Exhibit 10.1


 





SECURITIES PURCHASE AGREEMENT


 


THIS SECURITIES PURCHASE
AGREEMENT (“Agreement”) is made as of the 26th day of November, 2014 by and among Aethlon Medical, Inc., a Nevada corporation
(the “Company”), and the Investors set forth on the signature pages affixed hereto (each an “Investor”
and collectively the “Investors”).


 


Recitals


 


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


 


B.          The Investors
wish to purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions stated
in this Agreement, (i) an aggregate of 11,000,000 shares of the Company’s Common Stock, par value $0.001 per share (together
with any securities into which such shares may be reclassified, whether by merger, charter amendment or otherwise, the “Common
Stock”), at purchase price of $0.30 per share, and (ii) warrants to purchase an aggregate of 13,200,000 shares of Common
Stock (subject to adjustment) at an exercise price of $0.30 per share (subject to adjustment) in the form attached hereto as Exhibit
A (the “Warrants”); and


 


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


 


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


 


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


 


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


 


“Agent”
means Roth Capital Partners, LLC.


 






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“Agent Related
Persons” means any of the Agent’s directors, executive officers, general partners, managing members or other officers
participating in the offering of the Securities.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


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


 


“Purchase Price”
means Three Million Three Hundred Thousand Dollars ($3,300,000).


 


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


 


“Required Investors”
means (i) prior to Closing the Investors who, together with their Affiliates, have agreed to purchase a majority of the Securities
to be sold hereunder and (ii) from and after the Closing the Investors beneficially owning (calculated in accordance with Rule
13d-3 under the 1934 Act without giving effect to any limitation on exercise of the Warrants set forth therein) a majority of the
Shares and the Warrant Shares.


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


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


 


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


 


3.     Closing.
Upon confirmation that the other conditions to closing specified herein have been satisfied or duly waived by the Investors, (i)
the Company shall deliver to each Investor a certificate or certificates, registered in such name or names of Investors as such
Investor may designate, representing the Shares and Warrants purchased by such Investor, and (ii) such Investor shall cause a
wire transfer in same day funds to be sent to the account of the Company as instructed in writing by the Company, in an amount
representing such Investor’s pro rata portion of the Purchase Price as set forth on the signature pages to this Agreement.
The closing of the purchase and sale of the Shares and Warrants (the “Closing”) shall take place at the offices of
Lowenstein Sandler LLP, 1251 Avenue of the Americas, 18th Floor, New York, New York 10020, or at such other location and on such
other date as the Company and the Investors shall mutually agree. The date on which the Closing occurs is hereinafter referred
to as the “Closing Date.”


 


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


 


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


 


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


 






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


 


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


 


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


 






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4.4     Valid Issuance. The Shares
have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly issued, fully paid
and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by the Investors),
except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. The Warrants
have been duly and validly authorized. Upon the due exercise of the Warrants including the payment of the exercise price or other
exercise consideration thereunder, the Warrant Shares will be validly issued, fully paid and non-assessable free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable
securities laws and except for those created by the Investors. The Company has reserved at least 11,000,000 shares of Common Stock
for issuance upon the exercise of the Warrants.


 


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


 


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


 


4.7     Use of Proceeds. The net
proceeds of the sale of the Shares and the Warrants hereunder shall be used by the Company for working capital and general corporate
purposes.


 


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


 


(i)          any change in the consolidated assets,
liabilities, financial condition or operating results of the Company from that reflected in the financial statements included in
the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, except for changes in the ordinary
course of business which have not had and could not reasonably be expected to have a Material Adverse Effect, individually or in
the aggregate;


 






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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


4.9          SEC Filings.


 


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


 






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


 


(c)          To the Company’s Knowledge,
the Company is eligible to use Form S-3 to register the Registrable Securities (as such term is defined in the Registration Rights
Agreement) for sale or other disposition by the Investors as contemplated by the Registration Rights Agreement].


