earlier of
such dates, upon an Investor’s written request, the Company shall promptly cause
certificates evidencing the Investor’s Securities to be replaced with
certificates which do not bear such restrictive legends, and Warrant Shares
subsequently issued upon due exercise of the Warrants shall not bear such
restrictive legends provided the provisions of either clause (i) or clause (ii)
above, as applicable, are satisfied with respect to such Warrant Shares. When
the Company is required to cause an unlegended certificate to replace a
previously issued legended certificate, if: (1) the unlegended certificate is
not delivered to an Investor within three (3) Trading Days (as defined in the
Registration Rights Agreement) of submission by that Investor of a legended
certificate and supporting documentation to the Transfer Agent as provided above
and (2) prior to the time such unlegended certificate is received by the
Investor, the Investor, or any third party on behalf of such Investor or for the
Investor’s account, purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Investor of
shares represented by such certificate (a “Buy-In”), then the Company shall pay
in cash to the Investor (for costs incurred either directly by such Investor or
on behalf of a third party) the amount by which the total purchase price paid
for Common Stock as a result of the Buy-In (including brokerage commissions, if
any) exceeds the proceeds received by such Investor as a result of the sale to
which such Buy-In relates. The Investor shall provide the Company written notice
indicating the amounts payable to the Investor in respect of the Buy-In.

 

24

 

 

7.9 Subsequent Equity Sales; Registration Statements.

 

(a) From the date hereof until one hundred and eighty (180) days after the first
Effective Date (as defined in the Registration Rights Agreement) whereby all
Registrable Securities are registered for resale pursuant to an effective
registration statement, without the consent of the Required Investors, neither
the Company nor any Subsidiary shall issue shares of Common Stock or Common
Stock Equivalents. Notwithstanding the foregoing, the provisions of this Section
7.9(a) shall not apply to (i) the Warrant Shares, (ii) the issuance of Common
Stock or Common Stock Equivalents upon the conversion or exercise of any
securities of the Company or a Subsidiary outstanding on the date hereof,
provided that the terms of such security are not amended after the date hereof
to decrease the conversion, exchange or exercise price, change the term of any
such security or increase the Common Stock or Common Stock Equivalents
receivable upon the exercise, conversion or exchange thereof, (iii) the issuance
of any Common Stock or Common Stock Equivalents pursuant to any Company equity
incentive plan approved by the Company’s board of directors, as the same may be
amended from time to time, (iv) the issuance of Common Stock or Common Stock
Equivalents pursuant to the acquisition of another entity by merger, purchase of
substantially all of such entity’s assets or other reorganization or pursuant to
a joint venture agreement, provided that such issuances are approved by the
Company’s board of directors and further provided that any such issuance shall
only be to a Person (or to the equityholders of a Person) which is, itself or
through its subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall be intended to
provide to the Company substantial additional benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities, (v) the issuance of Common
Stock or Common Stock Equivalents to banks, equipment lessors or other financial
institutions, or to real property lessors, pursuant to a debt financing in
connection with equipment leasing or real property leasing transaction approved
by the Company’s board of directors, or (vi) the issuance of securities by
Exosome Sciences, Inc., a Nevada corporation, for fund-raising purposes
(collectively, the “Excluded Securities”). In addition, the Company may not file
a “shelf registration” for the purpose of future issuances of securities during
the time frame set forth in the first sentence of this paragraph. In the event
the Company’s Common Stock, the Shares and Warrant Shares are not listed for
trading on the Nasdaq Capital Market within ten (10) days after the Closing
Date, then the time periods set forth in Section 7.9(a)(i) and (ii) shall be
extended until the later of such date as stated above or until nine (9) months
after such listing is obtained.

