Exhibit 4.1


 


INVESTMENT AGREEMENT


 


INVESTMENT AGREEMENT (this “AGREEMENT”),
dated as of July 30, 2015 by and between PROPHASE LABS, INC. a Delaware corporation (the “Company”), and Dutchess Opportunity
Fund, II, LP, a Delaware Limited Partnership (the “Investor”).


 


WHEREAS, the parties desire that, upon the
terms and subject to the conditions contained herein, the Investor shall purchase up to three million two hundred thousand (3,200,000)
shares of the Company’s Common Stock with $.0005 par value per share (the “Common Stock”);


 


WHEREAS, such investments will be made in reliance
upon the provisions of Section 4(2) under the Securities Act of 1933, as amended (the “1933 Act”), Rule 506 of Regulation
D, and the rules and regulations promulgated thereunder, and/or upon such other exemption from the registration requirements of
the 1933 Act as may be available with respect to any or all of the investments in Common Stock to be made hereunder; and


 


WHEREAS, contemporaneously with the execution
and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement substantially in
the form attached hereto (the “Registration Rights Agreement”) pursuant to which the Company has agreed to provide
certain registration rights under the 1933 Act, and the rules and regulations promulgated thereunder, and applicable state securities
laws.


 


NOW THEREFORE, in consideration of the foregoing
recitals, which shall be considered an integral part of this Agreement, the covenants and agreements set forth hereafter, and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Investor hereby
agree as follows:


 


SECTION
1. DEFINITIONS.


 


As used in this Agreement,
the following terms shall have the following meanings specified or indicated below, and such meanings shall be equally applicable
to the singular and plural forms of such defined terms.


 


“1933 Act”
shall have the meaning set forth in the recitals of this Agreement.


 


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


 


“AAA”
shall have the meaning specified in Section 12.


 


“Affiliate”
shall have the meaning specified in Section 5(H).


 


“Agreement”
shall mean this Investment Agreement.


 


“Articles of Incorporation”
shall have the meaning specified in Section 4(C).


 


“By-laws”
shall have the meaning specified in Section 4(C).


 


“Closing”
shall have the meaning specified in Section 2(F).


 


“Closing Date”
shall have the meaning specified in Section 2(F).


 



    	 



    	 	 	 



    




 


“Common Stock”
shall have the meaning set forth in the recitals of this Agreement.


 


“Company”
shall have the meaning set forth in the preamble of this Agreement.


 


“Control”
or “Controls” shall have the meaning specified in Section 5(H).


 


“Deficit Proceeds”
shall have the meaning specified in Section 2(E)


 


“DTC”
shall have the meaning specified in Section 2(F).


 


“DWAC”
shall have the meaning specified in Section 2(F).


 


“Effective Date”
shall mean the date the SEC declares effective under the 1933 Act the Registration Statement covering the Securities.


 


“Equity Line Transaction
Documents” shall mean this Agreement and the Registration Rights Agreement.


 


“Excess Proceeds”
shall have the meaning specified in Section 2(E).


 


“FAST”
shall have the meaning specified in Section 2(F).


 


“Indemnities”
shall have the meaning specified in Section 11.


 


“Indemnified Liabilities”
shall have the meaning specified in Section 11.


 


“Indemnitor”
shall have the meaning specified in Section 11.


 


“Investor”
shall have the meaning indicated in the preamble of this Agreement.


 


“Material Adverse
Effect” shall have the meaning specified in Section 4(A).


 


“Maximum Common
Stock Issuance” shall have the meaning specified in Section 2(G).


 


“Open Market Adjustment
Amount” shall have the meaning specified in Section 2(H).


 


“Open Market Share
Purchase” shall have the meaning specified in Section 2(H).


 


“Open Period”
shall mean the period beginning on and including the Trading Day immediately following the Effective Date and ending on the earlier
to occur of (i) the date which is thirty-six (36) months from the Effective Date; or (ii) termination of the Agreement in accordance
with Section 9, below.


 


“Pricing Period”
shall mean the one (1) Trading Day beginning on the Put Notice Date and ending on that Trading Day.


 


“Principal Market”
shall mean the Nasdaq Capital Market, the NYSE MKT, the New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select
Market or the OTC Bulletin Board, whichever is the principal market on which the Common Stock is listed.


 


“Prospectus”
shall mean the prospectus, preliminary prospectus and supplemental prospectus used in connection with the Registration Statement.


 






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“Purchase Amount”
shall mean the total amount being paid by the Investor on a particular Closing Date to purchase the Securities.


 


“Purchase Price”
shall mean ninety-five percent (95%) of the lowest daily VWAP (as defined herein) of the Common Stock during the Pricing Period.


 


“Put”
shall have the meaning set forth in Section 2(B) hereof.


 


“Put Amount”
shall have the meaning set forth in Section 2(B) hereof.


 


“Put Notice”
shall mean a written notice in the form attached hereto as Exhibit C, sent to the Investor by the Company stating the Put Amount
(the number of Shares the Company intends to sell to the Investor pursuant to the terms of the Agreement), the Purchase Price for
such Shares, and stating the current number of Shares issued and outstanding on such date.


  


“Put Notice Date”
shall mean the Trading Day, as set forth below, which is the later of (i) the Trading Day immediately following the day on which
the Investor receives a Put Notice and (ii) the day that the Shares subject to such Put Notice are provided in accordance with
Section 2 (B) below. However a Put Notice shall be deemed delivered on (a) the Trading Day it is received by facsimile or email
by the Investor if such notice is received prior to noon Eastern Time, or (b) the immediately succeeding Trading Day if it is received
by facsimile or otherwise after noon Eastern Time on a Trading Day. No Put Notice may be deemed delivered on a day that is not
a Trading Day.


 


“Put Restriction”
shall mean the days during the Pricing Period. During this time, the Company shall not be entitled to deliver another Put Notice.


 


“Put Shares Due”
shall have the meaning specified in Section 2(H).


 


“Registration
Rights Agreement” shall have the meaning set forth in the recitals of this Agreement.


 


“Registration
Statement” means the registration statement of the Company filed under the 1933 Act covering the resale by the Investor
of the Common Stock issuable hereunder.


 


“Related Party”
shall have the meaning specified in Section 5(H).


 


“Resolutions”
shall have the meaning specified in Section 8(E).


 


“SEC”
shall mean the U.S. Securities & Exchange Commission.


 


“SEC Documents”
shall have the meaning specified in Section 4(G).


 


“Securities”
shall mean the shares of Common Stock issued pursuant to the terms of the Agreement.


 


“Shares”
shall mean the shares of the Company’s Common Stock.


 


“Subsequent Purchasers”
shall have the meaning specified in Section 2(I).


 


“Subsidiaries”
shall have the meaning specified in Section 4(A).


 






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“Suspension Price”
with respect to any Put Notice Date shall be the price defined by the Company in the applicable Put Notice.


 


“Trading Day”
shall mean any day on which the Principal Market for the Common Stock is open for trading, from the hours of 9:30 am until 4:00
pm Boston Time.


 


“VWAP”
shall mean the volume weighted average price during a Trading Day.


 


SECTION
2. PURCHASE AND SALE OF COMMON STOCK.


 


(A) PURCHASE AND
SALE OF COMMON STOCK. Subject to the terms and conditions set forth herein, the Company may issue and sell to the Investor,
and the Investor shall purchase from the Company, up to three million two hundred thousand (3,200,000) Shares.