 


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


 


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


 






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


 


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


 


4.14          Labor Matters.


 


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


 


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


 


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


 






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


 


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


 


4.15          Intellectual Property.


 


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


 


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


 


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


 






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


 


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


 


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


 


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


 






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


 


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


 


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


 


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


 


4.21          Brokers and Finders. Except
for the Agent, no Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant
to any agreement, arrangement or understanding entered into by or on behalf of the Company. The Company shall pay all fees and
expenses of the Agent.


 






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


 


4.23          No Integrated Offering.
Neither the Company nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(a)(2) for the exemption from registration for the transactions contemplated hereby or would
require registration of the Securities under the 1933 Act.


 


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


 


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


 


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


 


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


 






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


 


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


 






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


 


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


 


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


 


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


 


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


 


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


 






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


 


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


 


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


 


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


 


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


 


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


 






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


 


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


 


5.9          No General Solicitation.
To its knowledge, such Investor did not learn of the investment in the Securities as a result of any general solicitation or general
advertising.


 


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


 


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


 


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


 






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6.     Conditions to Closing.


 


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


 


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


 


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


 


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


 


(d)          The Company shall have received
gross proceeds from the sale of the Shares and Warrants as contemplated hereby of at least Three Million Three Hundred Thousand
Dollars ($3,300,000).


 


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


 


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


 


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


 






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


 


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


 


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


 


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


 


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


 


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


 


6.3          Termination of Obligations to
Effect Closing; Effects.


 


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


 


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


 






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


 


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


 


(iv)         By either the Company or any Investor
(with respect to itself only) if the Closing has not occurred on or prior to December 5, 2014;


 


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


 


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


 


7.     Covenants
and Agreements of the Company.


 


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


 


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


 






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


 


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


 


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


 


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


 


7.7          Termination of Covenants.
The provisions of Sections 7.2 through 7.5 shall terminate and be of no further force and effect on the date on which the Company’s
obligations under the Registration Rights Agreement to register or maintain the effectiveness of any registration covering the
Registrable Securities (as such term is defined in the Registration Rights Agreement) shall terminate.


 


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


 






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7.9          Subsequent Equity Sales; Registration
Statements.


 


(a)          From the date hereof until the later
of (i) ninety (90) days after the Closing Date and (ii) thirty (30) days after the first Effective Date (as defined in the Registration
Rights Agreement) whereby all Registrable Securities are registered for resale pursuant to an effective registration statement,
without the consent of the Required Investors, neither the Company nor any Subsidiary shall issue shares of Common Stock or Common
Stock Equivalents. Notwithstanding the foregoing, the provisions of this Section 7.9(a) shall not apply to (i) the Warrant Shares,
(ii) the issuance of Common Stock or Common Stock Equivalents upon the conversion or exercise of any securities of the Company
or a Subsidiary outstanding on the date hereof, provided that the terms of such security are not amended after the date hereof
to decrease the conversion, exchange or exercise price, change of the term of any such security or increase the Common Stock or
Common Stock Equivalents receivable upon the exercise, conversion or exchange thereof or (iii) the issuance of any Common Stock
or Common Stock Equivalents pursuant to any Company equity incentive plan approved by the Company’s board of directors and
in place as of the date hereof, as the same may be amended from time to time (collectedly, the “Excluded Securities”).
In addition, nothing in this section 7.9(a) shall prohibit the Company from filing a “shelf registration” for the purpose
of future issuances of securities, provided sales of securities under such registration statement do not commence in the time frame
set forth in the first sentence of this paragraph.


 


(b)          From the date hereof until such
time as no Investor holds any unexercised Warrants (or portion thereof), the Company shall be prohibited from effecting or entering
into an agreement to effect any “Variable Rate Transaction”. The term “Variable Rate Transaction” shall
mean a transaction in which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable
or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange
rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at
any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that
is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence
of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock
or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities
at a future determined price. For the avoidance of doubt, the issuance of a security which is subject to anti-dilution protections
where the conversion, exercise or exchange price is subject to adjustment as a result of stock splits, reverse stock splits and
other similar recapitalization or reclassification events, shall not be deemed to be a “Variable Rate Transaction.”