 

(b) From the date hereof until such time as no Major Investor holds any
unexercised Warrants, the Company will not, without the consent of the Required
Investors, enter into any Equity Line of Credit or similar agreement nor issue
floating or Variable Priced Equity Linked Instruments nor any of the foregoing
or equity with price reset rights (subject to adjustment for stock splits,
distributions, dividends, recapitalizations and the like) (collectively, the
“Variable Rate Transaction”).  For purposes hereof, “Equity Line of Credit”
shall include any transaction involving a written agreement between the Company
and an investor or underwriter whereby the Company has the right to “put” its
securities to the investor or underwriter over an agreed period of time and at
an agreed price or price formula, and “Variable Priced Equity Linked
Instruments” shall include: (A) any debt or equity securities which are
convertible into, exercisable or exchangeable for, or carry the right to receive
additional shares of Common Stock either (1) at any conversion, exercise or
exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for Common Stock at any time after the initial issuance
of such debt or equity security, or (2) with a fixed conversion, exercise or
exchange price that is subject to being reset at some future date at any time
after the initial issuance of such debt or equity security due to a change in
the market price of the Company’s Common Stock since date of initial issuance,
and (B) any amortizing convertible security which amortizes prior to its
maturity date, where the Company is required or has the option to (or any
investor in such transaction has the option to require the Company to) make such
amortization payments in shares of Common Stock which are valued at a price that
is based upon and/or varies with the trading prices of or quotations for Common
Stock at any time after the initial issuance of such debt or equity security
(whether or not such payments in stock are subject to certain equity
conditions).  For purposes of determining the total consideration for a
convertible instrument (including a right to purchase equity of the Company)
issued, subject to an original issue or similar discount or which principal
amount is directly or indirectly increased after issuance, the consideration
will be deemed to be the actual net cash amount received by the Company in
consideration of the original issuance of such convertible instrument. The
restrictions contained in this Section 7.9(b) shall not apply in connection with
the issuance of any Excluded Securities. For the avoidance of doubt, the
issuance of a security which is subject to anti-dilution protections where the
conversion, exercise or exchange price is subject to adjustment as a result of
stock splits, reverse stock splits and other similar recapitalization or
reclassification events, shall not be deemed to be a “Variable Rate
Transaction.”

 

25

 

 

(c) The Company shall not, and shall use its commercially reasonable efforts to
ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the 1933 Act) that will be integrated with the offer or sale of the
Securities in a manner that would require the registration under the 1933 Act of
the sale of the Securities to the Investors, or that will be integrated with the
offer or sale of the Securities for purposes of the rules and regulations of any
trading market such that it would require stockholder approval prior to the
closing of such other transaction unless stockholder approval is obtained before
the closing of such subsequent transaction.

 

(d) The Company shall not, from the date hereof until one hundred and eighty
(180) days after the first Effective Date upon which all Registrable Securities
are registered for resale pursuant to an effective registration statement,
absent the prior written consent of the Required Investors, prepare and file
with the SEC a registration statement relating to an offering for its own
account or the account of others under the 1933 Act of any of its equity
securities, other than any registration statement or post-effective amendment to
a registration statement (or supplement thereto) (i) relating to the Company’s
employee benefit plans registered on Form S-8, (ii) in connection with an
acquisition, on Form S-4, or (iii) relating to the Registration Statement on
Form S-1 (and any amendments thereto) filed by the Company on December 31, 2014.

 

(e) From the date hereof until the earlier of (i) the two-year anniversary of
the Closing Date and (ii) the date upon which the Major Investors hold 20% or
less of the Securities purchased hereunder, the Company shall be prohibited from
effecting or entering into any transaction without the consent of the Required
Investors, for the issuance of Common Stock or Common Stock Equivalents at a per
share price of Common Stock less than the per Share price paid hereunder,
subject to adjustment for stock splits, dividends, distributions and similar
events. The restrictions contained in this Section 7.9(e) shall not apply in
connection with the issuance of any Excluded Securities.

 

7.10 Equal Treatment of Investors. 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 to which such provision is
applicable. For clarification purposes, this provision constitutes a separate
right granted to each Investor by the Company and negotiated separately by each
Investor, and is intended for the Company to treat the Investors as a class and
shall not in any way be construed as the Investors acting in concert or as a
group with respect to the purchase, disposition or voting of Securities or
otherwise.

 

7.11 Reporting Status. Until the date that no Warrants remain outstanding (the
“Reporting Period”), the Company shall timely file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate
its status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rule and regulations thereunder would no longer require or
otherwise permit such termination.