  


(B) DELIVERY OF PUT
NOTICES. Subject to the terms and conditions of the Equity Line Transaction Documents, and from time to time during the Open Period,
the Company may, in its sole discretion, deliver a Put Notice to the Investor which states the number of shares of Common Stock
(the “Put Amount”) which the Company intends to sell to the Investor on a Closing Date (the “Put”). The
number of Shares in any Put Notice shall not exceed five hundred thousand shares (500,000). During the Open Period, the Company
shall not be entitled to submit a Put Notice until the Pricing Period for the prior Put has been completed. The Common Stock identified
in the Put Notice shall be purchased for a price equal to the Purchase Price. Within two (2) days of delivering a Put Notice to
the Investor, the Company shall deliver to the Investor pursuant to this Agreement, certificates representing the Shares to be
issued to the Investor on such date and registered in the name of the Investor; and (II) In lieu of delivering physical certificates
representing the Securities and provided that the Company’s transfer agent then is participating in The Depository Trust
Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Investor, the
Company shall use all commercially reasonable efforts to cause its transfer agent to electronically transmit the Securities by
crediting the account of the Investor’s prime broker (as specified by the Investor within a reasonable period in advance
of the Investor’s notice) with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system. The price
for the Put Amount will be determined by multiplying the number of Shares to be delivered specified in the Put Notice by the Purchase
Price outlined in that particular Put. In the event the Shares are not sufficient to cover the entire Put, the Company shall immediately
deliver more Shares pursuant to a request by the Investor. In the event there is an excess of Shares for that Put, the Company
will be able to deduct that particular amount of excess Shares for the subsequent Put.


  


(C) COMPANY’S
RIGHT TO SUSPEND. On each Put Notice submitted to the Investor by the Company, the Company shall have the option to specify a Suspension
Price for that Put. In the event the Common Stock falls below the Suspension Price, the Put shall be temporarily suspended. The
Put shall resume at such time as the Common Stock is above the Suspension Price, provided the dates for the Pricing Period for
that particular Put are still valid. In the event the Pricing Period has been complete, any shares above the Suspension Price due
to the Investor shall be sold to the Investor by the Company at the Suspension Price under the terms of this Agreement. The Suspension
Price for a Put may not be changed by the Company once submitted to the Investor.


 






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(D) CONDITIONS TO
INVESTOR’S OBLIGATION TO PURCHASE SHARES. Notwithstanding anything to the contrary in this Agreement, the Company shall
not be entitled to deliver a Put Notice and the Investor shall not be obligated to purchase any Shares at a Closing unless
each of the following conditions are satisfied:


 


(1) a Registration
Statement shall have been declared effective and shall remain effective and available for the resale of all the Registrable
Securities (as defined in the Registration Rights Agreement) at all times until the Closing with respect to the subject Put
Notice;


 


(2) at all times
during the period beginning on the related Put Notice Date and ending on and including the related Closing Date, the Common
Stock shall have been listed on the Principal Market and shall not have been suspended from trading thereon for a period of
two (2) consecutive Trading Days during the Open Period and the Company shall not have been notified of any pending or
threatened proceeding or other action to suspend the trading of the Common Stock;


 


(3) the Company has
complied with its obligations and is otherwise not in breach of or in default under this Agreement, the Registration Rights
Agreement or any other agreement executed in connection herewith which has not been cured prior to delivery of the Put
Notice;


 


(4) no injunction
shall have been issued and remain in force, or action commenced by a governmental authority which has not been stayed or
abandoned, prohibiting the purchase or the issuance of the Securities; and


 


(5) the issuance of
the Securities pursuant to this Agreement will not violate any shareholder approval requirements of the Principal Market.


 


If any of the events described in clauses (1)
through (5) above occurs during a Pricing Period, then the Investor shall have no obligation to purchase the Common Stock subject
to the applicable Put Notice.


 


(E) INVESTOR RETURN.
In the event the Investor receives more than five percent (5%) return on the net sales for a specific Put (“Excess Proceeds”),
the Investor will remit the Excess Proceeds to the Company on the applicable Closing Date. In the event the Investor receives less
than 5% return on the net sales for a specific Put (“Deficit Proceeds”), the Investor shall have the right to deduct
from the proceeds of the Put Amount on the applicable Closing Date that amount of funds in order for the Investor’s return
to equal five percent (5%).


  


(F) MECHANICS OF
PURCHASE OF SHARES BY INVESTOR. The closing of the purchase by the Investor of Shares (a “Closing”) shall occur
on the date which is no later than three (3) Trading Days following the applicable Put Notice Date (each a “Closing
Date”). On each Closing Date, the Investor shall deliver to the Company the Purchase Price to be paid for such Shares,
based on the Put Amount set forth in Section 2(B) and the Investor shall wire the funds for that Put. In the event that the
number of Shares delivered pursuant to Section 2.B were more than necessary to cover the Put, the Investor shall return such
Shares to the Company or include such Shares under a subsequent Put, as directed by the Company in its sole discretion.


 






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(G) OVERALL LIMIT ON
COMMON STOCK ISSUABLE. Notwithstanding anything contained herein to the contrary, if during the Open Period the Company becomes
listed on an exchange that limits the number of shares of Common Stock that may be issued without shareholder approval, then the
number of Shares issuable by the Company and purchasable by the Investor, shall not exceed that number of the shares of Common
Stock that may be issuable without shareholder approval (the “Maximum Common Stock Issuance”). If such issuance of
shares of Common Stock could cause a delisting on the Principal Market, then the Maximum Common Stock Issuance shall first be approved
by the Company’s shareholders in accordance with applicable law and the By-laws and Articles of Incorporation of the Company,
as amended. The parties understand and agree that the Company’s failure to seek or obtain such shareholder approval shall
in no way adversely affect the validity and due authorization of the issuance and sale of Securities or the Investor’s obligation
in accordance with the terms and conditions hereof to purchase a number of Shares in the aggregate up to the Maximum Common Stock
Issuance limitation, and that such approval pertains only to the applicability of the Maximum Common Stock Issuance limitation
provided in this Section 2(G).


 


(H) OPEN MARKET
ADJUSTMENT. If, by the third (3rd) business day after a Closing Date, the Company fails to deliver any portion of the
Securities subject to a Put Notice to the Investor (the “Put Shares Due”) and the Investor notifies the Company
in writing of its intention to purchase, and purchases, in an open market transaction or otherwise, shares of Common Stock
necessary to make delivery by the Investor of shares in respect of sales to subsequent purchasers, pursuant to transactions
entered into before the Closing Date (“Subsequent Purchasers”), which such shares of Common Stock would have been
delivered to the Investor by the Company but for the Company’s failure to so deliver (the “Open Market Share
Purchase”), then the Company shall pay to the Investor, in addition to any other amounts due to Investor pursuant to
the Put, and not in lieu thereof, the Open Market Adjustment Amount (as defined below). The “Open Market Adjustment
Amount” is the amount equal to the excess, if any, of (x) the Investor’s total purchase price (including
brokerage commissions, if any) for the Open Market Share Purchase minus (y) the net proceeds (after brokerage commissions, if
any) received by the Investor from the sale of the Put Shares Due to such Subsequent Purchasers. The Company shall pay the
Open Market Adjustment Amount to the Investor in immediately available funds within five (5) business days of written demand
by the Investor, provided the Investor provided timely written notice to the Company in accordance with the first sentence.
By way of illustration and not in limitation of the foregoing, if the Investor purchases shares of Common Stock having a
total purchase price (including brokerage commissions) of $11,000 to cover an Open Market Share Purchase with respect to
shares of Common Stock it sold to Subsequent Purchasers for net proceeds of $10,000, the Open Market Adjustment Amount
which the Company will be required to pay to the Investor will be $1,000.


 


(I) LIMITATION ON
AMOUNT OF OWNERSHIP. Notwithstanding anything to the contrary in this Agreement, in no event shall the Investor be entitled
to purchase that number of Shares, which when added to the sum of the number of shares of Common Stock beneficially owned (as
such term is defined under Section 13(d) and Rule 13d-3 of the 1934 Act), by the Investor, would exceed 4.99% of the number
of shares of Common Stock outstanding on the Closing Date, as determined in accordance with Rule 13d-1(j) of the 1934
Act.


 


SECTION
3. INVESTOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS. The Investor represents and warrants to the Company,
and covenants, that:


 


(A) SOPHISTICATED
INVESTOR. The Investor has, by reason of its business and financial experience, such knowledge, sophistication and experience
in financial and business matters and in making investment decisions of this type that it is capable of (1) evaluating the
merits and risks of an investment in the Securities and making an informed investment decision; (2) protecting its own
interest; and (3) bearing the economic risk of such investment for an indefinite period of time.