 


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


 






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(d)          The Company shall not, from the
date hereof until ninety (90) days after the first Effective Date upon which all Registrable Securities are registered for resale
pursuant to an effective registration statement, prepare and file with the SEC a registration statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its equity securities, other than any registration statement
or post-effective amendment to a registration statement (or supplement thereto) relating to the Company’s employee benefit
plans registered on Form S-8 or, in connection with an acquisition, on Form S-4. Notwithstanding the foregoing, nothing shall prohibit
the Company from filing a “shelf registration” for the purpose of future issuances of securities, provided sales under
such registration statement do not commence in the time frame set forth in the first sentence of paragraph 7.9(a).


 


7.10         Equal Treatment of Investors.
No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents.
For clarification purposes, this provision constitutes a separate right granted to each Investor by the Company and negotiated
separately by each Investor, and is intended for the Company to treat the Investors as a class and shall not in any way be construed
as the Investors acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.


 


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


 


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


 






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7.13         Public
Information. At any time during the period commencing from the six (6) month anniversary of the Closing Date and ending at
such time that all of the Securities, if a registration statement is not available for the resale of all of the Securities, may
be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1),
if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the
failure to satisfy the current public information requirement under Rule 144(c) or (ii) if the Company has ever been an issuer
described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set
forth in Rule 144(i)(2) (a "Public Information Failure") then, as partial relief for the damages to any Investors that
still holds Securities by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not
be exclusive of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash
equal to two percent (2.0%) of the aggregate Purchase Price on the day of a Public Information Failure and on every thirtieth
day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information
Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144. The payments to which
an Investor shall be entitled pursuant to this Section 4(o) are referred to herein as "Public Information Failure Payments."
Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Public
Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving rise to the Public
Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments
in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated
for partial months) until paid in full.


 


7.14         Right of Participation.


 


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




 


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


 


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


 


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


 


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


 


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


 


(i)          The
Company shall deliver to each Investor an irrevocable written notice (the "Offer Notice") of any proposed or intended
issuance or sale or exchange (the "Offer") of the securities being offered (the "Offered Securities") in a
Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other
terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold
or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (z) offer to issue and sell to or exchange with such Investors at least thirty percent (30%) of
the Offered Securities, allocated among such Investors (a) based on such Investor's pro rata portion of the number of shares of
Common Stock purchased hereunder (the "Basic Amount"), and (b) with respect to each Investor that elects to purchase
its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Investors as such
Investor shall indicate it will purchase or acquire should the other Investors subscribe for less than their Basic Amounts (the
"Undersubscription Amount"), which process shall be repeated until the Investors shall have an opportunity to subscribe
for any remaining Undersubscription Amount.


 






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(ii)         To accept an Offer, in whole
or in part, such Investor must deliver a written notice to the Company prior to the end of the third (3rd) Business Day after
such Investor's receipt of the Offer Notice (the "Offer Period"), setting forth the portion of such Investor's Basic
Amount that such Investor elects to purchase and, if such Investor shall elect to purchase all of its Basic Amount, the Undersubscription
Amount, if any, that such Investor elects to purchase (in either case, the "Notice of Acceptance"). If the Basic Amounts
subscribed for by all Investors are less than the total of all of the Basic Amounts, then each Investor who has set forth an Undersubscription
Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided, however, that if the Undersubscription Amounts subscribed for exceed the difference between
the total of all the Basic Amounts and the Basic Amounts subscribed for (the "Available Undersubscription Amount"),
each Investor who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available
Undersubscription Amount as the Basic Amount of such Investor bears to the total Basic Amounts of all Investors that have subscribed
for Undersubscription Amounts, subject to rounding by the Company to the extent its deems reasonably necessary. Notwithstanding
anything to the contrary contained herein, if the Company desires to modify or amend the terms and conditions of the Offer prior
to the expiration of the Offer Period, the Company may deliver to the Investors a new Offer Notice and the Offer Period shall
expire on the third (3rd) Business Day after such Investor's receipt of such new Offer Notice.