26

 

 

7.12 Financial Information. The Company agrees to send the following to each
Major Investor during the Reporting Period (i) unless the following are filed
with the SEC through EDGAR and are available to the public through the EDGAR
system, within one (1) Business Day after the filing thereof with the SEC, a
copy of its Annual Reports on Form 10-K, any Quarterly Reports on Form 10-Q, any
Current Reports on Form 8-K (or any analogous reports under the 1934 Act) and
any registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act, (ii) unless the following are filed with the SEC
through EDGAR and are available to the public through the EDGAR system or posted
to the Company’s website, on the same day as the release thereof, facsimile or
e-mailed copies of all press releases issued by the Company or any of its
Subsidiaries, and (iii) copies of any notices and other information made
available or given to the shareholders of the Company generally,
contemporaneously with the making available or giving thereof to the
shareholders.

 

7.13 Public Information. At any time during the period commencing from the six
(6) month anniversary of the Closing Date and ending at such time that all of
the Securities, if a registration statement is not available for the resale of
all of the Securities, may be sold without restriction or limitation pursuant to
Rule 144 and without the requirement to be in compliance with Rule 144(c)(1), if
the Company shall (i) fail for any reason to satisfy the requirements of Rule
144(c)(1), including, without limitation, the failure to satisfy the current
public information requirement under Rule 144(c) or (ii) if the Company has ever
been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the
future, and the Company shall fail to satisfy any condition set forth in Rule
144(i)(2) (a "Public Information Failure") then, as partial relief for the
damages to any Investors that still holds Securities by reason of any such delay
in or reduction of its ability to sell the Securities (which remedy shall not be
exclusive of any other remedies available at law or in equity), the Company
shall pay to each such holder an amount in cash equal to two percent (2.0%) of
the aggregate Purchase Price on the day of a Public Information Failure and on
every thirtieth day (pro-rated for periods totaling less than thirty days)
thereafter until the earlier of (i) the date such Public Information Failure is
cured and (ii) such time that such public information is no longer required
pursuant to Rule 144. The payments to which an Investor shall be entitled
pursuant to this Section 7.13 are referred to herein as "Public Information
Failure Payments." Public Information Failure Payments shall be paid on the
earlier of (I) the last day of the calendar month during which such Public
Information Failure Payments are incurred and (II) the third Business Day after
the event or failure giving rise to the Public Information Failure Payments is
cured. In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear
interest at the rate of 1.5% per month (prorated for partial months) until paid
in full.

 

7.14 Right of Participation.

 

(a) For the purposes of this Section 7.14, the following definitions shall
apply.

 

(i) "Convertible Securities" means any stock or securities (other than Options)
convertible into or exercisable or exchangeable for shares of Common Stock.

 

(ii) "Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.

 

(iii) "Common Stock Equivalents" means, collectively, Options and Convertible
Securities.

 

27

 

 

(iv) “Subsequent Placement” means any offer, sale, grant or any option to
purchase or other disposition of any of its or its Subsidiaries' debt, equity or
equity equivalent securities, including without limitation any debt, preferred
stock or other instrument or security that is, at any time during its life and
under any circumstances, convertible into or exchangeable or exercisable for
Common Stock or Common Stock Equivalents.

 

(b) From the Closing Date until the two year anniversary of the Closing Date,
the Company will not, directly or indirectly, effect any Subsequent Placement
unless the Company shall have first complied with this Section 7.14(b).

 

(i) The Company shall deliver to each Major Investor an irrevocable written
notice (the "Offer Notice") of any proposed or intended issuance or sale or
exchange (the "Offer") of the securities being offered (the "Offered
Securities") in a Subsequent Placement, which Offer Notice shall (w) identify
and describe the Offered Securities, (x) describe the price and other terms upon
which they are to be issued, sold or exchanged, and the number or amount of the
Offered Securities to be issued, sold or exchanged, (y) identify the persons or
entities (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (z) offer to issue and sell to or
exchange with such Major Investors at least seventy percent (70%) of the Offered
Securities, allocated among such Major Investors (a) based on such Major
Investor’s pro rata portion of the number of shares of Common Stock purchased
hereunder by Major Investors (the "Basic Amount"), and (b) with respect to each
Major Investor that elects to purchase its Basic Amount, any additional portion
of the Offered Securities attributable to the Basic Amounts of other Major
Investors as such Major Investor shall indicate it will purchase or acquire
should the other Major Investors subscribe for less than their Basic Amounts
(the “Undersubscription Amount”), which process shall be repeated until the
Major Investors shall have an opportunity to subscribe for any remaining
Undersubscription Amount.

