Exhibit 4.01


 


THIS WARRANT, AND THE SECURITIES ISSUABLE
UPON THE EXERCISE OF THIS WARRANT, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT”),
OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT, OR ANY APPLICABLE STATE SECURITIES LAWS.


 


WARRANT AGREEMENT


 


WSA 00173


 


To Purchase Shares of Common Stock of


 


NEURALSTEM, INC.


 


Dated as of October 28 2014 (the “Effective
Date”)


 


WHEREAS, Neuralstem, Inc., a Delaware corporation,
has entered into a Loan and Security Agreement dated as of March 22, 2013 which was subsequently amended on June 18, 2013 and October
28, 2014 (as amended, the “Loan Agreement”) with Hercules Technology III, L.P., a Delaware limited partnership,
(the “Warrantholder”);


 


WHEREAS, the Company (as defined below)
desires to grant to Warrantholder, in consideration for, among other things, the financial accommodations provided for in the Loan
Agreement, the right to purchase shares of Common Stock (as defined below) pursuant to this Warrant Agreement (the “Agreement”);


 


NOW, THEREFORE, in consideration of the
Warrantholder executing and delivering the Loan Agreement and providing the financial accommodations contemplated therein, and
in consideration of the mutual covenants and agreements contained herein, the Company and Warrantholder agree as follows:


 


SECTION 1.        GRANT
OF THE RIGHT TO PURCHASE COMMON STOCK.


 


For value received, the Company hereby
grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth,
to subscribe for and purchase, from the Company, an aggregate number of fully paid and non-assessable shares of the Common Stock
equal to the quotient derived by dividing (a) $200,000 by (b) the Exercise Price (defined below). As used herein, the following
terms shall have the following meanings:


 


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


 


“Company” means Neuralstem, Inc.,
a Delaware corporation, and any successor or surviving entity that assumes the obligations of the Company under this Agreement
pursuant to Section 8(a).


 


“Charter” means the Company’s
Articles of Incorporation, Certificate of Incorporation or other constitutional document, as may be amended from time to time.


 


“Common Stock” means the Company’s
common stock, $0.01 par value per share;


 


“Exercise Price” means $2.66, subject
to adjustment pursuant to Section 8.


 


“Merger Event” means any sale,
lease or other transfer of all or substantially all assets of the Company or any merger or consolidation involving the Company
in which the Company is not the surviving entity, or in which the outstanding shares of the Company’s capital stock are otherwise
converted into or exchanged for shares of Common stock, other securities or property of another entity;


 




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“Purchase Price” means, with respect
to any exercise of this Agreement, an amount equal to the Exercise Price as of the relevant time multiplied by the number of shares
of Common Stock requested to be exercised under this Agreement pursuant to such exercise; and


 


“SEC” means Securities and Exchange
Commission.


 


SECTION 2.        TERM
OF THE AGREEMENT.


 


Except as otherwise provided for herein, the term of this Agreement
and the right to purchase Common Stock as granted herein (the “Warrant) shall commence on the Effective Date and shall be
exercisable for a period ending five (5) years from the Effective Date.


 


SECTION 3.        EXERCISE
OF THE PURCHASE RIGHTS.


 


(a)          Exercise.
The purchase rights set forth in this Agreement are exercisable by the Warrantholder, in whole or in part, at any time, or from
time to time, prior to the expiration of the term set forth in Section 2, by tendering to the Company at its principal office a
notice of exercise in the form attached hereto as Exhibit I (the “Notice of Exercise”), duly completed
and executed. Promptly upon receipt of the Notice of Exercise and the payment of the Purchase Price in accordance with the terms
set forth below, and in no event later than three (3) days thereafter, the Company shall issue to the Warrantholder a certificate
for the number of shares of Common Stock purchased and shall execute the acknowledgment of exercise in the form attached hereto
as Exhibit II (the “Acknowledgment of Exercise”) indicating the number of shares which remain subject
to future purchases, if any.


 


The Purchase Price may be paid at the Warrantholder’s
election either (i) by cash or check, or (ii) by surrender of all or a portion of the Warrant for shares of Common Stock to be
exercised under this Agreement and, if applicable, an amended Agreement representing the remaining number of shares purchasable
hereunder, as determined below (“Net Issuance”). If the Warrantholder elects the Net Issuance method, the Company
will issue Common Stock in accordance with the following formula:


 


X = Y(A-B)


A


 


Where:                X
=         the number of shares of Common Stock to be issued to
the Warrantholder.