 


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


 


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


 






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


 


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


 


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


 


(viii)       Notwithstanding
anything to the contrary in this Section 7.14 and unless otherwise agreed to by the Investors, the Company shall either confirm
in writing to the Investors that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly
disclose its intention to issue the Offered Securities, in either case in such a manner such that the Investors will not be in
possession of material non-public information, by the tenth (10th) Business Day following delivery of the Offer Notice. If by the
tenth (10th) Business Day following delivery of the Offer Notice no public disclosure regarding a transaction with respect to the
Offered Securities has been made, and no notice regarding the abandonment of such transaction has been received by the Investors,
such transaction shall be deemed to have been abandoned and the Investors shall not be deemed to be in possession of any material,
non-public information with respect to the Company. Should the Company decide to pursue such transaction with respect to the Offered
Securities, the Company shall provide each Investor with another Offer Notice and each Investor will again have the right of participation
set forth in this Section 7.14. The Company shall not be permitted to deliver more than one such Offer Notice to the Investors
in any 60 day period.


 


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


 






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


 


8.     Survival
and Indemnification.


 


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


 


8.2          Indemnification.


 


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


 






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


 


9.     Miscellaneous.


 


9.1          Successors and Assigns. This
Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Investors, as applicable,
provided, however, that an Investor may assign its rights and delegate its duties hereunder in whole or in part to an Affiliate
or to a third party acquiring some or all of its Securities in a transaction complying with applicable securities laws without
the prior written consent of the Company or the other Investors. The provisions of this Agreement shall inure to the benefit of
and be binding upon the respective permitted successors and assigns of the parties. Without limiting the generality of the foregoing,
in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction
in which the Common Stock is converted into the equity securities of another Person, from and after the effective time of such
transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder,
the term “Company” shall be deemed to refer to such Person and the term “Shares” shall be deemed to refer
to the securities received by the Investors in connection with such transaction. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.


 


9.2          Counterparts; Faxes. This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original.


 


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



 






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


 


If to the Company:


 


Aethlon Medical, Inc.


9635 Granite Ridge Drive, Suite 100


San Diego, CA 92123


Attention: James Frakes, CFO


Fax: 858-272-2738


E-mail: jfrakes@aethlonmedical.com


 


With a copy to:


 


Raines Feldman LLP


9720 Wishire Boulevard, 5th
Floor


Los Angeles, CA 90212


Attention: Jennifer Post


Fax: (310) 499-5922


E-mail: jpost@raineslaw.com


 


If to the Investors:


 


to the addresses set forth on the signature
pages hereto.


 


With a copy to:


 


Schulte Roth & Zabel, LLP


919 Third Avenue


New York, NY 10022


Attention: Eleazer N. Klein, Esq.


Fax: (212) 593-5955


E-mail: eleazer.klein@srz.com



 






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9.5          Expenses. The parties hereto
shall pay their own costs and expenses in connection herewith, except that the Company shall pay the reasonable fees and expenses
of (i) Lowenstein Sandler LLP not to exceed $35,000 and (ii) Schulte Roth & Zabel LLP not to exceed $10,000, regardless of
whether the transactions contemplated hereby are consummated; it being understood that Lowenstein Sandler LLP has only rendered
legal advice to the Agent and not to the Company or any Investor in connection with the transactions contemplated hereby, and that
each of the Company and each Investor has relied for such matters on the advice of its own respective counsel. Such expenses shall
be paid upon demand. The Company shall reimburse the Investors upon demand for all reasonable out-of-pocket expenses incurred by
the Investors, including without limitation reimbursement of attorneys’ fees and disbursements, in connection with any amendment,
modification or waiver of this Agreement or the other Transaction Documents. In the event that legal proceedings are commenced
by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction
Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share
of the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party
in such proceedings.