 

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

 

28

 

 

(iii) The Company shall have twenty (20) Business Days from the expiration of
the Offer Period above to offer, issue, sell or exchange all or any part of such
Offered Securities as to which a Notice of Acceptance has not been given by the
Major Investors (the "Refused Securities") pursuant to a definitive agreement
(the "Subsequent Placement Agreement") but only to the offerees described in the
Offer Notice (if so described therein) and only upon terms and conditions
(including, without limitation, unit prices and interest rates) that are not
more favorable to the acquiring Person or Persons or less favorable to the
Company than those set forth in the Offer Notice and (ii) to publicly announce
(a) the execution of such Subsequent Placement Agreement, and (b) either (x) the
consummation of the transactions contemplated by such Subsequent Placement
Agreement or (y) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent
Placement Agreement and any documents contemplated therein filed as exhibits
thereto.

 

(iv) In the event the Company shall propose to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in
Section 7.14(b)(iii) above), then each Major Investor may, at its sole option
and in its sole discretion, reduce the number or amount of the Offered
Securities specified in its Notice of Acceptance to an amount that shall be not
less than the number or amount of the Offered Securities that such Major
Investor elected to purchase pursuant to Section 7.14(b)(ii) above multiplied by
a fraction, (i) the numerator of which shall be the number or amount of Offered
Securities the Company actually proposes to issue, sell or exchange (including
Offered Securities to be issued or sold to Major Investors pursuant to Section
7.14(b)(iii) above prior to such reduction) and (ii) the denominator of which
shall be the original amount of the Offered Securities. In the event that any
Major Investor so elects to reduce the number or amount of Offered Securities
specified in its Notice of Acceptance, the Company may not issue, sell or
exchange more than the reduced number or amount of the Offered Securities unless
and until such securities have again been offered to the Major Investors in
accordance with Section 7.14(b)(i) above.

 

(v) Upon the closing of the issuance, sale or exchange of all or less than all
of the Refused Securities, the Major Investors shall acquire from the Company,
and the Company shall issue to the Major Investors, the number or amount of
Offered Securities specified in the Notices of Acceptance, as reduced pursuant
to Section 7.14(b)(iv) above if the Major Investors have so elected, upon the
terms and conditions specified in the Offer. The purchase by the Major Investors
of any Offered Securities is subject in all cases to the preparation, execution
and delivery by the Company and the Major Investors of a purchase agreement
relating to such Offered Securities reasonably satisfactory in form and
substance to the Major Investors and their counsel.

 

29

 

 

(vi) Any Offered Securities not acquired by the Major Investors or other persons
in accordance with Section 7.14(b)(iii) above may not be issued, sold or
exchanged until they are again offered to the Major Investors under the
procedures specified in this Agreement.

 

(vii) The Company and the Major Investors agree that if any Major Investor
elects to participate in the Offer, (x) neither the Subsequent Placement
Agreement with respect to such Offer nor any other transaction documents related
thereto (collectively, the "Subsequent Placement Documents") shall include any
term or provisions whereby any Major Investor shall be required to agree to any
restrictions in trading as to any securities of the Company owned by such Major
Investor prior to such Subsequent Placement, and (y) any registration rights set
forth in such Subsequent Placement Documents shall be similar in all material
respects to the registration rights contained in the Registration Rights
Agreement.