 






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(B) AUTHORIZATION;
ENFORCEMENT. The Investor has the requisite power and authority to enter into and perform this Agreement and the Registration
Rights Agreement. The execution and delivery of the Equity Line Transaction Documents by the Investor and the consummation by
it of the transactions contemplated hereby and thereby have been duly and validly authorized by the Investor’s general
partners and no further consent or authorization is required by its partners. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Investor and is a valid and binding agreement of the Investor enforceable
against the Investor in accordance with its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors’ rights and remedies.


 


(C) SECTION 9 OF
THE 1934 ACT. During the term of this Agreement, the Investor will comply with the provisions of Section 9 of the 1934 Act,
and the rules promulgated thereunder, with respect to transactions involving the Common Stock. The Investor agrees not to
sell the Company’s stock short, either directly or indirectly through its affiliates, principals or advisors, during
the term of this Agreement.


 


(D) ACCREDITED
INVESTOR. Investor is an “Accredited Investor” as that term is defined in Rule 501(a) of Regulation D of the 1933
Act.


 


(E) NO CONFLICTS.
The execution, delivery and performance of the Transaction Documents by the Investor and the consummation by the Investor of
the transactions contemplated hereby and thereby will not (1) result in a violation of the partnership agreement or other
organizational documents of the Investor, (2) conflict with, or constitute a material default (or an event which with notice
or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, contract, indenture mortgage, indebtedness or instrument to which
the Investor is a party, or to the Investor’s knowledge result in a violation of any law, rule, regulation, order,
judgment or decree (including United States federal and state securities laws and regulations) applicable to the Investor or
by which any property or asset of the Investor is bound or affected.


 


(F) NO VIOLATIONS.
Except as disclosed in Schedule 3(f), the Investor is not in violation of any term of, or in default under, the partnership
agreement of other organizational documents of the Investor or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Investor, except for
conflicts, defaults, terminations, amendments, accelerations, cancellations and violations that would not, individually or in
the aggregate, constitute or reasonably be expected to constitute a material adverse effect on the Investor. The business of
the Investor is not being conducted, and shall not be conducted, in violation of any law, statute, ordinance, rule, order or
regulation of any governmental authority or agency, regulatory or self-regulatory agency, or court, except for violations the
sanctions for which either, individually or in the aggregate, would not have or reasonably be expected to have a material
adverse effect on the Investor. Except as specifically contemplated by this Agreement and as required under the 1933 Act or
any securities laws of any states, to the Investor’s knowledge, the Investor is not required to obtain any consent,
authorization, permit or order of, or make any filing or registration (except the filing of a registration statement as
outlined in the Registration Rights Agreement) with, any court, governmental authority or agency, regulatory or
self-regulatory agency or other third party in order for it to execute, deliver or perform any of its obligations under, or
contemplated by, the Equity Line Transaction Documents in accordance with the terms hereof or thereof except for
those consents, authorizations, permits, orders or filings as have been obtained or effected on or prior to the date hereof
and are in full force and effect as of the date hereof. Except as disclosed in Schedule 3(f), the Investor is unaware of any
facts or circumstances which might give rise to any violation or default set forth in this Section 3(F).


 






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(G) OPPORTUNITY TO
DISCUSS. The Investor has received all materials relating to the Company’s business, finance and operations which it
has requested. The Investor has had an opportunity to discuss the business, management and financial affairs of the Company
with the Company’s management.


 


(H) INVESTMENT
PURPOSES. The Investor is purchasing the Securities for its own account for investment purposes and not with a view towards
distribution and agrees to resell or otherwise dispose of the Securities solely in accordance with the registration
provisions of the 1933 Act (or pursuant to an exemption from such registration provisions).


 


(I) NO REGISTRATION
AS A DEALER. The Investor is not and will not be required to be registered as a “dealer” under the 1934 Act, either
as a result of its execution and performance of its obligations under this Agreement or otherwise.


 


(J) GOOD STANDING.
The Investor is a Limited Partnership, duly organized, validly existing and in good standing in the state of Delaware.


 


(K) TAX LIABILITIES.
The Investor understands that it is liable for its own tax liabilities.


 


(L) REGULATION M.
The Investor will comply with Regulation M under the 1934 Act, if applicable.


 


SECTION
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in the Schedules attached hereto, or as
disclosed in the Company’s SEC Documents, the Company represents and warrants to the Investor that:


 


(A) ORGANIZATION AND
QUALIFICATION. The Company is a corporation duly organized and validly existing in good standing under the laws of the State of
Delaware, USA and has the requisite corporate power and authorization to own its properties and to carry on its business as now
being conducted. Both the Company and the companies it owns or controls (“Subsidiaries”) are duly qualified to do business
and are in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on
(1) the properties, assets, operations, results of operations, or financial condition of the Company and its Subsidiaries, if any,
taken as a whole, (2) the transactions contemplated hereby or by the agreements and instruments to be entered into in connection
herewith, or (3) the authority or ability of the Company to perform its obligations under the Equity Line Transaction Documents
other than as a result of (a) changes adversely affecting the United States economy (so long as the Company is not disproportionately
affected thereby), (b) changes adversely affecting the industry in which the Company operates (so long as the Company is not disproportionately
affected thereby), (c) the announcement or consummation of the transactions contemplated by this Agreement, and (d) changes in
the market price of the Common Stock.


 






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(B) AUTHORIZATION;
ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.


 


(1) The Company has
the requisite corporate power and authority to enter into and perform the Equity Line Transaction Documents, aand to perform
its obligations contemplated hereby and thereby.


 


(2) The execution and
delivery of the Equity Line Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby
and thereby, including without limitation the reservation for issuance and the issuance of the Securities pursuant to this Agreement,
have been duly and validly authorized by the Company’s Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors, or its shareholders.


 


(3) The Equity Line
Transaction Documents have been duly and validly executed and delivered by the Company.


 


(4) The Equity Line
Transaction Documents constitute the valid and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors’ rights and remedies.


 


(C) CAPITALIZATION.
As of the date hereof, the authorized capital stock of the Company consists of (i) 50,000,000 shares of Common Stock with $.0005
par value per share, of which as of July 30, 2015, 16,330,776 shares were issued and outstanding and (ii) 1,000,000 shares of preferred
stock with $.0005 par value per share of which as of July 30, 2015, no shares were outstanding. Except as disclosed in the Company’s
publicly available filings with the SEC: (1) no shares of the Company’s capital stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by the Company; (2) there are no outstanding debt securities;
(3) there are no outstanding shares of capital stock, options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any
of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into, any shares of capital stock of the Company or any of its Subsidiaries; (4) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except
the Registration Rights Agreement); (5) there are no outstanding securities of the Company or any of its Subsidiaries which contain
any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (6) there are
no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities
as described in this Agreement; (7) the Company does not have any stock appreciation rights or “phantom stock” plans
or agreements or any similar plan or agreement; and (8) there is no dispute as to the classification of any shares of the Company’s
capital stock.


 






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The Company has furnished
to the Investor, or the Investor has had access through the SEC’s EDGAR website to, true and correct copies of the Company’s
Articles of Incorporation, as amended and in effect on the date hereof (the “Articles of Incorporation”), and the Company’s
By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable
for Common Stock and the material rights of the holders thereof in respect thereto.


 


(D) ISSUANCE OF
SHARES. The Company has reserved 3,200,000 Shares for issuance pursuant to this Agreement, which have been duly authorized
and reserved for issuance (subject to adjustment pursuant to the Company’s covenant set forth in Section 5(F) below)
pursuant to this Agreement. Upon issuance in accordance with this Agreement, the Securities will be validly issued, fully
paid for and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. In the event the
Company cannot register a sufficient number of Shares for issuance pursuant to this Agreement, the Company will use its best
efforts to authorize and reserve for issuance the number of Shares required for the Company to perform its obligations
hereunder as soon as reasonably practicable.