 


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


 


9.7          Disclosure
of Transactions and Other Material Information. On or before 5:30 p.m., New York City time, on the date that this Agreement
has been executed, the Company shall issue a press release reasonably acceptable to the Investors and, on or prior to 8:00 a.m.,
New York City time, on November 28, 2014, file a Current Report on Form 8-K describing the terms of the transactions contemplated
by the Transaction Documents in the form required by the 1934 Act and attaching the material Transaction Documents (including,
without limitation, this Agreement (and all schedules and exhibits to this Agreement), the Form of Warrant and the Registration
Rights Agreement, as exhibits to such filing (including all attachments), the "8-K Filing"). From and after the
public release of the Press Release, no Investor shall be in possession of any material, nonpublic information received from the
Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, that is not
disclosed in the Press Release. In addition, effective upon the public release of the Press Release, the Company acknowledges
and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company,
any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand, and
any of the Investors or any of their affiliates, on the other hand, shall terminate. The Company shall not, and shall cause each
of its Subsidiaries and its and each of their respective officers, directors, affiliates, employees and agents, not to, provide
any Investor with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the date
hereof without the express prior written consent of such Investor. If an Investor has, or believes it has, received any such material,
nonpublic information regarding the Company or any of its Subsidiaries from the Company, any of its Subsidiaries or any of their
respective officers, directors, affiliates, employees or agents, it may provide the Company with written notice thereof. The Company
shall, within two (2) Trading Days of receipt of such notice, make public disclosure of such material, nonpublic information.
In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective
officers, directors, affiliates, employees and agents, in addition to any other remedy provided herein or in the Transaction Documents,
an Investor shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise,
of such material, nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their respective
officers, directors, affiliates, employees or agents. No Investor shall have any liability to the Company, its Subsidiaries, or
any of its or their respective officers, directors, affiliates, employees, shareholders or agents for any such disclosure. To
the extent that the Company delivers any material, non-public information to an Investor without such Investor's consent, the
Company hereby covenants and agrees that such Investor shall not have any duty of confidentiality to the Company, any of its Subsidiaries
or any of their respective officers, directors, employees, affiliates or agents with respect to, or a duty not to trade on the
basis of, such material, non-public information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Investor
shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any Investor, to make any press release or other public
disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Investor shall be consulted
by the Company in connection with any such press release or other public disclosure prior to its release). Except for the Registration
Statement required to be filed pursuant to the Registration Rights Agreement, without the prior written consent of any applicable
Investor, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of such Investor in any filing,
announcement, release or otherwise.


 






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


 


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


 


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


 


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


 


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


 


[signature page follows]


 






    	31



    	 



    

 


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


 


The Company:


AETHLON MEDICAL, INC.


 


 


 


By: /s/ James A. Joyce


Name: James A. Joyce


Title: Chairman, CEO


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 






    	32



    	 



    

 


________________________________


                 (Name of Investor)


 


 


 


By:_________________________


Name:


Title:


 


Aggregate Purchase Price: $


Number of Shares:


Number of Warrants:


 


 


Address for Notice:


 


 


 


 


 


 


 


 


 


 






    	33



    	 



    

 


Exhibit C


TRANSFER AGENT INSTRUCTIONS


Aethlon
Medical, Inc.


December __, 2014


Computershare


250 Royall Street


Canton, Massachusetts 02021


 


Telephone: 303.262.0678


Attention: Adam Burnham


 


Ladies and Gentlemen:


Reference is made
to that certain Securities Purchase Agreement, dated as of November 26, 2014 (the "Agreement"), by and among Aethlon
Medical, Inc., a Nevada corporation (the "Company"), and the investors named on the signature pages thereto (collectively,
the "Holders"), pursuant to which the Company is issuing to the Holders shares (the "Common Shares")
of the common stock of the Company, par value $0.001 per share (the "Common Stock"), and warrants (the "Warrants"),
which are exercisable to purchase shares of Common Stock.