 

(viii) Notwithstanding anything to the contrary in this Section 7.14 and unless
otherwise agreed to by the Major Investors, the Company shall either confirm in
writing to the Major Investors that the transaction with respect to the
Subsequent Placement has been abandoned or shall publicly disclose its intention
to issue the Offered Securities, in either case in such a manner such that the
Major Investors will not be in possession of material non-public information, by
the fifth (5th) Business Day following delivery of the Offer Notice. If by the
fifth (5th) Business Day following delivery of the Offer Notice no public
disclosure regarding a transaction with respect to the Offered Securities has
been made, and no notice regarding the abandonment of such transaction has been
received by the Major Investors, such transaction shall be deemed to have been
abandoned and the Major Investors shall not be deemed to be in possession of any
material, non-public information with respect to the Company. Should the Company
decide to pursue such transaction with respect to the Offered Securities, the
Company shall provide the Major Investors with another Offer Notice and the
Major Investors will again have the right of participation set forth in this
Section 7.14. The Company shall not be permitted to deliver more than one such
Offer Notice to the Major Investors in any 60 day period.

 

The restrictions contained in this Section 7.14(b) shall not apply in connection
with the issuance of any Excluded Securities.

 

(c) The Company shall not effect any exercise of the rights granted in this
Section 7.14 of this Agreement by the Lead Investor, and the Lead Investor shall
not have the right to exercise any portion of such rights granted in this
Section 7.14 to the extent that after giving effect to such exercise, the Lead
Investor (together with the Lead Investor’s Affiliates, and any other Persons
acting as a group together with the Lead Investor or any of the Lead Investor’s
Affiliates), would beneficially own in excess of the Maximum Percentage (as
defined in the Warrant), applied in the manner set forth in the Warrant.

 

30

 

 

7.15 Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, in the
form of Exhibit C attached hereto (the "Irrevocable Transfer Agent
Instructions") to issue certificates or credit shares to the applicable balance
accounts at DTC, registered in the name of each Investor or its respective
nominee(s), for the Warrant Shares issued at the Closing or pursuant to the
terms of the Warrants in such amounts as specified from time to time by each
Investor to the Company upon exercise of the Warrants. The Company warrants that
no instruction other than the Irrevocable Transfer Agent Instructions referred
to in this Section 5(b), and stop transfer instructions to give effect to
Section 5.7 hereof, will be given by the Company to its transfer agent, and that
the Securities shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement and the other
Transaction Documents, and to the extent permitted by law. If an Investor
effects a sale, assignment or transfer of the Securities in accordance with
Section 5.7, the Company shall permit the transfer and shall promptly instruct
its transfer agent to issue one or more certificates or credit shares to the
applicable balance accounts at DTC in such name and in such denominations as
specified by such Investor to effect such sale, transfer or assignment. In the
event that such sale, assignment or transfer involves the Warrant Shares sold,
assigned or transferred pursuant to an effective registration statement or
pursuant to Rule 144, the transfer agent shall issue such Securities to the
Investor, assignee or transferee, as the case may be, without any restrictive
legend. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to an Investor. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 7.15 will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 7.15, that an
Investor shall be entitled, in addition to all other available remedies, to an
order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any
bond or other security being required.

 

7.16 Pledged Securities. The Company acknowledges and agrees that an Investor
may from time to time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or all of the
Securities to a financial institution that is an “accredited investor” as
defined in Rule 501(a) under the Securities Act and who agrees to be bound by
the provisions of this Agreement and, if required under the terms of such
arrangement, such Investor may transfer pledge or secure Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At such Investor’s expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or
transfer of the Securities, including, if the Securities are subject to
registration pursuant to a registration statement, the preparation and filing of
any required prospectus supplement under Rule 424(b)(3) under the Securities Act
or other applicable provision of the Securities Act to appropriately amend the
list of selling stockholders thereunder.

 

7.17 DTC Program. At all times that Warrants are outstanding, the Company shall
employ as the transfer agent for the Common Stock and Warrant Shares a
participant in the Depository Trust Company Automated Securities Transfer
Program and cause the Common Stock to be transferable pursuant to such program.

 

 

31

 

 

8. Survival and Indemnification.

 

8.1 Survival. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing of the transactions
contemplated by this Agreement.