 


(E) NO CONFLICTS. The execution,
delivery and performance of the Equity Line Transaction Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby will not (I) result in a violation of the Articles of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred stock of the Company or the By-laws; or (II) conflict with, or constitute
a material default (or an event which with notice or lapse of time or both would become a material default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any material agreement, contract, indenture mortgage, indebtedness
or instrument to which the Company or any of its Subsidiaries is a party, or to the Company’s knowledge result in a violation
of any law, rule, regulation, order, judgment or decree (including United States federal and state securities laws and regulations
and the rules and regulations of the Principal Market or principal securities exchange or trading market on which the Common Stock
is traded or listed) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any
of its Subsidiaries is bound or affected. Except as disclosed in the SEC Documents, neither the Company nor its Subsidiaries is
in violation of any term of, or in default under, the Articles of Incorporation, any Certificate of Designations, Preferences and
Rights of any outstanding series of preferred stock of the Company or the By-laws or their organizational charter or by-laws, respectively,
or any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its Subsidiaries, except for possible conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations that would not individually or in the aggregate have or constitute a Material Adverse Effect. The
business of the Company and its Subsidiaries is not being conducted, and shall not be conducted, in violation of any law, statute,
ordinance, rule, order or regulation of any governmental authority or agency, regulatory or self-regulatory agency, or court, except
for possible violations the sanctions for which either individually or in the aggregate would not have a Material Adverse Effect.
Except as specifically contemplated by this Agreement and as required under the 1933 Act or any securities laws of any states,
to the Company’s knowledge, the Company is not required to obtain any consent, authorization, permit or order of, or make
any filing or registration (except the filing of a registration statement as outlined in the Registration Rights Agreement between
the Parties) with, any court, governmental authority or agency, regulatory or self-regulatory agency or other third party in order
for it to execute, deliver or perform any of its obligations under, or contemplated by, the Equity Line Transaction Documents in
accordance with the terms hereof or thereof. All consents, authorizations, permits, orders, filings and registrations which the
Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof
and are in full force and effect as of the date hereof. Except as disclosed in the SEC Documents, the Company and its Subsidiaries
are unaware of any facts or circumstances which might give rise to any violation or default of any of the foregoing. Except as
disclosed in the SEC Documents, the Company is not, and will not be, in violation of the listing requirements of the Principal
Market as in effect on the date hereof and on each of the Closing Dates and is not aware of any facts which would reasonably lead
to delisting of the Common Stock by the Principal Market in the foreseeable future.


 






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(F) SEC DOCUMENTS; FINANCIAL
STATEMENTS. As of the date hereof, the Company has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the
date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “SEC Documents”). The Company has delivered to the Investor or its representatives,
or they have had access through the SEC’s EDGAR website to, true and complete copies of the SEC Documents. As of their respective
filing dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations
of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting principles, and audited by a firm that is a member
a member of the Public Companies Accounting Oversight Board (“PCAOB”) consistently applied, during the periods involved
(except (I) as may be otherwise indicated in such financial statements or the notes thereto, or (II) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). No other written information
provided by or on behalf of the Company to the Investor which is not included in the SEC Documents, including, without limitation,
information referred to in Section 4(D) of this Agreement, contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein, in the light of the circumstance under which they are or were made, not
misleading. Neither the Company nor any of its Subsidiaries or any of their officers, directors, employees or agents have provided
the Investor with any material, nonpublic information which was not publicly disclosed prior to the date hereof and any material,
nonpublic information provided to the Investor by the Company or its Subsidiaries or any of their officers, directors, employees
or agents prior to any Closing Date shall be publicly disclosed by the Company prior to such Closing Date.


 


(G) ABSENCE OF CERTAIN
CHANGES. Except as otherwise set forth in the SEC Documents, the Company does not intend to change the business operations of the
Company in any material way. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or its Subsidiaries have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings.


 


(H) ABSENCE OF LITIGATION
AND/OR REGULATORY PROCEEDINGS. Except as set forth in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the
executive officers of Company or any of its Subsidiaries, threatened against or affecting the Company, the Common Stock or any
of the Company’s Subsidiaries or any of the Company’s or the Company’s Subsidiaries’ officers or directors
in their capacities as such, in which an adverse decision could have a Material Adverse Effect.


 






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(I) ACKNOWLEDGMENT REGARDING
INVESTOR’S PURCHASE OF SHARES. The Company acknowledges and agrees that the Investor is acting solely in the capacity of
an arm’s length purchaser with respect to the Equity Line Transaction Documents and the transactions contemplated hereby
and thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Equity Line Transaction Documents and the transactions contemplated hereby and
thereby and any advice given by the Investor or any of its respective representatives or agents in connection with the Equity Line
Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor’s purchase
of the Securities, and is not being relied on by the Company. The Company further represents to the Investor that the Company’s
decision to enter into the Equity Line Transaction Documents has been based solely on the independent evaluation by the Company
and its representatives.


 


(J) NO UNDISCLOSED EVENTS,
LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except as set forth in the SEC Documents, as of the date hereof, no event, liability,
development or circumstance has occurred or exists, or to the Company’s knowledge is contemplated to occur, with respect
to the Company or its Subsidiaries or their respective business, properties, assets, prospects, operations or financial condition,
that would be required to be disclosed by the Company under applicable securities laws on a registration statement filed with the
SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced.


 


(K) EMPLOYEE RELATIONS.
Neither the Company nor any of its Subsidiaries is involved in any union labor dispute nor, to the knowledge of the Company or
any of its Subsidiaries, is any such dispute threatened. Neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe that relations with their employees are good. No executive officer
(as defined in Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the Company’s employ
or otherwise terminate such officer’s employment with the Company.


 


(L) INTELLECTUAL PROPERTY
RIGHTS. Except as disclosed in the SEC Documents, the Company and its Subsidiaries own or possess adequate rights or licenses to
use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses
as now conducted. Except as set forth in the SEC Documents, none of the Company’s trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations,
trade secrets or other intellectual property rights necessary to conduct its business as now or as proposed to be conducted have
expired or terminated, or are expected to expire or terminate within two (2) years from the date of this Agreement. The Company
and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of trademark, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade
secret or other similar rights of others, or of any such development of similar or identical trade secrets or technical information
by others and, except as set forth in the SEC Documents, there is no claim, action or proceeding being made or brought against,
or to the Company’s knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade name,
patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or
other infringement; and the Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any
of the foregoing. The Company and its Subsidiaries have taken commercially reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties.


 






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(M) ENVIRONMENTAL LAWS.
The Company and its Subsidiaries (I) are, to the knowledge of the Company and its Subsidiaries, in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”); (II) have, to the knowledge
of the Company, received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct
their respective businesses; and (III) are in compliance, to the knowledge of the Company, with all terms and conditions of any
such permit, license or approval where, in each of the three (3) foregoing cases, the failure to so comply would have, individually
or in the aggregate, a Material Adverse Effect.


 


(N) TITLE. The Company
and its Subsidiaries have good and marketable title to all personal property owned by them which is material to the business of
the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described
in the SEC Documents or such as do not materially affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company or any of its Subsidiaries. Any real property and facilities held under lease
by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company
and its Subsidiaries.


 


(O) INSURANCE. Each of
the Company’s Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as management of the Company reasonably believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has been refused any insurance coverage sought
or applied for and neither the Company nor its Subsidiaries has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.


 


(P) REGULATORY PERMITS.
The Company and its Subsidiaries have in full force and effect all certificates, approvals, authorizations and permits from the
appropriate federal, state, local or foreign regulatory authorities and comparable foreign regulatory agencies, necessary to own,
lease or operate their respective properties and assets and conduct their respective businesses, and neither the Company nor any
such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, approval,
authorization or permit, except for such certificates, approvals, authorizations or permits which if not obtained, or such revocations
or modifications which, would not have a Material Adverse Effect.


 






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(Q) INTERNAL ACCOUNTING
CONTROLS. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurance that (I) transactions are executed in accordance with management’s general or specific authorizations; (II) transactions
are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles
by a firm with membership to the PCAOB and to maintain asset accountability; (III) reasonable controls to safeguard assets are
in place; and (IV) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.