This letter shall
serve as our irrevocable authorization and direction to you (provided that you are the transfer agent of the Company at such time)
to issue or re-issue, as the case may be, (i) on the Closing Date of the transactions contemplated by the Agreement the Common
Shares to each of the Holders as set forth on Exhibit I attached hereto, (ii) shares of Common Stock and (iii) shares of
Common Stock issuable upon exercise of the Warrants (the "Warrant Shares") to or upon the order of a Holder from
time to time upon delivery to you of a properly completed and duly executed Exercise Notice, in the form attached hereto as Exhibit
II, which has been acknowledged by the Company as indicated by the signature of a duly authorized officer of the Company thereon.


You acknowledge and
agree that so long as you have previously received (a) written confirmation from the Company's legal counsel that either (i) a
registration statement covering resales of the Common Shares and the Warrant Shares has been declared effective by the Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 Act")
and such registration statement is not subject to a stop-order or other order that suspends the effectiveness of the registration
statement (and you have not been so advised by counsel), or (ii) sales of the Common Shares and the Warrant Shares may be made
in conformity with Rule 144 under the 1933 Act ("Rule 144"), and (b) if applicable, a copy of such registration statement,
then within three (3) business days of your receipt of a notice of transfer or an Exercise Notice, you shall issue the certificates
representing the Common Shares, and the Warrant Shares, as applicable, registered in the names of such transferees, and such certificates
shall not bear any legend restricting transfer of the Common Shares and the Warrant Shares thereby and should not be subject to
any stop-transfer restriction; provided, however, that if such Common Shares and Warrant Shares are not registered
for resale under the 1933 Act or able to be sold under Rule 144, then the certificates for such Common Shares and/or Warrant Shares
shall bear the following legend:


THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.


A
form of written notification from the Company's outside legal counsel that a registration statement covering resales of the Common
Shares and the Warrant Shares has been declared effective by the SEC under the 1933 Act is attached hereto as Exhibit III.



    	34



    	 



    




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


Very truly yours,


Aethlon
Medical, Inc.


 


By: ___________________________


        Name:

        Title:


THE FOREGOING INSTRUCTIONS ARE


ACKNOWLEDGED AND AGREED TO


this ___ day of November, 2014


Computershare


 


By: ___________________________

        Name: _____________________

        Title: ______________________






Enclosures


	cc:	Empery Asset Master, LTD
		Empery Tax Efficient, LP
		Empery Tax Efficient II, LP
	 	 
	 	Eleazer
Klein, Esq.







    	35



    	 



    




EXHIBIT I


 


Empery Asset Master, LTD


Common Shares to be issued: 3,507,907


 


Empery Tax Efficient, LP


Common Shares to be issued: 904,218


 


Empery Tax Efficient II, LP


Common Shares to be issued: 6,587,875


 


 


 


 


 






    	36



    	 



    




EXHIBIT II


EXERCISE NOTICE


TO BE EXECUTED BY THE REGISTERED HOLDER TO
EXERCISE THIS


WARRANT TO PURCHASE COMMON STOCK


 


AETHLON
MEDICAL, INC. 


The
undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock ("Warrant Shares")
of Aethlon Medical, Inc., a Nevada corporation (the "Company"), evidenced
by the attached Warrant to Purchase Common Stock (the "Warrant"). Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Warrant.


 


1. Form of Exercise Price.
The Holder intends that payment of the Exercise Price shall be made as:


 


____________
a "Cash Exercise" with respect to _________________ Warrant Shares; and/or


 


____________
a "Cashless Exercise" with respect to _______________ Warrant Shares.


 


2. Payment of Exercise
Price. In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance
with the terms of the Warrant.


 


3. Delivery of Warrant
Shares. The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant.


 








	_______ Electronic Delivery	DTC Participant: ___________________________
	 	DTC Number: _____________________________
	 	Account
Name: ____________________________
	 	Account Number: __________________________
	 	 
	_______ Physical Delivery	Address: _________________________________
	 	                  _________________________________
	 	                  _________________________________







Date: _______________ __, ______


 


 


_____________________________


Name of Registered Holder


 


 


By: __________________________


        Name:


        Title:



 






    	37



    	 



    

 


ACKNOWLEDGMENT


 


 


The Company hereby acknowledges
this Exercise Notice and hereby directs Computershare to issue the above indicated number of shares of Common Stock in accordance
with the Transfer Agent Instructions dated December [__], 2014 from the Company and acknowledged and agreed to by Computershare.


 


Aethlon
Medical, Inc.


 


 


 


By: __________________________


        Name:


        Title:


 


 


 


 


 


 


 


 


 


 


 


 


 






    	38



    	 



    

 



EXHIBIT III


FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT


Computershare


250 Royall Street


Canton, Massachusetts 02021


 


Attention: Adam Burnham


Re: Aethlon
Medical, Inc.


Ladies and Gentlemen:


[We are][I am] counsel
to Aethlon Medical, Inc., a Nevada corporation (the "Company"), and have represented the Company in connection
with that certain Securities Purchase Agreement, dated as of November ___, 2014 (the "Securities Purchase Agreement"),
entered into by and among the Company and the buyers named therein (collectively, the "Holders") pursuant to which
the Company issued to the Holders shares of the Company's common stock, par value $0.001 per share (the "Common Stock")
(the shares of Common Stock issuable pursuant to the terms of the Securities Purchase Agreement, collectively, the "Common
Shares") and warrants exercisable for shares of Common Stock (the "Warrants"). Pursuant to the Securities
Purchase Agreement, the Company also has entered into a Registration Rights Agreement with the Holders (the "Registration
Rights Agreement") pursuant to which the Company agreed, among other things, to register the resale of the Registrable
Securities (as defined in the Registration Rights Agreement), including the Common Shares issuable pursuant to the Securities Purchase
Agreement and the shares of Common Stock issuable upon exercise of the Warrants under the Securities Act of 1933, as amended (the
"1933 Act"). The description of the Registrable Securities are set forth on Schedule A hereto [Selling
Shareholder Table]. In connection with the Company's obligations under the Registration Rights Agreement, on ____________ ___,
2014, the Company filed a Registration Statement on Form S-3 (File No. 333-_____________) (the "Registration Statement")
with the Securities and Exchange Commission (the "SEC") relating to the Registrable Securities which names each
of the Holders as a selling shareholder thereunder.


In connection with
the foregoing, [we][I] advise you that a member of the SEC's staff has advised [us][me] by telephone that the SEC has entered an
order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER
DATE OF EFFECTIVENESS].  [We][I] have no knowledge, subsequent to such telephonic conversation with the SEC's staff, that
any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened
by, the SEC. Based on the foregoing, the Registrable Securities set forth on Schedule A hereto are available for resale
under the 1933 Act pursuant to the Registration Statement.


This
letter, unless and until subsequently revoked or modified orally by Jennifer A. Post or Gia C. Twine, or in writing from any member
of this firm (which writing may include email correspondence), shall serve as our standing instruction to you that the Registrable
Securities set forth on Schedule A hereto are freely transferable by the Holders pursuant to the Registration Statement.
You need not require further letters from us to effect any future legend-free issuance or reissuance of Registrable Securities
to the Holders as contemplated by the Company's Irrevocable Transfer Agent Instructions dated December [●],
2014. 


Very truly yours,


[ISSUER'S COUNSEL]


By:_____________________


 


	CC:	Empery Asset Master, LTD
	 	 
	 	Empery Tax Efficient, LP
	 	 
	 	Empery Tax Efficient II, LP






 


 






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