 

8.2 Indemnification. The Company agrees to indemnify and hold harmless each
Investor and its Affiliates and their respective directors, officers, trustees,
members, managers, employees and agents, and their respective successors and
assigns (each, an “Indemnitee” and collectively, the “Indemnitees”), from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses (including without
limitation reasonable attorney fees and disbursements and other expenses
incurred in connection with investigating, preparing or defending any action,
claim or proceeding, pending or threatened and the costs of enforcement thereof)
to which such Person may become subject as a result of (a) any breach of
representation, warranty, covenant or agreement made by or to be performed on
the part of the Company under the Transaction Documents or (b) any cause of
action, suit or claim brought or made against any Indemnitee by a third party
(including for these purposes a derivative action brought on behalf of the
Company) and arising out of or resulting from (i) the execution, delivery,
performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities, (iii) any
disclosure made by such Investor pursuant to Section 7.12 or Section 7.13, or
(iv) the status of such Investor or holder of the Securities as an investor in
the Company pursuant to the transactions contemplated by the Transaction
Documents, and will reimburse any such Person for all such amounts as they are
incurred by such Person.

 

8.3 Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further, that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.

 

32

 

 

9. Miscellaneous.

 

9.1 Successors and Assigns. This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Major Investors, as
applicable, provided, however, that an Investor may assign its rights and
delegate its duties hereunder in whole or in part to an Affiliate or to a third
party acquiring some or all of its Securities in a transaction complying with
applicable securities laws without the prior written consent of the Company or
the Major Investors. The provisions of this Agreement shall inure to the benefit
of and be binding upon the respective permitted successors and assigns of the
parties. Without limiting the generality of the foregoing, in the event that the
Company is a party to a merger, consolidation, share exchange or similar
business combination transaction in which the Common Stock is converted into the
equity securities of another Person, from and after the effective time of such
transaction, such Person shall, by virtue of such transaction, be deemed to have
assumed the obligations of the Company hereunder, the term “Company” shall be
deemed to refer to such Person and the term “Shares” shall be deemed to refer to
the securities received by the Investors in connection with such transaction.
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.

 

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

 

9.3 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

9.4 Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively given
as hereinafter described (i) if given by personal delivery, then such notice
shall be deemed given upon such delivery, (ii) if given by facsimile or
electronic mail, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one Business Day after
delivery to such carrier. All notices shall be addressed to the party to be
notified at the address as follows, or at such other address as such party may
designate by ten days’ advance written notice to the other party:

 

33

 

 

If to the Company:

 

Aethlon Medical, Inc.

9635 Granite Ridge Drive, Suite 100

San Diego, CA 92123

Attention: James Frakes, CFO

Fax: 858-272-2738

E-mail: jfrakes@aethlonmedical.com

 

With a copy to:

 

Raines Feldman LLP

9720 Wishire Boulevard, 5th Floor

Los Angeles, CA 90212

Attention: Jennifer Post

Fax: (310) 499-5922

E-mail: jpost@raineslaw.com

 

If to the Investors:

 

to the addresses set forth on the signature pages hereto.

 

With a copy to:

 

Grushko & Mittman, P.C.

515 Rockaway Avenue

Valley Stream, NY 11581

Attention: Barbara R. Mittman, Esq.

Fax: (212) 695-3575

E-mail: barbara@grushkomittman.com

 

9.5 Expenses. At the Closing, the Company has agreed to pay Grushko & Mittman,
P.C. for the legal fees in connection with the Closing of some, but not all, of
the Investors in the amount of $20,000 ($7,500 of which has been paid). Except
as expressly set forth in the Transaction Documents and on Schedule 4.21, each
party shall pay the fees and expenses of its advisers, 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 reimburse the Major Investors upon demand for all
reasonable out-of-pocket expenses incurred by the Major Investors, including
without limitation reimbursement of attorneys’ fees and disbursements, in
connection with any amendment, modification or waiver of this Agreement or the
other Transaction Documents. In the event that legal proceedings are commenced
by any party to this Agreement against another party to this Agreement in
connection with this Agreement or the other Transaction Documents, the party or
parties which do not prevail in such proceedings shall severally, but not
jointly, pay their pro rata share of the reasonable attorneys’ fees and other
reasonable out-of-pocket costs and expenses incurred by the prevailing party in
such proceedings. The Company shall pay all Transfer Agent fees (including,
without limitation, any fees required for same-day processing of any instruction
letter delivered by the Company and any conversion or exercise notice delivered
by an Investor), stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Investors.