 


		Y =	the number of shares of Common Stock requested to be
exercised under this Agreement.



 


		A =	 the fair market value of one (1) share of Common
Stock at the time of issuance of such shares of Common Stock.



 


		B =	the Exercise Price.



 


For purposes of the above calculation, current fair market value
of Common Stock shall mean with respect to each share of Common Stock:


 


(i)          if
the Common Stock is traded on a securities exchange, the fair market value shall be deemed to be the product of (x) the average
of the closing prices over a five (5) day period ending three days before the day the current fair market value of the securities
is being determined and (y) the number of shares of Common Stock into which each share of Common Stock is convertible at the time
of such exercise; or


 


(ii)         if
the Common Stock is traded over-the-counter, the fair market value shall be deemed to be the product of (x) the average of the
closing bid and asked prices quoted on the NASDAQ system (or similar system) over the five (5) day period ending three days before
the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock into which
each share of Common Stock is convertible at the time of such exercise;


 




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(iii)        if
at any time the Common Stock is not listed on any securities exchange or quoted in the NASDAQ National Market or the over-the-counter
market, the current fair market value of Common Stock shall be the highest price per share which the Company could obtain from
a willing buyer (not a current employee or director) for shares of Common Stock sold by the Company, from authorized but unissued
shares, as determined in good faith by its Board of Directors, unless the Company shall become subject to a Merger Event, in which
case the fair market value of Common Stock shall be deemed to be the per share value received by the holders of the Company’s
Common Stock on a common equivalent basis pursuant to such Merger Event.


 


Upon partial exercise by either cash or Net Issuance, the Company
shall promptly issue an amended Agreement representing the remaining number of shares purchasable hereunder. All other terms and
conditions of such amended Agreement shall be identical to those contained herein, including, but not limited to the Effective
Date hereof.


 


(b)          Exercise
Prior to Expiration. To the extent this Agreement is not previously exercised as to all Common Stock subject hereto, and if
the fair market value of one share of the Common Stock is greater than the Exercise Price then in effect, this Agreement shall
be deemed automatically exercised pursuant to Section 3(a) (even if not surrendered) immediately before its expiration. For purposes
of such automatic exercise, the fair market value of one share of the Common Stock upon such expiration shall be determined pursuant
to Section 3(a). To the extent this Agreement or any portion thereof is deemed automatically exercised pursuant to this Section
3(b), the Company agrees to promptly notify the Warrantholder of the number of shares of Common Stock, if any, the Warrantholder
is to receive by reason of such automatic exercise.


 


SECTION 4.        RESERVATION
OF SHARES.


 


During the term of this Agreement, the Company will at all times
have authorized and reserved a sufficient number of shares of its Common Stock to provide for the exercise of the rights to purchase
Common Stock as provided for herein.


 


SECTION 5.        NO
FRACTIONAL SHARES OR SCRIP.


 


No fractional shares or scrip representing fractional shares
shall be issued upon the exercise of this Agreement, but in lieu of such fractional shares the Company shall make a cash payment
therefor upon the basis of the Exercise Price then in effect.


 


SECTION 6.        NO
RIGHTS AS STOCKHOLDER.


 


This Agreement does not entitle the Warrantholder to any voting
rights or other rights as a stockholder of the Company prior to the exercise of this Agreement.


 


SECTION 7.        WARRANTHOLDER
REGISTRY.


 


The Company shall maintain a registry showing the name and address
of the registered holder of this Agreement. Warrantholder’s initial address, for purposes of such registry, is set forth
below Warrantholder’s signature on this Agreement. Warrantholder may change such address by giving written notice of such
changed address to the Company.


 




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SECTION 8.        ADJUSTMENT
RIGHTS.