 


(R) NO MATERIALLY ADVERSE
CONTRACTS, ETC. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction,
or any judgment, decree or order which in the judgment of the Company’s officers has or is expected in the future to have
a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the
judgment of the Company’s officers has or is expected to have a Material Adverse Effect.


 


(S) TAX STATUS. The Company
and each of its Subsidiaries has made or filed all United States federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its
Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and
has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on
such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably
adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim.


 


(T) CERTAIN TRANSACTIONS.
Except as set forth in the SEC Documents filed at least ten (10) days prior to the date hereof and except for arm’s length
transactions pursuant to which the Company makes payments in the ordinary course of business upon terms no less favorable than
the Company could obtain from disinterested third parties and other than the grant of stock options disclosed in the SEC Documents
or stock options granted in the future as contemplated by current compensation agreements or plans disclosed in the SEC Documents,
none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of
its Subsidiaries (other than 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 knowledge of the Company, any corporation, partnership, trust
or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee
or partner.


 


(U) DILUTIVE EFFECT. The
Company understands and acknowledges that the number of shares of Common Stock issuable upon purchases pursuant to this Agreement
will increase in certain circumstances including, but not necessarily limited to, the circumstance wherein the trading price of
the Common Stock declines during the period between the Effective Date and the end of the Open Period. The Company’s executive
officers and directors have studied and fully understand the nature of the transactions contemplated by this Agreement and recognize
that they have a potential dilutive effect on the shareholders of the Company. The Board of Directors of the Company has concluded,
in its good faith business judgment, and with full understanding of the implications, that such issuance is in the best interests
of the Company. The Company specifically acknowledges that, subject to such limitations as are expressly set forth in the Equity
Line Transaction Documents, its obligation to issue shares of Common Stock upon purchases pursuant to this Agreement is absolute
and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders
of the Company.


 






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(V) LOCK-UP. The Company
shall cause its officers and directors to refrain from selling Common Stock during each Pricing Period.


 


(W) NO GENERAL SOLICITATION.
Neither the Company, nor any of its affiliates, nor any person acting on its behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Common Stock to be offered
as set forth in this Agreement.


 


(X) NO BROKERS, FINDERS
OR FINANCIAL ADVISORY FEES OR COMMISSIONS. No brokers, finders or financial advisory fees or commissions will be payable by the
Company, its agents or Subsidiaries, with respect to the transactions contemplated by this Agreement, except as otherwise disclosed
in this Agreement.


 


SECTION
5. COVENANTS OF THE COMPANY


 


(A) EFFORTS. The
Company shall use all commercially reasonable efforts to timely satisfy each of the conditions set forth in Section 8 of this
Agreement.


 


(B) BLUE SKY. The
Company shall, at its sole cost and expense, on or before each of the Closing Dates, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for, or obtain exemption for the Securities for, sale to the
Investor at each of the Closings pursuant to this Agreement under applicable securities or “Blue Sky” laws of
such states of the United States, as reasonably specified by the Investor, and shall provide evidence of any such action so
taken to the Investor on or prior to the Closing Date.


 


(C) REPORTING
STATUS. Until one of the following occurs, the Company shall file all reports required to be filed with the SEC pursuant to
the 1934 Act, and the Company shall not terminate its status, or take an action or fail to take any action, which would
terminate its status as a reporting company under the 1934 Act: (1) this Agreement terminates pursuant to Section 9, or (2)
the date on which the Investor has sold all the Securities; provided that the Investor shall promptly notify the Company
after the Investor has sold all the Securities.


 


(D) USE OF PROCEEDS.
The Company will use the proceeds from the sale of the Securities (excluding amounts paid by the Company for fees as set forth
in the Equity Line Transaction Documents) for general corporate and working capital purposes and acquisitions or assets, businesses
or operations or for other purposes that the Board of Directors, in its good faith, deems to be in the best interest of the Company.


 


(E) FINANCIAL
INFORMATION. During the Open Period, the Company agrees to make available to the Investor via the SEC’s EDGAR website
or other electronic means the following documents and information on the forms set forth: (1) within five (5) Trading Days
after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any
Current Reports on Form 8-K and any Registration Statements or amendments filed pursuant to the 1933 Act; (2) 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; and (3) within two (2) calendar days of filing or delivery
thereof, copies of all documents filed with, and all correspondence sent to, the Principal Market, any securities exchange or
market, or the Financial Industry Regulatory Authority, unless such information is material nonpublic information.


 






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(F) RESERVATION OF
SHARES. The Company shall reserve 3,200,000 Shares for the issuance of the Securities to the Investor as required hereunder.
In the event that the Company determines that it does not have a sufficient number of authorized shares of Common Stock to
reserve and keep available for issuance as described in this Section 5(F), the Company shall use all commercially reasonable
efforts to increase the number of authorized shares of Common Stock by seeking shareholder approval for the authorization of
such additional shares.


 


(G) LISTING. The
Company shall promptly secure and maintain the listing of all of the Registrable Securities (as defined in the Registration
Rights Agreement) on the Principal Market and each other national securities exchange and automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, such listing
of all Registrable Securities from time to time issuable under the terms of the Equity Line Transaction Documents. Neither
the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting
or suspension of the Common Stock on the Principal Market (excluding suspensions of not more than one (1) trading day
resulting from business announcements by the Company). The Company shall promptly provide to the Investor copies of any
notices it receives from the Principal Market regarding the continued eligibility of the Common Stock for listing on such
automated quotation system or securities exchange. The Company shall pay all fees and expenses in connection with satisfying
its obligations under this Section 5(G).


 


(H) TRANSACTIONS
WITH AFFILIATES. The Company shall not, and shall cause each of its Subsidiaries not to, enter into, amend, modify or
supplement, or permit any Subsidiary to enter into, amend, modify or supplement, any agreement, transaction, commitment or
arrangement with any of its or any Subsidiary’s officers, directors, persons who were officers or directors at any time
during the previous two (2) years, shareholders who beneficially own 5% or more of the Common Stock, or Affiliates or with
any individual related by blood, marriage or adoption to any such individual or with any entity in which any such entity or
individual owns a 5% or more beneficial interest (each a “Related Party”), except for (1) customary employment
arrangements and benefit programs on reasonable terms, (2) any agreement, transaction, commitment or arrangement on an
arms-length basis on terms no less favorable than terms which would have been obtainable from a disinterested third party
other than such Related Party,(3) any agreement, transaction, commitment or arrangement which is approved by a majority of
the disinterested directors of the Company, or (4) extensions or amendments of any existing employment agreement. For
purposes hereof, any director who is also an officer of the Company or any Subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction, commitment or arrangement. “Affiliate”
for purposes hereof means, with respect to any person or entity, another person or entity that, directly or indirectly, (1)
has a 5% or more equity interest in that person or entity, (2) has 5% or more common ownership with that person or entity,
(3) controls that person or entity, or (4) is under common control with that person or entity. “Control” or
“Controls” for purposes hereof means that a person or entity has the power, directly or indirectly, to conduct
or govern the policies of another person or entity.


 


(I) FILING OF FORM
8-K. On or before the date which is four (4) Trading Days after the date of execution of this Agreement, the Company shall
file a Current Report on Form 8-K with the SEC describing the terms of the transaction contemplated by the Equity Line
Transaction Documents in the form required by the 1934 Act, if such filing is required.


 






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(J) CORPORATE
EXISTENCE. The Company shall use all commercially reasonable efforts to preserve and continue the corporate existence of the
Company.


 


(K) NOTICE OF
CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE A PUT. The Company shall promptly notify the Investor upon
the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of an
offering of the Securities: (1) receipt of any request for additional information by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the
Registration Statement or related prospectus; (2) the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings
for that purpose; (3) receipt of any notification with respect to the suspension of the qualification or exemption from
qualification of any of the Securities for sale in any jurisdiction or the initiation or notice of any proceeding for such
purpose; (4) the happening of any event that makes any statement made in such Registration Statement or related prospectus or
any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires
the making of any changes in the Registration Statement, related prospectus or documents so that, in the case of a
Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related
prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not
misleading; and (5) the Company’s reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate, and the Company shall promptly make available to Investor any such supplement or amendment to
the related prospectus. The Company shall not deliver to the Investor any Put Notice during the continuation of any of the
foregoing events in this Section 5(K).