 

9.6 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Required Investors. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Securities purchased under this Agreement at the time outstanding,
each future holder of all such Securities, and the Company.

 

34

 

 

9.7 Disclosure of Transactions and Other Material Information. On or before 9:00
a.m., New York City time on June 24, 2015, the Company shall issue a press
release reasonably acceptable to the Required Investors and, on or prior to 4:00
p.m., New York City time, on June 24, 2015, file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act and attaching the material
Transaction Documents (including, without limitation, this Agreement (and all
schedules and exhibits to this Agreement), the Form of Warrant and the
Registration Rights Agreement, as exhibits to such filing (including all
attachments), the "8-K Filing"). From and after the public release of the Press
Release, no Major Investor shall be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or any of their
respective officers, directors, affiliates, employees or agents, that is not
disclosed in the Press Release. In addition, effective upon the public release
of the Press Release, the Company acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether written or
oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one hand, and any
of the Major Investors or any of their affiliates, on the other hand, shall
terminate. The Company shall not, and shall cause each of its Subsidiaries and
its and each of their respective officers, directors, affiliates, employees and
agents, not to, provide any Major Investor with any material, nonpublic
information regarding the Company or any of its Subsidiaries from and after the
date hereof without the express prior written consent of such Major Investor. If
a Major Investor has, or believes it has, received any such material, nonpublic
information regarding the Company or any of its Subsidiaries from the Company,
any of its Subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, it may provide the Company with written notice
thereof. The Company shall, within two (2) Trading Days of receipt of such
notice, make public disclosure of such material, nonpublic information. In the
event of a breach of the foregoing covenant by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, affiliates,
employees and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Major Investor shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material, nonpublic information without the prior approval by the
Company, its Subsidiaries, or any of its or their respective officers,
directors, affiliates, employees or agents. No Major Investor shall have any
liability to the Company, its Subsidiaries, or any of its or their respective
officers, directors, affiliates, employees, shareholders or agents for any such
disclosure. To the extent that the Company delivers any material, non-public
information to a Major Investor without such Major Investor's consent, the
Company hereby covenants and agrees that such Major Investor shall not have any
duty of confidentiality to the Company, any of its Subsidiaries or any of their
respective officers, directors, employees, affiliates or agents with respect to,
or a duty not to trade on the basis of, such material, non-public information.
Subject to the foregoing, neither the Company, its Subsidiaries nor any Major
Investor shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Investor, to make
any press release or other public disclosure with respect to such transactions
(i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations (provided
that in the case of clause (i) each Major Investor shall be consulted by the
Company in connection with any such press release or other public disclosure
prior to its release). Except for the Registration Statement required to be
filed pursuant to the Registration Rights Agreement, without the prior written
consent of any applicable Investor, neither the Company nor any of its
Subsidiaries or affiliates shall disclose the name of such Investor in any
filing, announcement, release or otherwise.

 

35

 

 

9.8 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

 

9.9 Entire Agreement. This Agreement, including the Exhibits and the Disclosure
Schedules, and the other Transaction Documents constitute the entire agreement
among the parties hereof with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and thereof.

 

9.10 Further Assurances. The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be
required to carry out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.

 

9.11 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement 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 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 Agreement and the transactions contemplated hereby. 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 Agreement. Each of the parties hereto
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 AGREEMENT AND REPRESENTS
THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

 

 

36

 

 

9.12 Independent Nature of Investors' Obligations and Rights. The obligations of
each Investor under any Transaction Document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any
way for the performance of the obligations of any other Investor under any
Transaction Document. The decision of each Investor to purchase Securities
pursuant to the Transaction Documents has been made by such Investor
independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Investor acknowledges that no other Investor has acted as agent for such
Investor in connection with making its investment hereunder and that no Investor
will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction
Documents. Each Investor shall be entitled to independently protect and enforce
its rights, including, without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors
has been provided with the same Transaction Documents for the purpose of closing
a transaction with multiple Investors and not because it was required or
requested to do so by any Investor.