 


The Exercise Price and the number of shares of Common Stock
purchasable hereunder are subject to adjustment, as follows:


 


(a)          Merger
Event. If at any time there shall be Merger Event, then, as a part of such Merger Event, lawful provision shall be made so
that the Warrantholder shall thereafter be entitled to receive, upon exercise of this Agreement, the number of shares of Common
stock or other securities or property (collectively, “Reference Property”) that the Warrantholder would have
received in connection with such Merger Event if Warrantholder had exercised this Agreement immediately prior to the Merger Event.
In any such case, appropriate adjustment (as determined in good faith by the Company’s Board of Directors and reasonably
acceptable to the Warrantholder) shall be made in the application of the provisions of this Agreement with respect to the rights
and interests of the Warrantholder after the Merger Event to the end that the provisions of this Agreement (including adjustments
of the Exercise Price and adjustments to ensure that the provisions of this Section 8 shall thereafter be applicable, as nearly
as possible, to the purchase rights under this Agreement in relation to any Reference Property thereafter acquirable upon exercise
of such purchase rights) shall continue to be applicable in their entirety, and to the greatest extent possible. Without limiting
the foregoing, in connection with any Merger Event, upon the closing thereof, the successor or surviving entity shall assume the
obligations of this Agreement; provided that if the Reference Property includes shares of stock or other securities and assets
of an entity other than the successor or purchasing company, as the case may be, in such Merger Event, then such other entity shall
assume the obligations under this Agreement and any such assumption shall contain such additional provisions to protect the interests
of the Warrantholder as reasonably necessary by reason of the foregoing (as determined in good faith by the Company’s Board
of Directors and reasonably acceptable to the Warrantholder) . In connection with a Merger Event and upon Warrantholder’s
written election to the Company, the Company shall cause this Warrant Agreement to be exchanged for the consideration that Warrantholder
would have received if Warrantholder had chosen to exercise its right to have shares issued pursuant to the Net Issuance provisions
of this Warrant Agreement without actually exercising such right, acquiring such shares and exchanging such shares for such consideration.
The provisions of this Section 8(a) shall similarly apply to successive Merger Events.


 


(b)          Reclassification
of Shares. Except for Merger Events subject to Section 8(a), and subject to Section 8(f), if the Company at any time shall,
by combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which
purchase rights under this Agreement exist into the same or a different number of securities of any other class or classes, this
Agreement shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities which were subject to the purchase rights under this Agreement immediately
prior to such combination, reclassification, exchange, subdivision or other change. The provisions of this Section 8(b) shall similarly
apply to successive combination, reclassification, exchange, subdivision or other change.


 


(c)          Subdivision
or Combination of Shares. If the Company at any time shall combine or subdivide its Common Stock, (i) in the case of a subdivision,
the Exercise Price shall be proportionately decreased, or (ii) in the case of a combination, the Exercise Price shall be proportionately
increased.


 


(d)          Stock
Dividends. If the Company at any time while this Agreement is outstanding and unexpired shall:


 


(i)          pay
a dividend with respect to the Common Stock payable in Common Stock, then the Exercise Price shall be adjusted, from and after
the date of determination of stockholders entitled to receive such dividend or distribution, to that price determined by multiplying
the Exercise Price in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (B) the denominator
of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution; or


 


(ii)         make
any other distribution with respect to Common Stock, except any distribution specifically provided for in any other clause of this
Section 8, then, in each such case, provision shall be made by the Company such that the Warrantholder shall receive upon
exercise or conversion of this Warrant a proportionate share of any such distribution as though it were the holder of the Common
Stock as of the record date fixed for the determination of the stockholders of the Company entitled to receive such distribution.


 




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(e)          Antidilution
Rights. Additional antidilution rights applicable to the Common Stock purchasable hereunder are as set forth in the Charter
and shall be applicable with respect to the Common Stock issuable hereunder. The Company shall promptly provide the Warrantholder
with any restatement, amendment, modification or waiver of the Charter; provided, that no such amendment, modification or
waiver shall impair or reduce the antidilution rights applicable to the Common Stock as of the date hereof unless such amendment,
modification or waiver affects the rights of Warrantholder with respect to the Common Stock in the same manner as it affects all
other holders of Common Stock. The Company shall provide Warrantholder with prior written notice of any issuance of its stock or
other equity security to occur after the Effective Date of this Agreement, which notice shall include (a) the price at which such
stock or security is to be sold, (b) the number of shares to be issued, and (c) such other information as necessary for Warrantholder
to determine if a dilutive event has occurred. For the avoidance of doubt, there shall be no duplicate anti-dilution adjustment
pursuant to this subsection (e), the foregoing subsection (d) and the Charter.


 


(f)           Notice
of Adjustments. If: (i) the Company shall declare any dividend or distribution upon its stock, whether in stock, cash, property
or other securities (assuming Warrantholder consents to a dividend involving cash, property or other securities); (ii) the Company
shall offer for subscription prorata to the holders of its Common Stock or other capital stock any additional shares of stock of
any class or other rights; (iii) there shall be any Merger Event; (iv) the Company shall sell, lease, license or otherwise transfer
all or substantially all of its assets; or (v) there shall be any voluntary dissolution, liquidation or winding up of the Company;
then, in connection with each such event, the Company shall send to the Warrantholder: (A) at least thirty (30) days’ prior
written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution,
subscription rights (specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights
to vote in respect of such Merger Event, dissolution, liquidation or winding up; and (B) in the case of any such Merger Event,
sale, lease, license or other transfer of all or substantially all assets, dissolution, liquidation or winding up, at least thirty
(30) days’ prior written notice of the date when the same shall take place (and specifying the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such Merger
Event, dissolution, liquidation or winding up).


 


Each such written notice shall set forth, in reasonable detail,
(i) the event requiring the notice, and (ii) if any adjustment is required to be made, (A) the amount of such adjustment, (B) the
method by which such adjustment was calculated, (C) the adjusted Exercise Price (if the Exercise Price has been adjusted), and
(D) the number of shares subject to purchase hereunder after giving effect to such adjustment, and shall be given by first class
mail, postage prepaid, or by reputable overnight courier with all charges prepaid, addressed to the Warrantholder at the address
for Warrantholder set forth in the registry referred to in Section 7.


 


(g)          Timely
Notice. Failure to timely provide such notice required by subsection (f) above shall entitle Warrantholder to retain the benefit
of the applicable notice period notwithstanding anything to the contrary contained in any insufficient notice received by Warrantholder.
For purposes of this subsection (g), and notwithstanding anything to the contrary in Section 12(g), the notice period shall begin
on the date Warrantholder actually receives a written notice containing all the information required to be provided in such subsection
(f). Notwithstanding the foregoing, notice shall be deemed given in the event that the Company discloses such information via a
filing on the SEC’s Edgar website and delivers to Warrantholder an electronic link to such filing information.


 


SECTION 9.        REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE COMPANY.


 


(a)          Reservation
of Common Stock. The Common Stock issuable upon exercise of the Warrantholder’s rights has been duly and validly reserved
and, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and non-assessable, and
will be free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided, that the Common Stock issuable
pursuant to this Agreement may be subject to restrictions on transfer under state and/or federal securities laws. The Company has
made available to the Warrantholder true, correct and complete copies of its Charter and current bylaws. The issuance of certificates
for shares of Common Stock upon exercise of this Agreement shall be made without charge to the Warrantholder for any issuance tax
in respect thereof, or other cost incurred by the Company in connection with such exercise and the related issuance of shares of
Common Stock; provided, that the Company shall not be required to pay any tax which may be payable in respect of any transfer
and the issuance and delivery of any certificate in a name other than that of the Warrantholder.


 




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(b)          Due
Authority. The execution and delivery by the Company of this Agreement and the performance of all obligations of the Company
hereunder, including the issuance to Warrantholder of the right to acquire the shares of Common Stock and the Common Stock into
which it may be converted, have been duly authorized by all necessary corporate action on the part of the Company. This Agreement:
(1) does not violate the Company’s Charter or current bylaws; (2) does not contravene any law or governmental rule, regulation
or order applicable to it; and (3) does not and will not contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is bound. This Agreement constitutes a legal, valid
and binding agreement of the Company, enforceable in accordance with its terms.


 


(c)          Consents
and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect
of any state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance
by the Company of its obligations under this Agreement, except for: (i) the filing of notices pursuant to Regulation D under the
Act and any filing required by applicable state securities law, which filings will be effective by the time required thereby, and
(ii) the additional listing of the Common Stock issuable pursuant to this Agreement .


 


(d)          Issued
Securities. All issued and outstanding shares of Common Stock, Common Stock or any other securities of the Company have been
duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of Common Stock, Common Stock and
any other securities were issued in full compliance with all federal and state securities laws. In addition, as of the date immediately
preceding the date of this Agreement:


 


(i)          The
authorized capital of the Company consists of (A) 300,000,000 shares of Common Stock, of which 87,359,378 shares are issued and
outstanding, and (B) 7,000,000 shares of Preferred Stock, of which 0 shares are issued and outstanding.


 


(ii)         The
Company has reserved 44,373,623 shares of Common Stock for future grants under its equity compensation plans and for issuances
upon the exercise or conversion of currently outstanding options, warrants and other convertible securities. Included in
the above are 3,751,750 common shares reserved for issuance pursuant to future grants under our Stock Option Plan(s), 21,289,017
common shares reserved for issuance upon the exercise of outstanding common stock purchase warrants, 18,885,581 common shares reserved
for issuance upon the exercise of outstanding options and 447,275 shares underlying outstanding restricted stock unit grants. There
are no other options, warrants, conversion privileges or other rights presently outstanding to purchase or otherwise acquire any
authorized but unissued shares of the Company’s capital stock or other securities of the Company. The Company has no outstanding
loans to any employee, officer or director of the Company, and the Company agrees not to enter into any such loan or otherwise
guarantee the payment of any loan made to an employee, officer or director by a third party.


 


(iii)        In
accordance with the Company’s Charter, no stockholder of the Company has preemptive rights to purchase new issuances of the
Company’s capital stock.


 


(e)          [Intentionally
omitted.]


 


(f)           Other
Commitments to Register Securities. Except as previously disclosed to Warrantholder or as disclosed in the Company’s
public filings with the SEC, the Company is not, pursuant to the terms of any other agreement currently in existence, under any
obligation to register under the Act any of its presently outstanding securities or any of its securities which may hereafter be
issued.


 




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(g)          Exempt
Transaction. Subject to the accuracy of the Warrantholder’s representations in Section 10, the issuance of this Warrant
and the Common Stock upon exercise of this Agreement will each constitute a transaction exempt from (i) the registration requirements
of Section 5 of the Act, in reliance upon Section 4(2) thereof, and (ii) the qualification requirements of the applicable state
securities laws.


 


(h)          Compliance
with Rule 144. If the Warrantholder proposes to sell Common Stock issuable upon the exercise of this Agreement in compliance
with Rule 144 promulgated by the SEC, then, upon Warrantholder’s written request to the Company, the Company shall furnish
to the Warrantholder, within ten days after receipt of such request, a written statement confirming the Company’s compliance
with the filing requirements of the SEC as set forth in such Rule, as such Rule may be amended from time to time. The Company will
use commercially reasonable efforts to maintain compliance with Rule 144 periodic reporting requirements.


 


(i)           Information
Rights. In the event the Company ceases to file reports pursuant to the 1934 Exchange Act (as defined below), Warrantholder
shall be entitled to the information rights contained in Section 7.1 of the Loan Agreement, and Section 7.1 of the Loan Agreement
is hereby incorporated into this Agreement by this reference as though fully set forth herein, provided, however, that the Company
shall not be required to deliver a Compliance Certificate once all Indebtedness (as defined in the Loan Agreement) owed by the
Company to Warrantholder has been repaid.


 


SECTION 10.      REPRESENTATIONS
AND COVENANTS OF THE WARRANTHOLDER.


 


This Agreement has been entered into by the Company in reliance
upon the following representations and covenants of the Warrantholder:


 


(a)          Investment
Purpose. This Warrant and the right to acquire the Common Stock are being acquired for investment and not with a view to the
sale or distribution of any part thereof, and the Warrantholder has no present intention of selling or engaging in any public distribution
of such rights or the Common Stock except pursuant to an effective registration statement or an exemption from the registration
requirements of the Act.


 


(b)          Private
Issue. The Warrantholder understands (i) that the Warrant and the Common Stock issuable upon exercise of this Agreement are
not registered under the Act or qualified under applicable state securities laws on the ground that the issuance contemplated by
this Agreement will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s
reliance on such exemption is predicated on the representations set forth in this Section 10.


 


(c)          Financial
Risk. The Warrantholder has such knowledge and experience in financial and business matters as to be capable of evaluating
the merits and risks of its investment, and has the ability to bear the economic risks of its investment.


 


(d)          Risk
of No Registration. The Warrantholder understands that if the Company does not register with the SEC pursuant to Section 12
of the Securities Exchange Act of 1934 (the “1934 Act”), or file reports pursuant to Section 15(d) of the 1934
Act, or if a registration statement covering the securities under the Act is not in effect when it desires to sell (i) the rights
to purchase Common Stock pursuant to this Agreement or (ii) the Common Stock issuable upon exercise of the right to purchase, it
may be required to hold such securities for an indefinite period. The Warrantholder also understands that any sale of (A) its
rights hereunder to purchase Common Stock or (B) Common Stock issued or issuable hereunder which might be made by it in reliance
upon Rule 144 under the Act may be made only in accordance with the terms and conditions of that Rule.


 




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(e)          Accredited
Investor. Warrantholder is an “accredited investor” within the meaning of the Securities and Exchange Rule 501
of Regulation D, as presently in effect.


 


SECTION 11.      TRANSFERS.


 


Subject to compliance with applicable federal and state securities
laws, this Agreement and all rights hereunder are transferable, in whole or in part, without charge to the holder hereof (except
for transfer taxes) upon surrender of this Agreement properly endorsed. Each taker and holder of this Agreement, by taking or holding
the same, consents and agrees that this Agreement, when endorsed in blank, shall be deemed negotiable, and that the holder hereof,
when this Agreement shall have been so endorsed and its transfer recorded on the Company’s books, shall be treated by the
Company and all other persons dealing with this Agreement as the absolute owner hereof for any purpose and as the person entitled
to exercise the rights represented by this Agreement. The transfer of this Agreement shall be recorded on the books of the Company
upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit III (the “Transfer Notice”),
at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer.
Until the Company receives such Transfer Notice, the Company may treat the registered owner hereof as the owner for all purposes.


 


SECTION 12.     MISCELLANEOUS.


 


(a)          Effective
Date. The provisions of this Agreement shall be construed and shall be given effect in all respects as if it had been executed
and delivered by the Company on the date hereof. This Agreement shall be binding upon any successors or assigns of the Company.


 


(b)          Remedies.
In the event of any default hereunder, the non-defaulting party may proceed to protect and enforce its rights either by suit in
equity and/or by action at law, including but not limited to an action for damages as a result of any such default, and/or an action
for specific performance for any default where Warrantholder will not have an adequate remedy at law and where damages will not
be readily ascertainable. The Company expressly agrees that it shall not oppose an application by the Warrantholder or any other
person entitled to the benefit of this Agreement requiring specific performance of any or all provisions hereof or enjoining the
Company from continuing to commit any such breach of this Agreement.


 


(c)          No
Impairment of Rights. The Company will not, by amendment of its Charter or through any other means, avoid or seek to avoid
the observance or performance of any of the terms of this Agreement, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of
the Warrantholder against impairment.


 


(d)          Additional
Documents. The Company, upon execution of this Agreement, shall provide the Warrantholder with certified resolutions with respect
to the representations, warranties and covenants set forth in Sections 9(a) through 9(d), 9(f) and 9(g). The Company shall also
supply such other documents as the Warrantholder may from time to time reasonably request.


 


(e)          Attorney’s
Fees. In any litigation, arbitration or court proceeding between the Company and the Warrantholder relating hereto, the prevailing
party shall be entitled to attorneys’ fees and expenses and all costs of proceedings incurred in enforcing this Agreement.
For the purposes of this Section 12(e), attorneys’ fees shall include without limitation fees incurred in connection with
the following: (i) contempt proceedings; (ii) discovery; (iii) any motion, proceeding or other activity of any kind in connection
with an insolvency proceeding; (iv) garnishment, levy, and debtor and third party examinations; and (v) post-judgment motions and
proceedings of any kind, including without limitation any activity taken to collect or enforce any judgment.


 


(f)           Severability.
In the event any one or more of the provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable,
the remaining provisions of this Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced
by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying
the invalid, illegal or unenforceable provision.


 




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(g)          Notices.
Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication
that is required, contemplated, or permitted under this Agreement or with respect to the subject matter hereof shall be in writing,
and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission
by facsimile or hand delivery if transmission or delivery occurs on a business day at or before 5:00 pm in the time zone of the
recipient, or, if transmission or delivery occurs on a non-business day or after such time, the first business day thereafter,
or the first business day after deposit with an overnight express service or overnight mail delivery service; or (ii) the
third calendar day after deposit in the United States mails, with proper first class postage prepaid, and shall be addressed to
the party to be notified as follows:


 


If to Warrantholder:


 


Hercules Technology
III, L.P.


Legal Department


Attention: Chief Legal Officer and Manuel Henriquez


400 Hamilton Avenue, Suite 310


Palo Alto, CA 94301


Facsimile: 650-473-9194


Telephone: 650-289-3060


 


If to the Company:


 


Neuralstem, Inc.


Attention: Richard Garr


20271 Goldenrod Lane, 2nd Floor


Germantown, MD 20876


Facsimile: 301-560-6634


Telephone: 240-475-3148


 


or to such other address as each party may designate for itself
by like notice.


 


(h)          Entire
Agreement; Amendments. This Agreement constitutes the entire agreement and understanding of the parties hereto in respect of
the subject matter hereof, and supersede and replace in their entirety any prior proposals, term sheets, letters, negotiations
or other documents or agreements, whether written or oral, with respect to the subject matter hereof (including Lender’s
proposal letter dated September 29, 2014 and accepted by the Company on September 30, 2014). None of the terms of this Agreement
may be amended except by an instrument executed by each of the parties hereto.


 


(i)           Headings.
The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of
this Agreement or any provisions hereof.


 


(j)           Advice
of Counsel. Each of the parties represents to each other party hereto that it has discussed (or had an opportunity to discuss)
with its counsel this Agreement and, specifically, the provisions of Sections 12(n), 12(o), 12(p). 12(q) and 12(r).


 


(k)          No
Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the
parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.


 


(l)           No
Waiver. No omission or delay by Warrantholder at any time to enforce any right or remedy reserved to it, or to require performance
of any of the terms, covenants or provisions hereof by the Company at any time designated, shall be a waiver of any such right
or remedy to which Warrantholder is entitled, nor shall it in any way affect the right of Warrantholder to enforce such provisions
thereafter.


 




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(m)         Survival.
All agreements, representations and warranties contained in this Agreement or in any document delivered pursuant hereto shall be
for the benefit of Warrantholder and shall survive the execution and delivery of this Agreement and the expiration or other termination
of this Agreement.


 


(n)          Governing
Law. This Agreement has been negotiated and delivered to Warrantholder in the State of California, and shall have been accepted
by Warrantholder in the State of California. Delivery of Common Stock to Warrantholder by the Company under this Agreement is due
in the State of California. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the
State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.


 


(o)          Consent
to Jurisdiction and Venue. All judicial proceedings arising in or under or related to this Agreement may be brought in any
state or federal court of competent jurisdiction located in the State of California. By execution and delivery of this Agreement,
each party hereto generally and unconditionally: (a) consents to personal jurisdiction in Santa Clara County, State of California;
(b) waives any objection as to jurisdiction or venue in Santa Clara County, State of California; (c) agrees not to assert any defense
based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Service of process on any party hereto in any action arising out of or relating to this
Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 12(g), and shall be deemed
effective and received as set forth in Section 12(g). Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.


 


(p)          Mutual
Waiver of Jury Trial. Because disputes arising in connection with complex financial transactions are most quickly and economically
resolved by an experienced and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration
rules), the parties desire that their disputes be resolved by a judge applying such applicable laws. EACH OF THE COMPANY AND WARRANTHOLDER
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY
CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY THE COMPANY AGAINST WARRANTHOLDER OR ITS ASSIGNEE OR
BY WARRANTHOLDER OR ITS ASSIGNEE AGAINST THE COMPANY. This waiver extends to all such Claims, including Claims that involve Persons
other than Borrower and Lender; Claims that arise out of or are in any way connected to the relationship between the Company and
Warrantholder; and any Claims for damages, breach of contract, specific performance, or any equitable or legal relief of any kind,
arising out of this Agreement.


 


(q)          Judicial
Reference. If the waiver of jury trial set forth above is ineffective or unenforceable, the parties agree that all Claims shall
be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually
acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of Santa Clara County, California.
Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery applicable
to such proceeding.


 


(r)           Prejudgment
Relief. In the event Claims are to be resolved by arbitration, either party may seek from a court of competent jurisdiction
identified in Section 12(o), any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief
enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial
reference.


 




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(s)          Counterparts.
This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which
counterparts shall constitute but one and the same instrument.


 


(t)           Specific
Performance. The parties hereto hereby declare that it is impossible to measure in money the damages which will accrue to Warrantholder
by reason of the Company’s failure to perform any of the obligations under this Agreement and agree that the terms of this
Agreement shall be specifically enforceable by Warrantholder. If Warrantholder institutes any action or proceeding to specifically
enforce the provisions hereof, any person against whom such action or proceeding is brought hereby waives the claim or defense
therein that Warrantholder has an adequate remedy at law, and such person shall not offer in any such action or proceeding the
claim or defense that such remedy at law exists.


 


[Remainder of Page Intentionally Left Blank]


 




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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by its officers thereunto duly authorized as of the Effective Date.


 


	COMPANY:	NEURALSTEM, INC.
	 	 	 
	 	By:	 
	 	 	 
	 	Name:	 
	 	 	 
	 	Title:	 


 


	WARRANTHOLDER:	HERCULES TECHNOLOGY III, L.P.,
	 	a Delaware limited partnership
	 	 
	 	By: Hercules Technology SBIC Management, LLC,
	 	its General Partner
	 	 
	 	By: Hercules Technology Growth Capital, Inc.,
	 	its Manager


 


	 	By:	 
	 	Name:   Ben Bang
	 	Title:     Associate General Counsel


 




    	 



    	 



    

 


 


EXHIBIT I


 


NOTICE OF EXERCISE


 


		To:	NEURALSTEM, INC.



 


		(1)	The undersigned Warrantholder hereby elects to purchase
[_______] shares of the Common Stock of Neuralstem, Inc., pursuant to the terms of the Agreement dated the 28th day of October,
2014 (the “Agreement”) between Neuralstem, Inc. and the Warrantholder, and [CASH PAYMENT: tenders herewith payment
of the Purchase Price in full, together with all applicable transfer taxes, if any.] [NET ISSUANCE: elects pursuant to Section 3(a)
of the Agreement to effect a Net Issuance.]



 


		(2)	Please issue a certificate or certificates representing
said shares of Common Stock in the name of the undersigned or in such other name as is specified below.



 


	 	 
	 	(Name)
	 	 
	 	 
	 	(Address)


 


	WARRANTHOLDER:	HERCULES TECHNOLOGY III, L.P.,
	 	a Delaware limited partnership
	 	 
	 	By: Hercules Technology SBIC Management, LLC,
	 	its General Partner
	 	 
	 	By: Hercules Technology Growth Capital, Inc.,
	 	its Manager


 


	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	Date:	 


 




    	 



    	 



    

  


EXHIBIT II


 


ACKNOWLEDGMENT OF EXERCISE


 


The undersigned Neuralstem, Inc., hereby acknowledge receipt
of the “Notice of Exercise” from Hercules Technology III, L.P. to purchase [____] shares of the Common Stock of Neuralstem,
Inc., pursuant to the terms of the Agreement, and further acknowledges that [______] shares remain subject to purchase under the
terms of the Agreement.


 


	COMPANY:	NEURALSTEM, INC.
	 	 	 
	 	By:	 
	 	 	 
	 	Title:	 
	 	 	 
	 	Date:	 


 




    	 



    	 



    

  


EXHIBIT III


 


TRANSFER NOTICE


 


(To transfer or assign the foregoing Agreement, execute this
form and supply required information. Do not use this form to purchase shares.)


 


FOR VALUE RECEIVED, the foregoing Agreement and all rights evidenced
thereby are hereby transferred and assigned to


 


______________________________________________________________________


(Please Print)


 


whose address is_________________________________________________________


 


______________________________________________________________________


 


Dated:_____________________________________________________


 


Holder’s Signature:________________________________________________


 


Holder’s Address:_________________________________________________


 


_______________________________________________________________


 


Signature Guaranteed:  ____________________________________________________


 


NOTE:  The signature to this Transfer Notice must
correspond with the name as it appears on the face of the Agreement, without alteration or enlargement or any change whatever.
Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority
to assign the foregoing Agreement.