 


(L) REIMBURSEMENT. If
(I) the Investor becomes involved in any capacity in any action, proceeding or investigation brought by any shareholder of the
Company, in connection with or as a result of the consummation of the transactions contemplated by the Equity Line Transaction
Documents, or if the Investor is impleaded in any such action, proceeding or investigation by any person (other than as a result
of a breach of the Investor’s representations and warranties set forth in this Agreement); or (II) the Investor becomes involved
in any capacity in any action, proceeding or investigation brought by the SEC against or involving the Company (unless the Company
is involved in the action, proceeding or investigation as a witness only) or in connection with or as a result of the consummation
of the transactions contemplated by the Equity Line Transaction Documents (other than as a result of a breach of the Investor’s
representations and warranties set forth in this Agreement), or if this Investor is impleaded in any such action, proceeding or
investigation by any person, then in any such case, the Company will reimburse the Investor for its actual, reasonable legal and
other expenses (including the cost of any investigation and preparation) incurred in connection therewith, as such expenses are
incurred. In addition, other than with respect to any matter in which the Investor is a named party, the Company will pay to the
Investor the charges, as reasonably determined by the Investor, for the time of any officers or employees of the Investor devoted
to appearing and preparing to appear as witnesses, assisting in preparation for hearings, trials or pretrial matters, or otherwise
with respect to inquiries, hearing, trials, and other proceedings relating to the subject matter of this Agreement. The reimbursement
obligations of the Company under this section shall be in addition to any liability which the Company may otherwise have, shall
extend upon the same terms and conditions to any affiliates of the Investor that are actually named in such action, proceeding
or investigation, and partners, directors, agents, employees, attorneys, accountants, auditors and controlling persons (if any),
as the case may be, of Investor and any such affiliate, and shall be binding upon and inure to the benefit of any successors of
the Company, the Investor and any such affiliate and any such person. However, in all events, if the Investor is found to be guilty
of violations of the federal or state securities laws (or pleads “no contest” or other similar plea or settles an investigation
or pleading without a specific finding of liability but is still subject to civil or criminal liability), the Company will have
no responsibility to pay any of the Investor’s fees and expenses regardless of whether or not the Company is or is also found
to have liability.


 






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(M) TRANSFER AGENT.
Upon effectiveness of the Registration Statement, and for so long as the Registration Statement is effective, the Company shall
deliver instructions to its transfer agent to issue Shares to the Investor that are covered for resale by the Registration Statement
free of restrictive legends.


 


(N) ACKNOWLEDGEMENT
OF TERMS. The Company hereby represents and warrants to the Investor that: (1) it is voluntarily entering into this Agreement of
its own freewill, (2) it is not entering this Agreement under economic duress, (3) the terms of this Agreement are reasonable and
fair to the Company, and (4) the Company has had independent legal counsel of its own choosing review this Agreement, advise the
Company with respect to this Agreement, and represent the Company in connection with this Agreement.


 


SECTION
6. INTENTIONALLY OMITTED.


 


SECTION
7. CONDITIONS OF THE COMPANY’S OBLIGATION TO SELL. The obligation hereunder of the Company to issue and sell the
Securities to the Investor is further subject to the satisfaction, at or before each Closing Date, of each of the following conditions
set forth below. These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its
sole discretion.


 


(A) The Investor shall
have executed this Agreement and the Registration Rights Agreement and delivered the same to the Company.


 


(B) The Investor shall
have delivered to the Company the Purchase Price for the Securities being purchased by the Investor between the end of the Pricing
Period and the Closing Date via a Put Settlement Sheet (hereto attached as Exhibit D). Immediately after receipt of confirmation
of delivery of such Securities to the Investor, the Investor, by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company, will disburse the funds constituting the Purchase Amount.


 


(C) The representations
and warranties of the Investor shall be true and correct in all material respects as of the date when made and as of the applicable
Closing Date as though made at that time and the Investor shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by the Equity Line Transaction Documents to be performed, satisfied or complied
with by the Investor on or before such Closing Date.


 


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


 






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SECTION
8. FURTHER CONDITIONS OF THE INVESTOR’S OBLIGATION TO PURCHASE. The obligation of the Investor hereunder to purchase
Shares is subject to the satisfaction, on or before each Closing Date, of each of the following conditions set forth below.


 


(A) The Company shall
have executed the Equity Line Transaction Documents and delivered the same to the Investor.


 


(B) The Common Stock
shall be authorized for quotation on the Principal Market and trading in the Common Stock shall not have been suspended by the
Principal Market or the SEC, at any time beginning on the date hereof and through and including the respective Closing Date (excluding
suspensions of not more than one (1) Trading Day resulting from business announcements by the Company, provided that such suspensions
occur prior to the Company’s delivery of the Put Notice related to such Closing).


 


(C) The representations
and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the applicable
Closing Date as though made at that time and the Company shall have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by the Equity Line Transaction Documents to be performed, satisfied or complied
with by the Company on or before such Closing Date. The Investor may request an update as of such Closing Date regarding the representation
contained in Section 4(C) above.


 


(D) The Company shall
have executed and delivered to the Investor the certificates representing, or have executed electronic book-entry transfer of,
the Securities (in such denominations as the Investor shall request) being purchased by the Investor at such Closing.


 


(E) The Board of Directors
of the Company shall have adopted resolutions consistent with Section 4(B)(2) above (the “Resolutions”) and such Resolutions
shall not have been amended or rescinded prior to such Closing Date.


 


(F) INTENTIONALLY OMITTED.


 


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


 


(H) The Registration
Statement shall be effective on each Closing Date and no stop order suspending the effectiveness of the Registration statement
shall be in effect or to the Company’s knowledge shall be pending or threatened. Furthermore, on each Closing Date (1) neither
the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to
such Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of such Registration Statement,
either temporarily or permanently, or intends or has threatened to do so (unless the SEC’s concerns have been addressed and
Investor is reasonably satisfied that the SEC no longer is considering or intends to take such action), and (2) no other suspension
of the use or withdrawal of the effectiveness of such Registration Statement or related prospectus shall exist.


 






    	19



    	 	 	 



    

 


(I) At the time of each
Closing, the Registration Statement (including information or documents incorporated by reference therein) and any amendments or
supplements thereto shall not contain any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or which would require public disclosure or an update
supplement to the prospectus.


 


(J) If applicable, the
shareholders of the Company shall have approved the issuance of any Shares in excess of the Maximum Common Stock Issuance in accordance
with Section 2(H) or the Company shall have obtained appropriate approval pursuant to the requirements of Delaware law and the
Company’s Articles of Incorporation and By-laws.


 


(K) The conditions to
such Closing set forth in Section 2(D) shall have been satisfied on or before such Closing Date.


 


(L) The Company shall
have certified to the Investor the number of Shares of Common Stock outstanding when a Put Notice is given to the Investor. The
Company’s delivery of a Put Notice to the Investor constitutes the Company’s certification of the reservation for issuance
of the necessary number of shares of Common Stock subject to a Put Notice.


 


SECTION
9. TERMINATION. This Agreement shall terminate upon any of the following events:


 


(A) when the Investor
has purchased an aggregate of three million two hundred thousand (3,200,000) Shares pursuant to this Agreement; or,


 


(B) on the date which
is thirty-six (36) months after the Effective Date; or,


 


(C) upon written notice
of the Company to the Investor. Any and all shares, or penalties, if any, due under this Agreement shall be immediately payable
and due upon termination of this Agreement.


 


SECTION
10. SUSPENSION. The Company’s right to cause the Investor to purchase Shares pursuant to a Put Notice, and the
Investor’s obligation to purchase Shares under this Agreement shall be suspended upon any of the following events, and shall
remain suspended until such event is rectified:


 


(A) The trading of the
Common Stock is suspended by the SEC, the Principal Market or FINRA for a period of two (2) consecutive Trading Days during the
Open Period; or,


 


(B) The Common Stock
ceases to be registered under the 1934 Act or listed or traded on the Principal Market. Immediately upon the occurrence of one
of the above-described events, the Company shall send written notice of such event to the Investor.