 

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

 

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

 

 

 

37

 

 

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

 

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

 

 

 

 

[signature page follows]

 

 

 

 

 

 

 

38

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

The Company: AETHLON MEDICAL, INC.                       By: /s/ James A.
Joyce            Name:  James A. Joyce     Title:    Chief  Executive Officer  

 

 

 

 

 

 

 

 

 

Aethlon Medical, Inc. – Securities Purchase Agreement

 

39

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  ALPHA CAPITAL ANSTALT                       By: /s/ Konrad Ackermann          
  Name: Konrad Ackermann     Title:   Director  

 

 

 

 

 

 

 

 

 

Aethlon Medical, Inc. – Securities Purchase Agreement

 

40

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  OSHER CAPITAL PARTNERS LLC                       By: /s/ Ari
Kluger                               Name:  Ari Kluger     Title:    General
Partner  

 

 

 

 

 

 

 

 

 

Aethlon Medical, Inc. – Securities Purchase Agreement

 

41

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

  

  EMPERY ASSET MASTER, LTD.,     By: Empery Asset Management, LP, its authorized
agent                       By: /s/ Brett Director                         
Name: Brett Director     Title:   General Counsel  

 

 

 

 

 

 

 

42

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  EMPERY TAX EFFICIENT, LP,     By: Empery Asset Management, LP, its authorized
agent                       By: /s/ Brett Director                        Name:
Brett Director     Title:   General Counsel  

 

 

 

 

 

 

 

43

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  EMPERY TAX EFFICIENT II, LP,     By: Empery Asset Management, LP, its
authorized agent                       By: /s/ Brett Director                   
Name: Brett Director     Title:   General Counsel  

 

 

 

 

44

 

   

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

 

LINCOLN PARK CAPITAL FUND, LLC,

By: Lincoln Park Capital, LLC

By: Rockledge Capital Corporation

                      By: /s/ Joshua Scheinfeld                   

Name: Joshua Scheinfeld

Title: President

 

 

 

 

 

 

 

 

 

45

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  FRONTIER VENTURES, LLC                       By: /s/ Munish
Sood                          

Name: Munish Sood

Title: Managing Member

 

 

 

 

 

 

 

46

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  JOSHUA S. BRODKIN                       /s/ Joshua S.
Brodkin                            Joshua S. Brodkin  

 

 

 

 

 

 

 

47

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  RAJENDRA P. GUPTA                       /s/ Rajendra P.
Gupta                            Rajendra P. Gupta  

 

 

 

 

 

 

 

 

48

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  GARY KARLIN AND JANE ZAMOST                       /s/ Gary Karlin, Jane Zamost
Joint Tenants         Gary Karlin, Jane Zamos  

 

 

 

 

 

 

 

 

49

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  KEVIN L. KUNKLE                       /s/ Kevin L.
Kunkle                           Kevin L. Kunkle  

 

 

 

 

 

 

50

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  JAY K. PATEL                       /s/ Jay K. Patel                          
Jay K. Patel

 

 

 

 

 

 

 

51

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  ADAM SACKSTEIN, MD                       /s/ Adam Sackstein                
Adam Sackstein  

 

 

 

 

 

 

 

52

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  CHIRAG S. SHAH                       /s/ Chirag S. Shah                      
  Chirag S. Shah

 

 

 

 

 

 

 

 

53

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  NIRAV K. SHAH                       /s/ Nirav K. Shah                    Nirav
K. Shah  

 

 

 

 

 

 

 

 

54

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  SYDNEY TYSON                       /s/ Sydney Tyson                 Sydney
Tyson  

 

:

 

 

 

 

55

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  CHRISTOPHER WETZEL                       /s/ Christopher Wetzel               
Christopher Wetze  

 

 

 

 

 

 

56

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

 

  MARSHALL WOLF                       /s/ Marshall Wolf                 
Marshall Wolf  

 

 

 

 

 

 

57