 


SECTION
11. INDEMNIFICATION. In consideration of the parties’ mutual obligations set forth in the Transaction Documents,
each of the parties (in such capacity, an “Indemnitor”) shall defend, protect, indemnify and hold harmless the other
and all of the other party’s shareholders, officers, directors, employees, counsel, and direct or indirect investors and
any of the foregoing person’s agents or other representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and reasonable expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought),
and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee
as a result of, or arising out of, or relating to (A) any material misrepresentation or breach of any representation or warranty
made by the Indemnitor in the Equity Line Transaction Documents or any other certificate, instrument or document contemplated hereby
or thereby; (B) any material breach of any covenant, agreement or obligation of the Indemnitor contained in the Equity Line Transaction
Documents or any other certificate, instrument or document contemplated hereby or thereby; or (C) any cause of action, suit or
claim brought or made against such Indemnitee by a third party and arising out of or resulting from the execution, delivery, performance
or enforcement of the Equity Line Transaction Documents or any other certificate, instrument or document contemplated hereby or
thereby, except insofar as (Y) any such misrepresentation, breach or any untrue statement, alleged untrue statement, omission or
alleged omission is made in reliance upon and in conformity with information furnished to Indemnitor which is specifically intended
for use in the preparation of any such Registration Statement, preliminary prospectus, prospectus or amendments to the prospectus,
or (Z) any such Indemnified Liabilities resulted or arose from the breach by the Indemnitee party hereto of any representation,
warranty, covenant or agreement of such Indemnitee contained in the Equity Line Transaction Documents or the negligence, recklessness,
willful misconduct or bad faith of such Indemnitee. To the extent that the foregoing undertaking by the Indemnitor may be unenforceable
for any reason, the Indemnitor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law. The indemnity provisions contained herein shall be in addition to any cause of action
or similar rights Indemnitor may have, and any liabilities the Indemnitor or the Indemnitees may be subject to.


 






    	20



    	 	 	 



    

 


SECTION
12. GOVERNING LAW; DISPUTES SUBMITTED TO ARBITRATION. All disputes arising under this agreement shall be governed by
and interpreted in accordance with the laws of the State of New York, without regard to principles of conflict of laws. The parties
to this agreement will submit all disputes arising under this agreement to arbitration in New York City, Borough of Manhattan before
a single arbitrator of the American Arbitration Association (“AAA”). The arbitrator shall be selected by application
of the rules of the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to practice
law in State of New York. No party to this Agreement will challenge the jurisdiction or venue provisions as provided in this section.
No party to this agreement will challenge the jurisdiction or venue provisions as provided in this section. Nothing contained herein
shall prevent the party from obtaining an injunction.


 


SECTION
13. LEGAL EXPENSES; AND MISCELLANEOUS EXPENSES. Except as otherwise set forth in the Equity Line Transaction Documents,
each party shall pay the fees and expenses of its advisers, counsel, the 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. Any attorneys’
fees and expenses incurred by either the Company or the Investor in connection with the preparation, negotiation, execution and
delivery of any amendments to this Agreement or relating to the enforcement of the rights of any party, after the occurrence of
any breach of the terms of this Agreement by another party or any default by another party in respect of the transactions contemplated
hereunder, shall be paid on demand by the party which breached the Agreement and/or defaulted, as the case may be. The Company
shall pay all stamp and other taxes and duties levied in connection with the issuance of any Securities. The Company will pay $5,000
toward the preparation of the Equity Line Transaction Documents. If the Company is not DWAC eligible at the time of a Put Closing,
there will be a $2,000 charge on each Closing Date to cover costs associated with, but not limited to: deposit costs, legal review
fees and wire fees. If the Company is DWAC eligible at the time of a Put Closing, there will be a $250 charge on each Closing Date.


 


SECTION
14. COUNTERPARTS. This Agreement may be executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory  thereto
with the same force and effect as if the signature were an original signature.


 






    	21



    	 	 	 



    

 


SECTION
15. HEADINGS; SINGULAR/PLURAL. The headings of this Agreement are for convenience of reference and shall not form part
of, or affect the interpretation of, this Agreement. Whenever required by the context of this Agreement, the singular shall include
the plural and masculine shall include the feminine.


 


SECTION
16. SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or
the validity or enforceability of any provision of this Agreement in any other jurisdiction.


 


SECTION
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement is the FINAL AGREEMENT between the Company and the Investor with respect
to the terms and conditions set forth herein, and, the terms of this Agreement may not be contradicted by evidence of prior, contemporaneous,
or subsequent oral agreements of the Parties. No provision of this Agreement may be amended other than by an instrument in writing
signed by the Company and the Investor, and no provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought. The execution and delivery of the Equity Line Transaction Documents shall not alter
the force and effect of any other agreements between the Parties, and the obligations under those agreements.


 


SECTION
18. NOTICES. Any notices or other communications required or permitted to be given under the terms of this Agreement
must be in writing and will be deemed to have been delivered (A) upon receipt, when delivered personally; (B) upon receipt, when
sent by facsimile or email with the signed document attached in PDF format (provided confirmation of transmission is mechanically
or electronically generated and kept on file by the sending party); or (C) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:


 


If to the Company:


 


PROPHASE LABS, INC.


621 N. Shady Retreat Road


Doylestown, Pennsylvania 18901


Telephone: (215) 345-0919


 


with a copy to (which shall
not constitute notice):


 


Reed Smith LLP


599 Lexington Avenue


New York, NY 10022


Facsimile: (212) 521-5450


Attention: Herbert Kozlov,
Esq.


 






    	22



    	 	 	 



    

 


If to the Investor:


 


Dutchess Opportunity Fund, II, LP

50 Commonwealth Avenue, Suite 2

Boston, MA 02116

Telephone: (617) 301-4700






Each party shall provide five (5) days prior
written notice to the other party of any change in address or facsimile number.


 


SECTION
19. NO ASSIGNMENT. This Agreement and any rights, agreements or obligations hereunder may not be assigned, by operation
of law, merger or otherwise, without the prior written consent of the other party hereto, and any purported assignment by a party
without prior written consent of the other party will be null and void and not binding on such other party. Subject to the preceding
sentence, all of the terms, agreements, covenants, representations, warranties and conditions of this Agreement are binding upon,
and inure to the benefit of and are enforceable by, the parties and their respective successors and assigns.


 


SECTION
20. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the parties hereto and is not for the
benefit of, nor may any provision hereof be enforced by, any other person, except that the Company acknowledges that the rights
of the Investor may be enforced by its general partner.


 


SECTION
21. SURVIVAL. The indemnification provisions set forth in Section 11, shall survive each of the Closings and the termination
of this Agreement.


 


SECTION
22. PUBLICITY. The Company and the Investor shall consult with each other in issuing any press releases or otherwise
making public statements with respect to the transactions contemplated hereby and no party shall issue any such press release or
otherwise make any such public statement without the prior consent of the other party, which consent shall not be unreasonably
withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which such case the
disclosing party shall provide the other party with prior notice of such public statement. The Investor acknowledges that this
Agreement and all or part of the Equity Line Transaction Documents may be deemed to be “material contracts” as that
term is defined by Item 601(b)(10) of Regulation S-B, and that the Company may therefore be required to file such documents as
exhibits to reports or registration statements filed under the 1933 Act or the 1934 Act. The Investor further agrees that the status
of such documents and materials as material contracts shall be determined solely by the Company, in consultation with its counsel.


 


SECTION
23. FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.


 






    	23



    	 	 	 



    

 


SECTION
24. INTENTIONALLY OMITTED.


 


SECTION
25. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be applied against any party, as the parties mutually
agree that each has had a full and fair opportunity to review this Agreement and seek the advice of counsel on it.


 


SECTION
26. REMEDIES. The Investor shall have all rights and remedies set forth in this Agreement and the Registration Rights
Agreement and all rights and remedies which such holders have been granted at any time under any other agreement or contract and
all of the rights which the Investor has by law. Any person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any default or
breach of any provision of this Agreement, including the recovery of reasonable attorneys fees and costs, and to exercise all other
rights granted by law.


 


SECTION
27. PAYMENT SET ASIDE. To the extent that the Company makes a payment or payments to the Investor hereunder or under
the Registration Rights Agreement or the Investor enforces or exercises its rights hereunder or 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.


 


SECTION
28. PRICING OF COMMON STOCK. For purposes of this Agreement, the VWAP of the Common Stock shall be as reported on a direct
feed service.


 


SECTION
29. NON-DISCLOSURE OF NON-PUBLIC INFORMATION.


 


(A) The Company shall
not disclose non-public information concerning the Company to the Investor, its advisors, or its representatives.


 


(B) Nothing herein shall
require the Company to disclose non-public information to the Investor or its advisors or representatives, provided, however, that
notwithstanding anything herein to the contrary, the Company will, as hereinabove provided, immediately notify the advisors and
representatives of the Investor and, if any, underwriters, of any event or the existence of any circumstance (without any obligation
to disclose the specific event or circumstance) of which it becomes aware, constituting non-public information (whether or not
requested of the Company specifically or generally during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause such prospectus to include a material misstatement
or to omit a material fact required to be stated therein in order to make the statements, therein, in light of the circumstances
in which they were made, not misleading. Nothing contained in this Section 29 shall be construed to mean that such persons or entities
other than the Investor (without the written consent of the Investor prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the terms of this Agreement and nothing herein shall prevent
any such persons or entities from notifying the Company of their opinion that based on such due diligence by such persons or entities,
that the Registration Statement contains an untrue statement of material fact or omits a material fact required to be stated in
the Registration Statement or necessary to make the statements contained therein, in light of the circumstances in which they were
made, not misleading.


 






    	24



    	 	 	 



    

 


SECTION
30. ACKNOWLEDGEMENTS OF THE PARTIES. Notwithstanding anything in this Agreement to the contrary, the parties hereto hereby
acknowledge and agree to the following: (A) the Investor makes no representations or covenants that it will not engage in trading
in the securities of the Company, other than the Investor will not sell any of the Company’s common stock short at any time
during a Pricing Period; (B) the Company shall, by 8:30 a.m. Boston Time on the fourth Trading Day following the date hereof, file
a current report on Form 8-K disclosing the material terms of the transactions contemplated hereby and in the other Equity Line
Transaction Documents; (C) the Company has not and shall not provide material non-public information to the Investor unless prior
thereto the Investor shall have executed a written agreement regarding the confidentiality and use of such information; and (D)
the Company understands and confirms that the Investor will be relying on the acknowledgements set forth in clauses (A) through
(C) above if the Investor effects any transactions in the securities of the Company.


 


[Signature Page Follows]


 









    	25



    	 	 	 



    

 


SIGNATURE PAGE OF INVESTMENT AGREEMENT


 


Your signature on this
Signature Page evidences your agreement to be bound by the terms and conditions of the Investment Agreement and the Registration
Rights Agreement as of the date first written above.


 


The undersigned signatory
hereby certifies that he has read and understands the Investment Agreement, and the representations made by the undersigned in
this Investment Agreement are true and accurate, and agrees to be bound by its terms.


  


	 	DUTCHESS
OPPORTUNITY FUND, II, LP 



	 		
	 	By:	 
	 	 	Douglas H. Leighton
	 	 	Managing Member of:
	 	 	Dutchess Capital Management, II, LLC
	 	 	General Partner to:
	 	 	Dutchess Opportunity Fund, II, LP


 


	 	PROPHASE LABS, INC.
	 	 	 
	 	By:	 
	 	 	Ted Karkus
	 	 	
        Chairman of the
Board and Chief Executive Officer



 


	 	By:	 
	 	 	Robert V. Cuddihy, Jr. 
	 	 	Chief Operating Officer and Chief Financial Officer


 


[Signature
Page to Investment Agreement]








 






    	 



    	 	 	 



    

 


LIST OF EXHIBITS 


 


	EXHIBIT A	Registration Rights Agreement 
	EXHIBIT B 	Opinion of Company’s Counsel
	EXHIBIT C	Put Notice 
	EXHIBIT D	Put Settlement Sheet 


  






    	 



    	 	 	 



    

 


EXHIBIT A


 


REGISTRATION RIGHTS AGREEMENT


 


(Attached)


 












    	A-1



    	 	 	 



    

 


EXHIBIT B


 


OPINION OF COMPANY’S COUNSEL


 


(Attached)


 









    	B-1



    	 	 	 



    

 


EXHIBIT C


 


FORM OF PUT NOTICE


 


Date: ______________


 


RE: Put Notice Number   ______________


 


Dear Mr. Leighton:


 


This is to inform you that as of today, ProPhase
Labs, Inc., a Delaware corporation (the “Company”), hereby elects to exercise its right pursuant to the
Investment Agreement entered into with Dutchess Opportunity Fund II, LP (“Dutchess”) to require Dutchess
to purchase shares of its common stock. The Company hereby certifies that:


 


1. The undersigned is the duly elected ______________
of the Company.


 


2. There are no fundamental changes to the
information set forth in the Registration Statement which would require the Company to file a post effective amendment to the Registration
Statement.


 


3. The Company has performed in all material
respects all covenants and agreements to be performed by the Company and has complied in all material respects with all obligations
and conditions contained in this Agreement on or prior to the Put Notice Date, and shall continue to perform in all material respects
all covenants and agreements to be performed by the Company through the applicable Put Date. All conditions to the delivery of
this Put Notice are satisfied as of the date hereof.


 


4. The undersigned hereby represents, warrants
and covenants that it has made all filings (“SEC Filings”) required to be made by it pursuant to applicable
securities laws (including, without limitation, all filings required under the Securities Exchange Act of 1934, which include Forms
10-Q, 10-K, 8-K, etc.). All SEC Filings and other public disclosures made by the Company, including, without limitation, all press
releases, analysts meetings and calls, etc. (collectively, the “Public Disclosures”), have been reviewed and
approved for release by the Company’s attorneys and, if containing financial information, the Company’s independent
certified public accountants. None of the Company’s Public Disclosures contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.


 


5. The amount of this put is up to ____________________shares (Put Amount).


 


6. The Pricing Period runs from ______________
until ______________.


 


7. The Suspension Price is $______________.


 


8. The current number of shares issued and
outstanding as of the Company are: ______________.


 


9. The number of shares currently available
for resale pursuant to the Registration Statement on Form S-3 for the Equity Line are:______________.


  


	 	ProPhase Labs, Inc.
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 


 




    	 



    	 	 	 



    


  


EXHIBIT D


 


FORM OF PUT SETTLEMENT SHEET


 


Date: __________


 


RE: PROPHASE LABS, INC.


 


Dear  __________:


 


Pursuant to the Put given by PROPHASE LABS,
INC. to Dutchess Opportunity Fund, II, LP on __________ 20 ____, we are now submitting the amount of common shares for you
to issue to Dutchess.


 


Please deliver __________ shares without
restrictive legend via book entry to Dutchess Opportunity Fund, II, LP immediately and send via DWAC to the following
account:


 


XXXXXX


 


Once these shares are received by us, we will
have the funds wired to the Company.


 


Regards,


 


Douglas H. Leighton


 









    	 



    	 	 	 



    

 


	
        DATE
	 	
        PRICE

	Date of Day 1	 	VWAP of Day 1


 


	LOWEST VWAP IN PRICING PERIOD	 	 
	 	 	 
	PUT AMOUNT	 	 
	 	 	 
	DEFICIT/EXCESS	 	 
	 	 	 
	PURCHASE PRICE PER SHARE	 	 
	(NINETY-FIVE PERCENT (95%))	 	 
	 	 	 
	PURCHASE AMOUNT	 	 


 


The undersigned has completed
this Put as of this ___th day of _________, 20__.


 


	 	PROPHASE LABS, INC.
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title: