Document:

ex101.htm

Exhibit 10.1

 

	
SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

	  	  
	
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HANOVER HOLDINGS I, LLC,

Plaintiff,

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INTELLICELL BIOSCIENCES, INC.,

 

Defendant.

	
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Index  No. 651709/2013

 

 

	
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STIPULATION OF SETTLEMENT

 

Plaintiff, Hanover Holdings I, LLC (“Hanover”), on the one hand, and Defendant, Intellicell Biosciences, Inc. (“Intellicell”), on the other hand, stipulate to the entry of the Proposed Order attached hereto as Exhibit A (the “Proposed Order”), and further stipulate and agree as follows:

 

1. Intellicell is a corporation incorporated under the laws of the State of Nevada, with its principal place of business located at 460 Park Avenue, 17th Floor, New York, New York 10022.  Intellicell hereby acknowledges receipt of the Complaint filed by Hanover on May 10, 2013, and agrees to waive any requirement that Hanover formally serve Intellicell with process.  Intellicell accepts service of process as of the date of this Settlement Agreement.

 

2. Hanover and Intellicell request that the Court enter an Order substantially in the form of the Proposed Order.

 

3. Hanover owns bona fide claims in the total aggregate amount of $706,765.38 against Intellicell for non-payment of past-due debt for services rendered to Intellicell (collectively, the “Claim”), which Hanover purchased from the following creditors of Intellicell: JKT Construction Inc. d/b/a Corcon; Sichenzia Ross Friedman Ference LLP; AGR Enterprises, Inc.; Carrolton Partners LLC; Mendel Bluming; and Gerner Kronick & Valcarcel Architects PC (the “Original Creditors”), for a total aggregate purchase price of $634,765.38, pursuant to Receivable Purchase Agreements, dated as of May 10, 2013, between Hanover and each of the Original Creditors (the “Receivable Purchase Agreements”), in which each of the Original Creditors sold, transferred, and assigned to Hanover all right, title and interest of such Original Creditors with respect to the Claim, including, without limitation, the right to bring the above-captioned action against Intellicell with respect to the Claim (the “Action”).  The purchase price for the Claim is payable to the Original Creditors in the manner set forth in the Receivable Purchase Agreements.  Each of the Original Creditors issued invoices to Intellicell for services rendered, payable upon receipt.  Such invoices have not been paid by Intellicell and are past due in their entirety.

 

4. Intellicell has not paid, and will not be able to pay in the near term, any amounts due on the Claim.  As a result, on May 10, 2013, Hanover commenced the Action, which Action the parties now seek to settle by this Stipulation of Settlement (the “Settlement Agreement”).

 

5. Intellicell desires to issue shares of Intellicell’s common stock (the “Common Stock”) in exchange for the release of the Claim and dismissal of the Action in its entirety.  Hanover is willing to accept such shares of Common Stock in accordance with the terms of this Settlement Agreement, provided that (i) the proposed exchange (including the issuance of the Common Stock pursuant to this Settlement Agreement) is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), under Section 3(a)(10) of the Securities Act, which requires a finding from the Court that the terms and conditions of the proposed exchange are procedurally and substantively fair to Hanover prior to the issuance of the Common Stock pursuant to this Settlement Agreement, and (ii) through such exemption under Section 3(a)(10) of the Securities Act, Intellicell shall be permitted to issue shares of Common Stock to Hanover in exchange for the release of the Claim and dismissal of the Action without registration under the Securities Act, and Hanover shall be permitted to immediately publicly resell such shares of Common Stock into the market without restriction.  Section 3(a)(10) of the Securities Act provides in its entirety as follows:

 

Section 3 -- Classes of Securities under this Title

 

	
  

	
(a)

	
Exempted securities. Except as hereinafter expressly provided, the provisions of this title shall not apply to any of the following classes of securities:...

 

 

  

1

  

 

	
  

	
10.

	
Except with respect to a security exchanged in a case under title 11 of the United States Code, any security which is issued in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by any court, or by any official or agency of the United States, or by any State or Territorial banking or insurance commission or other governmental authority expressly authorized by law to grant such approval;

 

(Emphasis added.)

 

6. Hanover is the only party to whom the shares of Common Stock will be issued pursuant to this Settlement Agreement, and is therefore the only party entitled to notice of hearing and an opportunity to be heard in accordance with Section 3(a)(10) of the Securities Act.

 

7. Hanover has agreed to the proposed settlement terms and conditions, and believes that they are procedurally and substantively fair to Hanover, such that Hanover is willing to enter into this Settlement Agreement.  In addition, Intellicell’s board of directors has considered the proposed settlement and has resolved that its terms and conditions are fair to, and in the best interests of, Intellicell and its shareholders.  Accordingly, both parties shall request the Court to approve the fairness of the proposed terms and conditions of the proposed exchange (including the issuance of the Common Stock pursuant to this Settlement Agreement) (following the hearing referred to in the next sentence).

 

8. The parties shall submit this Settlement Agreement to the Court and shall request that the Court enter the Proposed Order approving this Settlement Agreement at a hearing thereon as required by Section 3(a)(10) of the Securities Act. Effective upon execution of the Proposed Order by the Court, this Settlement Agreement shall become final and binding upon Intellicell and Hanover, it being hereby acknowledged and agreed that prior to such time this Settlement Agreement is not binding upon Intellicell and Hanover.

 

9. It is the intent and effect of this Settlement Agreement that the Proposed Order, when signed, shall end, finally and forever (i) any claims to payment or compensation of any kind or nature that Hanover had, now has, or may assert in the future against Intellicell arising out of the Claim, and (ii) any claims, including, without limitation, for offset or counterclaim, that Intellicell had, now has, or may assert in the future against Hanover arising out of the Claim.

 

10. In this regard, and subject to full and complete compliance with the Proposed Order, effective upon the execution of the Proposed Order, each party hereby releases and forever discharges the other party, including all of the other party’s employees, officers, directors, members, partners, agents, affiliates, subsidiaries and attorneys, from any and all claims, demands, obligations (fiduciary or otherwise), and causes of action, whether known or unknown, suspected or unsuspected, arising out of, connected with, or incidental to the Claim.  Intellicell shall not (and Intellicell shall cause each of its employees, officers, directors, members, partners, agents, affiliates, subsidiaries and attorneys to not) disparage (or induce or encourage other persons to disparage) Hanover or any of its employees, officers, directors, members, partners, agents, affiliates, subsidiaries, attorneys or other Indemnified Persons (as defined below).

 

11. In full and final settlement of the Claim, no later than the first trading day following the date of the Court’s entry of the Proposed Order, time being of the essence, Intellicell will cause to be issued and delivered to Hanover or its designee 8,500,000 shares of Common Stock, representing approximately 9.93% of Intellicell’s outstanding shares of Common Stock (collectively, the “Settlement Shares”).

 

12. Further, the Settlement Shares will be subject to adjustment (as described in paragraph 14 below) to reflect the intention of the parties that the total number of shares of Common Stock issued to Hanover be based upon a specified discount to the VWAP (as defined below) of the Common Stock for a specified period of time subsequent to the Court’s entry of the Proposed Order.

 

13. No later than the first trading day following the date that the Court enters the Proposed Order approving this Settlement Agreement, time being of the essence, Intellicell shall: (i) immediately cause to be issued the number of shares of Common Stock required by paragraph 11 above to Hanover’s or its designee’s balance account with The Depository Trust Company (DTC) through the Fast Automated Securities Transfer (FAST) Program of DTC’s Deposit/Withdrawal At Custodian (DWAC) system, without any restriction on transfer or resale, by transmitting via facsimile and overnight delivery such irrevocable and unconditional instruction to Intellicell’s stock transfer agent, and (ii) cause its legal counsel to issue an opinion to Intellicell’s transfer agent, in form and substance acceptable to Hanover and such transfer agent, that the shares of Common Stock to be issued pursuant to the Proposed Order (a) shall be legally issued, fully paid and non-assessable, (b) when issued in accordance with the Proposed Order shall be exempt from the registration requirements of the Securities Act afforded by Section 3(a)(10) of the Securities Act and (c) may be issued without any restriction on transfer or resale (such issuance, the “Initial DWAC Issuance,” and the date upon which such issuance is complete and all of the Settlement Shares have been received into Hanover’s or its designee’s account in electronic form and fully cleared for trading, the “Initial DWAC Issuance Date”).  Intellicell represents and warrants that no instruction other than such irrevocable and unconditional instruction to Intellicell’s stock transfer agent referred to in this paragraph 13 will be given by Intellicell to its transfer agent with respect to such shares of Common Stock, and that such shares of Common Stock shall otherwise be freely transferable on the books and records of Intellicell.

 

14. The total number of shares of Common Stock to be issued to Hanover or its designee in connection with this Settlement Agreement and the Proposed Order shall be adjusted on the trading day immediately following the Calculation Period (as defined below) (the “True-Up Date”), as follows: (i) if the number of VWAP Shares (as defined below) exceeds the number of Settlement Shares initially issued, then Intellicell will, as promptly as practicable (but subject in all cases to the limitations set forth in paragraph 14.c below), cause to be issued and delivered to Hanover or its designee, as DWAC shares, additional shares of Common Stock equal to the difference between (x) the total number of VWAP Shares and (y) the number of Settlement Shares, and (ii) if the number of VWAP Shares is less than the number of Settlement Shares, then Hanover or its designee will return to Intellicell for cancellation that number of shares equal to the difference between (x) the total number of VWAP Shares and (y) the number of Settlement Shares issued in the Initial DWAC Issuance. The “Calculation Period” shall mean the 80-consecutive trading day period commencing on the trading day immediately following the Initial DWAC Issuance Date, or such shorter consecutive trading day period immediately following the Initial DWAC Issuance Date as Hanover shall determine in its sole discretion by written notice delivered to Intellicell.  If Hanover shall notify Intellicell that, due to the limitations set forth in paragraph 14.c. below, all of the additional shares of Common Stock required to be issued and delivered to Hanover or its designee pursuant to this paragraph 14, if any, cannot be issued and delivered to Hanover or its designee on a single trading day, then Intellicell will cause to be issued and delivered to Hanover or its designee, as DWAC shares, in a single issuance or in multiple issuances, such additional shares of Common Stock at such times and in such amounts as Hanover shall request from time to time from and after the True-Up Date (subject in all cases to the limitations of paragraph 14.c. below), until all VWAP Shares have been issued and delivered to Hanover or its designee. If Hanover’s right to receive VWAP Shares at any particular time is limited, in whole or in part, by this paragraph and paragraph 14.c. below, all such VWAP Shares that are so limited shall be held in abeyance for the benefit of Hanover by Intellicell until such time, if ever, as Hanover shall notify Intellicell that its right thereto would not result in Hanover exceeding the limitations set forth in paragraph 14.c. below.

 

 

  

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a.           For all purposes of this Settlement Agreement, “VWAP Shares” means such number of shares of Common Stock (rounded up to the nearest whole share) equal to the sum of: (i) the quotient obtained by dividing (A) $706,765.38 by (B) 55% of the average of the lowest 10 trading volume weighted average prices of the Common Stock as reported by Bloomberg L.P. (the “VWAP”) over the Calculation Period; (ii) the quotient obtained by dividing (A) the total dollar amount of legal fees and expenses incurred in connection with the Action through the True-Up Date, which shall not exceed $57,500 (less $5,000 heretofore paid by Intellicell) by (B) the VWAP over the Calculation Period; and (iii) the quotient obtained by dividing (A) agent fees of $35,338.27 by (B) the VWAP over the Calculation Period.

 

b.           If, at any time and from time to time during the Calculation Period, Hanover reasonably believes that the total number of Settlement Shares previously issued to Hanover shall be less than the total number of VWAP Shares to be issued to Hanover or its designee in connection with this Settlement Agreement and the Proposed Order, Hanover may, in its sole discretion, deliver one or more written notices to Intellicell, at any time and from time to time during the Calculation Period, by facsimile or email transmission, requesting that a specified number of additional shares of Common Stock promptly be issued and delivered to Hanover or its designee (subject in all cases to the limitations of paragraph 14.c. below) and containing the calculation for the number of additional shares of Common Stock requested to be so issued and delivered.  Within one trading day following delivery of each such notice, time being of the essence, Intellicell shall cause to be issued and delivered to Hanover or its designee, in compliance with the procedure set forth in paragraph 13 above (including, without limitation, issuance of the legal opinion to Intellicell’s transfer agent, if required, at Intellicell’s sole cost and expense), the number of additional shares of Common Stock requested to be so issued and delivered in the notice (subject in all cases to the limitations of paragraph 14.c. below).  Any additional shares of Common Stock issued to Hanover or its designee pursuant to this paragraph 14.b. will be considered Settlement Shares for purposes of any calculation of the total number of shares to be issued by, or returned to, Intellicell pursuant to this paragraph 14.

 

c.           In no event shall the number of shares of Common Stock issued to Hanover or its designee in connection with the settlement of the Claim pursuant to this Settlement Agreement (either as Settlement Shares or VWAP Shares, or in connection with any adjustment thereto pursuant to this Settlement Agreement), when aggregated with all other shares of Common Stock then beneficially owned by Hanover and its affiliates (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder), result in the beneficial ownership by Hanover and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and the rules and regulations thereunder) at any time of more than 9.99% of the Common Stock.  Neither Hanover nor Intellicell may waive this paragraph 14.c.  For any reason at any time, upon the written or oral request of Hanover, Intellicell shall within one (1) business day confirm orally and in writing to Hanover the number of shares of Common Stock then outstanding.

 

d.           The provisions of this paragraph 14 shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this paragraph 14 to correct this paragraph 14 (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation contained in paragraph 14.c. above or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

15. Intellicell hereby makes the following representations, warranties and covenants:

 

a.           The shares of Common Stock provided for above are duly authorized and, when issued pursuant to the Proposed Order, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens, encumbrances and preemptive and similar rights to subscribe for or purchase securities.  Intellicell has reserved from its duly authorized capital stock 140,000,000 shares of Common Stock for issuance pursuant to the terms of this Settlement Agreement.  If at any time it appears reasonably possible that there may be insufficient authorized or reserved shares to fully comply with the Proposed Order, Intellicell shall take all action required to promptly reserve additional shares of Common Stock from its authorized shares and, if necessary, promptly take such actions as are necessary or appropriate to increase its authorized shares so as to ensure its ability to timely comply with the Proposed Order, and the Company may not reserve or issue any shares of Common Stock to any other person unless and until sufficient shares have been reserved for Hanover (except to the extent that a person has the right to purchase shares of Common Stock on or prior to the date of this Stipulation).  The execution of this Settlement Agreement and performance of the Proposed Order by Intellicell and Hanover will not (i) conflict with, violate, or cause a breach or default under any agreements between Intellicell and any creditor of Intellicell as of the date hereof, or any affiliate thereof, including, but not limited to, those agreements with the Original Creditors (or any affiliate thereof) related to the debt comprising the Claim, or (ii) require any waiver, consent, or other action of Intellicell or any creditor of Intellicell as of the date hereof, including, but not limited to, the Original Creditors, or their respective affiliates, that has not already been obtained in writing.  Without limitation, Intellicell hereby waives any provision in any agreement related to the debt comprising the Claim (x) requiring payments to be applied in a certain order, manner, or fashion, or (y) providing for exclusive jurisdiction and venue in any court other than this Court.  Intellicell has all necessary corporate power and authority to execute, deliver and perform all of its obligations under this Settlement Agreement.  The execution, delivery and performance of this Settlement Agreement by Intellicell has been duly authorized by all requisite action on the part of Intellicell, including, without limitation, express approval by its board of directors. This Settlement Agreement has been duly executed and delivered by Intellicell and constitutes the legal, valid and binding obligation of Intellicell, enforceable against Intellicell in accordance with its terms.

 

b.           Intellicell acknowledges and agrees that neither Hanover nor any of the Original Creditors, nor any of their respective affiliates, (i) is or was an affiliate of Intellicell within the last 90 days or (ii) has or will, directly or indirectly, provide any consideration to or invest in any manner in Intellicell in exchange or consideration for, or otherwise in connection with, the sale or satisfaction of the Claim other than pursuant to the Proposed Order.  Except for the agreement by and among JKT Construction Inc. d/b/a Corcon (“JKT Construction”), Intellicell, Steven Victor, M.D. and JKT Construction’s counsel (as escrow agent) pursuant to which Intellicell agreed, among other things, to deposit an amount of its stock in escrow to secure the performance of Hanover under the Receivable Purchase Agreement between Hanover and JKT Construction (which stock shall be returned to Intellicell upon the full performance of Hanover’s obligations under such Receivable Purchase Agreement), none of the Original Creditors is, directly or indirectly, receiving any consideration from or being compensated in any manner by, and will not at any time in the future accept any consideration or compensation from, Intellicell, any affiliate of Intellicell, or any other person (except Hanover pursuant to the Receivable Purchase Agreements between Hanover and each of the Original Creditors) for or in connection with the sale or satisfaction of the Claim.  Intellicell further acknowledges and agrees that (i) Hanover has no obligation of confidentiality to Intellicell and may sell any of its shares of Common Stock issued pursuant to the Proposed Order at any time, including, without limitation, at any time during the Calculation Period, and (ii) with respect to this Settlement Agreement and the transactions contemplated hereby, (A) Hanover is acting solely in an arm’s length capacity, (B) Hanover does not make and has not made any representations or warranties, other than those specifically set forth in this Settlement Agreement, (C) Hanover has not and is not acting as a legal, financial, accounting or tax advisor to Intellicell, or agent or fiduciary of Intellicell, or in any similar capacity, and (D) any statement made by Hanover or any of Hanover’s representatives, agents or attorneys is not advice or a recommendation to Intellicell.  Intellicell is not, and has not previously been at any time, an issuer identified in, or subject to, Rule 144(i) under the Securities Act.

 

  

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c.           Intellicell has not, in the 12 months preceding the date of this Settlement Agreement, received notice from any national securities exchange or automated quotation system on which the Common Stock is listed or designated for quotation to the effect that Intellicell is not in compliance with the listing or maintenance requirements of such national securities exchange or automated quotation system.  As of the date of this Settlement Agreement, Intellicell is in compliance with all such listing and maintenance requirements. Intellicell, through its stock transfer agent, currently participates in the DTC Fast Automated Securities Transfer (FAST) Program of DTC’s Deposit/Withdrawal At Custodian (DWAC) system, and the Common Stock may be issued and transferred electronically to third parties via the DTC Fast Automated Securities Transfer (FAST) Program of DTC’s Deposit/Withdrawal At Custodian (DWAC) system. Intellicell has not, in the 12 months preceding the date of this Settlement Agreement, received notice from DTC to the effect that a suspension of electronic trading or settlement services by DTC with respect to the Common Stock is being imposed or is contemplated.  Neither any shares of Common Stock issuable hereunder nor any certificates evidencing any of such shares of Common Stock (if a certificate therefor is requested in writing by Hanover) shall bear any restrictive or other legends or notations.  Intellicell shall not, and Intellicell shall cause all other persons to not, issue any stop-transfer order, instruction or other restriction with respect to any such shares of Common Stock.  Upon issuance in accordance herewith, such shares of Common Stock will be exempt from the registration requirements of the Securities Act under Section 3(a)(10) of the Securities Act.  All of such shares of Common Stock will be freely transferable and freely tradable by Hanover without restriction.  Intellicell and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested stockholder, business combination, or other similar anti­takeover provision under the certificate of incorporation, bylaws or other organizational documents of Intellicell, as currently in effect, or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable as a result of the transactions contemplated by this Settlement Agreement, including, without limitation, Intellicell’s issuance of shares of Common Stock hereunder and Hanover’s ownership of such shares of Common Stock, together with all other securities now or hereafter owned or acquired by Hanover.  Intellicell and its board of directors have taken all necessary action, if any, in order to render inapplicable any shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock or a change in control of Intellicell or any of its subsidiaries.  On the date hereof and on the date of any issuance of Common Stock hereunder, all stock transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the offer, issuance and transfer of the shares of Common Stock issuable hereunder will be, or will have been, fully paid or provided for by Intellicell, and all laws imposing such taxes will be or will have been complied with.

 

d.           Intellicell shall take such action as Hanover shall reasonably determine is necessary in order to qualify the shares of Common Stock issuable to Hanover hereunder under applicable securities or "blue sky" laws of the states of the United States for the issuance to Hanover hereunder and for resale by Hanover to the public (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to Hanover.  Without limiting any other obligation of Intellicell hereunder, Intellicell shall timely make all filings and reports relating to the offer and issuance of such shares of Common Stock required under all applicable securities laws (including, without limitation, all applicable federal securities laws and all applicable state securities or "blue sky" laws), and Intellicell shall comply with all applicable federal, state, local and foreign laws, statutes, rules, regulations and the like relating to the offering and issuance of such shares of Common Stock to Hanover.

 

e.           Intellicell shall promptly secure the listing or designation for quotation (as the case may be) of all of the shares of Common Stock to be issued to Hanover pursuant to this Settlement Agreement on each national securities exchange and automated quotation system, if any, on which the Common Stock is listed or designated for quotation (as the case may be) and shall use its reasonable best efforts to maintain such listing or designation for quotation (as the case may be) of all such shares of Common Stock on such national securities exchange or automated quotation system for so long as Hanover or any of its affiliates holds any shares of Common Stock. Intellicell shall pay all fees and expenses in connection with satisfying its obligations under this paragraph 15.e.

 

16. Hanover hereby makes the following representations, warranties and covenants:

 

a.            As of the date of this Settlement Agreement and during the 90 calendar days prior to the date of this Settlement Agreement, neither Hanover nor any affiliate thereof is or was an officer, director, or 10% or more shareholder of Intellicell.

 

b.            Until at least 180 days after the Calculation Period, neither Hanover nor any of its affiliates shall (i) hold any short position in the Common Stock or (ii) engage in or affect, directly or indirectly, any short sale of the Common Stock.

 

17. The representations, warranties, agreements and covenants in this Settlement Agreement shall survive the execution and delivery hereof and the consummation of the transactions contemplated hereby.

 

18. For so long as Hanover or any of its affiliates holds any shares of Common Stock, neither Hanover nor any of its affiliates will: (i) vote any shares of Common Stock owned or controlled by it, or solicit any proxies or seek to advise or influence any person with respect to any voting securities of Intellicell; or (ii) engage or participate in any actions, plans or proposals that relate to or would result in (a) Hanover or any of its affiliates acquiring additional securities of Intellicell, alone or together with any other person, which would result in Hanover and its affiliates collectively beneficially owning, or being deemed to beneficially own, more than 9.99% of the Common Stock or other voting securities of Intellicell (as calculated pursuant to Section 13(d) of the Exchange Act and the rules and regulations thereunder), (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Intellicell or any of its subsidiaries, (c) a sale or transfer of a material amount of assets of Intellicell or any of its subsidiaries, (d) any change in the present board of directors or management of Intellicell, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board, (e) any material change in the present capitalization or dividend policy of Intellicell, (f) any other material change in Intellicell’s business or corporate structure, (g) changes in Intellicell’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of Intellicell by any person, (h) causing a class of securities of Intellicell to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (i) causing a class of equity securities of Intellicell to become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act or (j) taking any action, intention, plan or arrangement similar to any of those enumerated above.  The provisions of this paragraph may not be modified or waived without further order of the Court.

 

19. The parties agree that, for the period from and after the date hereof through and including November 9, 2013, and regardless of whether Hanover or its affiliates then hold any debt or equity securities of Intellicell, Hanover and its affiliates shall have the exclusive right to enter into transactions with Intellicell whereby Intellicell directly or indirectly issues Common Stock or Common Stock equivalents to a party in exchange for outstanding securities, claims or property interests, or partly in such exchange and partly for cash, in one or more transactions carried out pursuant to Section 3(a)(9) or Section 3(a)(10) of the Securities Act.

 

  

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20. Prior to the earlier of (i) the opening time for trading stocks on public securities exchanges located in New York City on the first trading day immediately following the date of the Court’s entry of the Proposed Order and (ii) the Initial DWAC Issuance, time being of the essence, Intellicell shall file a Current Report on Form 8-K with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13 or Section 15(d) of the Exchange Act disclosing all of the material terms of this Settlement Agreement, including, without limitation, the issuance of shares of Common Stock to Hanover pursuant to the Proposed Order approving this Settlement Agreement, and disclosing all other material, nonpublic information delivered to Hanover (or Hanover’s representatives or agents) by Intellicell or any of its officers, directors, employees, agents or representatives, if any, in connection with the Claim, the Action, the Original Creditors or the transactions contemplated by this Settlement Agreement, and attaching a copy of the Proposed Order and this Settlement Agreement as exhibits thereto (the “Initial 8-K Filing”).  From and after the Initial 8-K Filing, neither Intellicell nor any of its officers, directors, employees, agents or representatives shall disclose any material non-public information about Intellicell to Hanover (or Hanover’s representatives or agents), unless prior thereto Intellicell shall have filed a Current Report on Form 8-K with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act disclosing all such material non-public information.  In addition, Intellicell shall file a Current Report on Form 8-K with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act prior to each issuance of additional shares of Common Stock required to be issued and delivered to Hanover or its designee pursuant to paragraph 14, if any, time being of the essence, disclosing the number of shares so issued and delivered to Hanover and the date of issuance (each, an “Additional 8-K Filing”). In the event of a breach of any of the foregoing covenants in this paragraph 20 by Intellicell, in addition to any other remedy available to Hanover, Hanover shall have the right to make a public disclosure, in the form of a press release, public advertisement, SEC filing or otherwise, of the matters contemplated hereby without the prior approval by Intellicell, or any of its officers, directors, employees, stockholders or agents, and Hanover shall not have any liability to Intellicell, or any of its officers, directors, employees, stockholders or agents, for any such disclosure.

21. Neither Intellicell, its subsidiaries nor Hanover shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, Intellicell shall be entitled, without the prior approval of Hanover, to issue any press release or make other public disclosure with respect to such transactions (i) in substantial conformity with the Initial 8-K Filing and any Additional 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that Hanover shall be consulted by Intellicell in connection with any such press release or other public disclosure prior to its release).

 

22. Without the prior written consent of Hanover, Intellicell shall not (and shall cause each of its subsidiaries and affiliates to not) disclose the name of Hanover in any filing (other than the Initial 8-K Filing and any Additional 8-K Filing), announcement, release or otherwise.

 

23. Intellicell hereby agrees to indemnify, defend and hold Hanover and each of its present and former directors, officers, shareholders, members, managers, investment managers, investment advisers, partners, employees, agents, advisors and representatives (and any other persons with a functionally equivalent role of a person holding such titles notwithstanding the lack of such title or any other title) and each person or entity, if any, who controls Hanover within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, and each of their direct and indirect related persons (collectively, the “Indemnified Persons”) harmless with respect to all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (regardless of whether any such Indemnified Person is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"), arising from or incident or related to (i) this Settlement Agreement, (ii) any misrepresentation or breach of any representation or warranty made by Intellicell herein or in connection herewith, (iii) any breach of any covenant, agreement or obligation of Intellicell contained herein or in any document entered into in connection herewith or (iv) any cause of action, suit, proceeding or claim brought or made against such Indemnified Persons by a third party or any shareholder of Intellicell (including for these purposes a derivative action brought on behalf of Intellicell or any subsidiary thereof) or which otherwise involves such Indemnified Person that arises out of relates to or results from (a) the execution, delivery, performance or enforcement of this Settlement Agreement or any document entered into in connection herewith or any other agreement entered into with, or any instrument received from, Intellicell or (b) the status of such Indemnified Person or holder of shares of Common Stock issued hereunder either as a holder of such shares of Common Stock or as a party to this Settlement Agreement or any other agreement entered into with, or any instrument received from, Intellicell  (regardless of any termination thereof) (including, without limitation, as a party in interest or otherwise in any action or proceeding for injunctive or other equitable relief). To the extent that the foregoing undertaking by Intellicell may be unenforceable for any reason, Intellicell shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

 

24. The parties to this Settlement Agreement represent that each of them has been advised as to the terms and legal effect of this Settlement Agreement and the Proposed Order provided for herein, and that the settlement and compromise stated herein shall be final and conclusive forthwith, subject to the execution of the Proposed Order by the Court and the other conditions stated herein, and each attorney represents that his or her client has freely consented to and authorized this Settlement Agreement.

 

25. Each party hereby irrevocably submits to the exclusive jurisdiction and venue of the state or federal courts located in the City of New York, New York, for the adjudication of the above-captioned action and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court or that such suit, action or proceeding is improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at its principal place of business and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

26. Intellicell has irrevocably appointed Joseph M. Lucosky, Esq., of Lucosky Brookman LLP, with an office located at 45 Rockefeller Plaza, Suite 2000, New York, New York 10111, and Richard A. Roth, Esq., of The Roth Law Firm, PLLC, 295 Madison Avenue, 22nd Floor, New York, New York 10017, as its agents to receive on behalf of Intellicell service of any legal process which may be served in all such suits, actions or proceedings. Such service may be made by mail or delivery of such process to the Company in care of either of such agents at the agent’s address set forth above and the Company hereby irrevocably authorizes and directs such agents to accept such service on behalf of the Company. Service upon either of such agents in accordance with the foregoing shall be deemed completed whether or not forwarded to or received by Intellicell. If either of such agents ceases to be able to act as such or to have an address in New York, New York, Intellicell agrees to irrevocably appoint a new agent acceptable to Hanover to receive on behalf of Intellicell service of any legal process and to deliver to Hanover within 14 days a copy of a written acceptance of appointment by such agent.

 

27. Upon entry of the Proposed Order approving this Settlement Agreement, the Action shall be dismissed with prejudice.  The Court shall retain jurisdiction to enforce the terms of this Settlement Agreement.

 

 

  

5

  

 

28. Each party hereto waives a statement of decision, and the right to appeal from the Order after its entry. Intellicell further waives any defense based on the rule against splitting causes of action. The prevailing party in any motion to enforce the terms of this Settlement Agreement or the Proposed Order shall be awarded its reasonable attorneys’ fees, costs and expenses arising out of or relating to such motion.  Except as expressly set forth herein, each party shall bear its own attorneys’ fees, expenses and costs.  This Settlement Agreement may be executed in counterparts and by facsimile, pdf or other electronic format, each of which shall constitute an original and all of which together shall be deemed together as a single document.

 

	
DATED: May 14, 2013

	
GREENBERG TRAURIG, LLP

 

By:/s/ Timothy E. Di Domenico

Timothy E. Di Domenico

MetLife Building

200 Park Avenue, 15th Floor

New York, New York 10166

(212) 801-2127

didomenicot@gtlaw.com

     

	
DATED: May 14, 2013

	
HANOVER HOLDINGS I, LLC

	
  

	
By: /s/ Joshua Sason

	
  

	
Joshua Sason

	
  

	
Chief Executive Officer

 

	
DATED: May 14, 2013

	
The ROTH LAW FIRM, PLLC

                                                         

	
DATED: May 14, 2013     

	
By: /s/ Richard A. Roth

	
  

	
Richard A. Roth

	
  

	
295 Madison Avenue, 22nd Floor

	
  

	
New York, New York 10017

	
  

	
(212) 542-8882

	
  

	
Rich@rrothlaw.com

	
DATED: May 14, 2013

	
INTELLICELL BIOSCIENCES, INC.

	
  

	
By: /s/ Steven A. Victor

	
  

	
Steven A. Victor

	
  

	
Chief Executive Officer

 

 

 

 

 

 

 

6Exhibit 4.1

 

Securities Purchase Agreement

 

This
Securities Purchase Agreement, dated as of May 13, 2013 (this “Agreement”), is entered into by and between
Solar Wind Energy Tower Inc., a Nevada corporation (the “Company”),
and Typenex Co-Investment, LLC, an Illinois limited liability company, its successors
and/or assigns (“Buyer”).

 

RECITALS:

 

A.The Company and
the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration for offers and
sales to accredited investors afforded, inter alia, under Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the
“1933 Act”), and/or Section 4(2) of the 1933 Act.

 

B.The Buyer wishes
to acquire from the Company, and the Company desires to issue and sell to the Buyer, the Note (as defined below), which Note will
be convertible into shares of common stock of the Company, par value $0.0001 per share (the “Common Stock”);
and the Warrants (as defined below), upon the terms and subject to the conditions of the Note, the Warrants, this Agreement and
the other Transaction Documents (as defined below).

 

NOW THEREFORE, in consideration
of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

 

1.CERTAIN DEFINITIONS.
As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires:

 

“Affiliate”
means, with respect to a specific Person referred to in the relevant provision, another Person who or which controls or is controlled
by or is under common control with such specified Person.

 

“Buyer’s
Counsel” means Hansen Black Anderson PLLC.

 

“Buyer Control
Person” means each manager, executive officer, promoter, and such other Persons as may be deemed in control of the Buyer
pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act (as defined below).

 

“Certificate
of Incorporation” means the certificate of incorporation, articles of incorporation or other charter document (howsoever
denominated) of the Company, as amended to date.

 

“Closing Date”
means the date of the closing of the purchase and sale of the Securities.

 

“Company Control
Person” means each director, executive officer, promoter, and such other Persons as may be deemed in control of the Company
pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.

 

“Company Counsel”
means Anslow & Jaclin, LLP.

 

“Company’s
SEC Documents” means the Company’s filings on the SEC’s EDGAR system.

 

 

    	1

    	 

    

 

“Conversion
Date” means the date a Holder submits a Conversion Notice, as provided in the Note.

 

“Conversion
Notice” has the meaning ascribed to it in the Note.

 

“Conversion
Price” has the meaning ascribed to it in the Note.

 

“Conversion
Shares” has the meaning ascribed to it in the Note.

 

“Delivery
Date” means (a) the date that Conversion Shares are required to be delivered to Holder under Section 3 or Section 8 of
the Note, as applicable, or (b) the date Delivery Shares are required to be delivered to the Holder under the Warrants, as applicable.

 

“Delivery
Shares” has the meaning ascribed to it in the Warrants.

 

“DTC”
means the Depository Trust Company.

 

“DTC/FAST
Program” means the DTC’s Fast Automated Securities Transfer Program.

 

“DWAC”
means Deposit Withdrawal at Custodian as defined by the DTC.

 

“DWAC Eligible
Conditions” means that (i) the Common Stock is eligible at DTC for full services pursuant to DTC’s Operational
Arrangements, including without limitation transfer through DTC’s DWAC system, (ii) the Company has been approved (without
revocation) by the DTC’s underwriting department, and (iii) the Transfer Agent is approved as an agent in the DTC/FAST Program,
(iv) the Conversion Shares are otherwise eligible for delivery via DWAC; and (v) the Transfer Agent does not have a policy prohibiting
or limiting delivery of the Conversion Shares via DWAC.

 

“Exercise
Price” has the meaning ascribed to it in the Warrants.

 

“Holder”
means the Person holding the relevant Securities at the relevant time.

 

“Initial Cash
Purchase Price” is defined in Section 2.1(a) hereof.

 

“Last Audited
Date” means December 31, 2012.

 

“Market Price”
has the meaning ascribed to it in the Note.

 

“Material
Adverse Effect” means an event or combination of events, which individually or in the aggregate, would reasonably be
expected to (a) adversely affect the legality, validity or enforceability of the Note, the Warrants, or any of the other Transaction
Documents, (b) have or result in a material adverse effect on the results of operations, assets, or financial condition of the
Company and its Subsidiaries, taken as a whole, or (c) adversely impair the Company’s ability to perform fully on a timely
basis its material obligations under any of the Transaction Documents or the transactions contemplated thereby.

 

“Maturity
Date” has the meaning ascribed to it in the Note.

 

“Notice of
Exercise” has the meaning ascribed to it in the Warrants.

 

“Outstanding
Balance” has the meaning ascribed to it in the Note.

 

 

    	2

    	 

    

 

“Permitted
Liens” means (a) any Lien (as defined herein) for taxes not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (b) any statutory Lien arising
in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (c) any Lien
created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the
ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith
by appropriate proceedings, and (d) any Lien arising under the Transaction Documents in favor of Buyer.

 

“Person”
means any living person or any entity, such as, but not necessarily limited to, a corporation, partnership or trust.

 

“Principal
Trading Market” means (a) the NYSE Amex, (b) the New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq
Capital Market, (e) the OTC Bulletin Board, (f) the OTCQX or OTCQB, or (g) such other market on which the Common Stock is principally
traded at the relevant time, but shall not include OTC Pink (a.k.a., “pink sheets”).

 

“Purchase
Price” is defined in Section 2.1(a) hereof.

 

“Registration
Statement” means a registration statement of the Company under the 1933 Act covering securities of the Company (including
Common Stock) on Form S-3, if the Company is then eligible to file using such form, and if not eligible, on Form S-1 or other appropriate
form.

 

“Rule 144”
means (a) Rule 144 promulgated under the 1933 Act or (b) any other similar rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration under the 1933 Act.

 

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

 

“Shares”
means the shares of Common Stock representing any or all of the Conversion Shares and the Warrant Shares.

 

“State of
Incorporation” means Nevada.

 

“Subsidiary”
or “Subsidiaries” means, as of the relevant date, any subsidiary or subsidiaries of the Company (whether or
not included in the Company’s SEC Documents) whether now existing or hereafter acquired or created.

 

“Trading Day”
means any day during which the Principal Trading Market shall be open for business.

 

“Transaction
Documents” means this Agreement, the Note, the Company Security Agreement (defined below), the Transfer Agent Letter
(defined below), the Warrants, the Investor Security Agreement (defined below), and all other certificates (including without limitation
the Secretary’s Certificate (defined below), documents, agreements, resolutions and instruments delivered to any party under
or in connection with this Agreement, as the same may be amended from time to time.

 

“Transfer
Agent” means, at any time, the transfer agent for the Common Stock.

 

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

 

 

    	3

    	 

    

 

“Wire Instructions”
means the wire instructions for the Initial Cash Purchase Price, as provided by the Company, set forth on ANNEX I.

 

 

2.AGREEMENT
TO PURCHASE; PURCHASE PRICE.

 

2.1.Purchase.

 

(a)Subject to the
terms and conditions of this Agreement and the other Transaction Documents, the undersigned Buyer hereby agrees to purchase from
the Company a Secured Convertible Promissory Note in the principal amount of $555,000.00 substantially in the form attached hereto
as ANNEX II (the “Note”). The Note shall be secured by a Security Agreement substantially in the form
attached hereto as ANNEX III (the “Company Security Agreement”) listing all of the Secured Buyer Notes
(defined below) as security for the Company’s obligations under the Transaction Documents. In consideration thereof, the
Buyer shall pay (i) the amount designated as the initial cash purchase price on the Buyer’s signature page to this Agreement
(the “Initial Cash Purchase Price”), and (ii) issue to the Company the Secured Buyer Notes (the
sum of the principal amount of the Secured Buyer Note(s), together with the Initial Cash Purchase Price, the “Purchase
Price”). Subject to Section 2.1(d), all of the Secured Buyer Notes shall be secured by the Investor Security Agreement
substantially in the form attached hereto as ANNEX XII, as the same may be amended from time to time (the “Investor
Security Agreement”). The Initial Cash Purchase Price shall be paid to the Company in accordance with the Wire Instructions.
The Purchase Price and the OID (as defined herein) are allocated to the Tranches (as defined in the Note) of the Note and to the
Warrants as set forth in the table attached hereto as ANNEX XIII.  

 

(b)In consideration
for the Purchase Price, the Company shall, at the Closing (defined below):

 

(i)execute
and deliver to the Buyer the Company Security Agreement;

 

(ii)execute
and deliver to the Buyer that certain Warrant #1 to Purchase Shares of Common Stock substantially in the form attached hereto as
ANNEX IV (“Warrant #1”);

 

(iii)execute
and deliver to the Buyer that certain Warrant #2 to Purchase Shares of Common Stock substantially in the form attached hereto as
ANNEX V (“Warrant #2”);

 

(iv)execute
and deliver to the Buyer that certain Warrant #3 to Purchase Shares of Common Stock substantially in the form attached hereto as
ANNEX VI (“Warrant #3”);

 

(v)execute
and deliver to the Buyer that certain Warrant #4 to Purchase Shares of Common Stock substantially in the form attached hereto as
ANNEX VII (“Warrant #4”);

 

(vi)execute
and deliver to the Buyer that certain Warrant #5 to Purchase Shares of Common Stock substantially in the form attached hereto as
ANNEX VIII (“Warrant #5”, and together with Warrant #1, Warrant #2, Warrant #3, and Warrant #4, the “Warrants”)

 

    	4

    	 

    

 

 

(vii)execute
and deliver to the Transfer Agent, and the Transfer Agent shall execute to indicate its acceptance thereof, the irrevocable letter
of instructions to transfer agent substantially in the form attached hereto as ANNEX IX (the “Transfer Agent Letter”);

 

(viii)cause
to be executed and delivered to the Buyer a fully executed secretary’s certificate and written consent of directors evidencing
the Company’s approval of the Transaction Documents substantially in the forms attached hereto as ANNEX X (together,
the “Secretary’s Certificate”);

 

(ix)cause
to be executed and delivered to the Buyer a fully executed share issuance resolution to be delivered to the Transfer Agent substantially
in the form attached hereto as ANNEX XI (the “Share Issuance Resolution”); and

 

(x)execute
and deliver to the Buyer the Investor Security Agreement.

 

(c)At the Closing,
the Buyer shall deliver the Purchase Price to the Company by delivering the following: (i) the Initial Cash Purchase Price; (ii)
Secured Buyer Note #1 in the principal amount of $100,000.00 duly executed and substantially in the form attached hereto as ANNEX
XIV (“Secured Buyer Note #1”); (iii) Secured Buyer Note #2 in the principal amount of $100,000.00 duly executed
and substantially in the form attached hereto as ANNEX XV (“Secured Buyer Note #2”) (iv) Secured Buyer
Note #3 in the principal amount of $100,000.00 duly executed and substantially in the form attached hereto as ANNEX XVI
(“Secured Buyer Note #3”), (v) Secured Buyer Note #4 in the principal amount of $100,000.00 duly executed and
substantially in the form attached hereto as ANNEX XVII (“Secured Buyer Note #4”, and together with Secured
Buyer Note #1, Secured Buyer Note #2, Secured Buyer Note #3, the “Secured Buyer Notes”).

 

(d)At the Closing,
the Buyer shall execute the Investor Security Agreement, thereby granting to the Company a security interest in the collateral
described therein (the “Collateral”). The Buyer also agrees to file a UCC-1 (or equivalent) with the Illinois
Secretary of State in the manner set forth in the Investor Security Agreement in order to perfect the Company’s security
interest in the Collateral. Notwithstanding anything to the contrary herein or in any other Transaction Document, the Buyer may,
in the Buyer’s sole discretion, add additional collateral to the Collateral covered by the Investor Security Agreement, and
may substitute Collateral as the Buyer deems fit, provided that the fair market value of the substituted Collateral may not be
less than the aggregate principal balance of the Secured Buyer Notes as of the date of any such substitution.

 

2.2.Form of Payment;
Delivery of Securities. The purchase and sale of the Securities shall take place at a closing (the “Closing”)
to be held at the offices of the Buyer on the Closing Date. At the Closing, the Company will deliver the Transaction Documents
to the Buyer against delivery by the Buyer to the Company of the Initial Cash Purchase Price and the Secured Buyer Notes, as set
forth in Section 2.1(c) above.

 

2.3.Purchase Price.
The Note carries an original issue discount of $50,000.00 (the “OID”) to be allocated prorata to cash funds
paid to the Company by the Buyer. The OID will increase the Outstanding Balance of the Note as follows: (i) $10,000 upon payment
of the Initial Cash Purchase Price, (ii) $10,000 upon payment of Secured Buyer Note #1, (iii) $10,000 upon payment of Secured Buyer
Note #2, (iv) $10,000 upon payment of Secured Buyer Note #3, and (v) $10,000 upon payment of Secured Buyer Note #4. In addition,
the Company agrees to pay $7,500.00 to the Buyer to cover the Buyer’s legal fees, accounting costs, due diligence, monitoring
and other transaction costs incurred in connection with the purchase and sale of the Securities (the “Transaction Expense
Amount”), $2,500.00 of which has been previously paid to the Buyer and the remaining $5,000.00 of which is included in
the initial principal balance of the Note (the “Carried Transaction Expense Amount”). The Purchase Price, therefore,
shall be $500,000.00, computed as follows: $555,000.00 original principal balance, less the OID, less the Carried Transaction Expense
Amount. The Initial Cash Purchase Price shall be the Purchase Price less the sum of the initial principal amounts of the Secured
Buyer Notes.

 

    	5

    	 

    

 

3.BUYER REPRESENTATIONS
AND WARRANTIES. The Buyer represents and warrants to, and covenants and agrees with, the Company, as of the date hereof and
as of the Closing Date, as follows:

 

3.1.Binding Obligation.
The Transaction Documents to which the Buyer is a party, and the transactions contemplated hereby and thereby, have been duly and
validly authorized by the Buyer. This Agreement has been executed and delivered by the Buyer, and this Agreement is, and each of
the other Transaction Documents to which the Buyer is a party, when executed and delivered by the Buyer (if necessary), will be
valid and binding obligations of the Buyer enforceable in accordance with their respective terms, subject as to enforceability
only to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement
of creditors’ rights generally.

 

3.2.Accredited
Investor Status. Buyer is, and will be on the Closing Date, an “accredited investor,” as such term is defined
in Regulation D promulgated under the 1933 Act, is experienced in investments and business matters, and has made investments of
a speculative nature and has purchased securities of United States publicly-owned companies in private placements in the past.
Such Buyer is able to bear the risk of an investment in the Company for an indefinite period and to afford a complete loss thereof.
The information set forth on the signature page hereto regarding such Buyer is accurate.

 

4.COMPANY REPRESENTATIONS
AND WARRANTIES. The Company represents and warrants to the Buyer as of the date hereof and as of the Closing Date that:

 

4.1.Rights of
Others Affecting the Transactions. There are no preemptive rights of any stockholder of the Company, as such, to acquire the
Securities. No other party has a currently exercisable right of first refusal which would be applicable to any or all of the transactions
contemplated by the Transaction Documents.

 

4.2.Status.
The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Incorporation
and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company is
duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business
conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so
qualify would not have or result in a Material Adverse Effect. The Company has registered its stock under Section 12(g) of
the Securities Exchange Act of 1934, as amended (the “1934 Act”), and is obligated to file reports pursuant
to Section 13 or Section 15(d) of the 1934 Act. The Company has not taken and will not take any action designed to terminate,
or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the 1934 Act,
nor has the Company received any notification that the SEC is contemplating terminating such registration. The Common Stock is
quoted on the Principal Trading Market. The Company has received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for quotation on the Principal Trading Market, and the Company has maintained all requirements
on its part for the continuation of such quotation. The Company has not, in the twelve (12) months preceding the date hereof, received
notice from the Principal Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company
is not in compliance with the listing or maintenance requirements of such Principal Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance
requirements.

 

    	6

    	 

    

 

4.3.Authorized
Shares.

 

(a)The authorized
capital stock of the Company consists of 10,000,000 shares of preferred stock, $0.0001 par value per share, no shares of which
have been issued, and 500,000,000 shares of Common Stock, $0.0001 par value per share, of which approximately 279,865,011 are outstanding.
Of the outstanding shares of Common Stock, approximately 163,888,281 shares are beneficially owned by Affiliates of the Company.

 

(b)Other than as
set forth in the Company’s SEC Documents, there are no outstanding securities which are convertible into or exchangeable
for shares of Common Stock, whether such conversion is currently exercisable or exercisable only upon some future date or the occurrence
of some event in the future.

 

(c)All issued and
outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. After considering
all other commitments that may require the issuance of Common Stock, the Company has sufficient authorized and unissued shares
of Common Stock as may be necessary to effect the issuance of the Shares on the Closing Date, were (i) the Note issued and fully
converted on that date and (ii) the Warrants issued and fully exercised on that date.

 

(d)The Shares have
been duly authorized by all necessary corporate action on the part of the Company as of or prior to the Closing in accordance with
the terms of this Agreement, and, when issued on conversion of, or in payment of interest on the Note in accordance with the terms
thereof, or upon exercise of the Warrants in accordance with the terms thereof, as applicable, will have been duly and validly
issued, fully paid and non-assessable, free from all taxes, liens, claims, pledges, mortgages, restrictions, obligations, security
interests and encumbrances of any kind, nature and description, and will not subject the Holder thereof to personal liability by
reason of being a Holder.

 

(e)The Conversion
Shares and Warrant Shares are enforceable against the Company and the Company presently has no claims or defenses of any nature
whatsoever with respect to the Conversion Shares or the Warrant Shares.

 

4.4.Transaction
Documents and Stock. This Agreement and each of the other Transaction Documents, and the transactions contemplated hereby and
thereby, have been duly and validly authorized by the Company. This Agreement has been duly executed and delivered by the Company
and this Agreement is, and the Note, the Company Security Agreement, the Warrants, and each of the other Transaction Documents,
when executed and delivered by the Company, will be, valid and binding obligations of the Company enforceable in accordance with
their respective terms, subject as to enforceability only to general principles of equity and to bankruptcy, insolvency, moratorium,
and other similar laws affecting the enforcement of creditors’ rights generally.

 

4.5.Non-contravention.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company, the issuance of the Securities
in accordance with the terms hereof and thereof, and the consummation by the Company of the other transactions contemplated by
this Agreement, the Note, the Company Security Agreement, the Warrants, and the other Transaction Documents do not and will not
conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (a) the
Certificate of Incorporation or bylaws of the Company, each as currently in effect, (b) any indenture, mortgage, deed of trust,
or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are
bound, including any listing agreement for the Common Stock except as herein set forth, or (c) to the Company’s knowledge,
any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal
or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of the
Company’s properties or assets, except such conflict, breach or default which would not have or result in a Material Adverse
Effect.

 

    	7

    	 

    

 

 

4.6.Approvals.
No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders or any lender of the Company is required to be obtained by the Company for the issuance
and sale of the Securities to the Buyer as contemplated by this Agreement, except such authorizations, approvals and consents that
have been obtained.

 

4.7.Filings; Financial
Statements. None of the Company’s SEC Documents contained, at the time they were filed, any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by the Company with the SEC under the 1934 Act on a timely basis or has received a valid
extension of such time of filing and has filed any such report, schedule, form, statement or other document prior to the expiration
of any such extension. As of their respective dates, the financial statements of the Company included in the Company’s SEC
Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (a) as may be otherwise indicated in such financial statements
or the notes thereto, or (b) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). No other information provided by or on behalf of the Company to the Buyer which is not included in
the Company’s SEC Documents, including, without limitation, information referred to in this Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light
of the circumstance under which they are or were made, not misleading.

 

4.8.Absence of
Certain Changes. Since the Last Audited Date, there has been no Material Adverse Effect. Since the Last Audited Date, the Company
has not (a) incurred or become subject to any material liabilities (absolute or contingent) except liabilities incurred in the
ordinary course of business consistent with past practices; (b) discharged or satisfied any material lien or encumbrance or paid
any material obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business
consistent with past practices; (c) declared or made any payment or distribution of cash or other property to stockholders with
respect to its capital stock, or purchased or redeemed, or made any agreements to purchase or redeem, any shares of its capital
stock; (d) sold, assigned or transferred any other material tangible assets, or canceled any material debts owed to the Company
by any third party or material claims of the Company against any third party, except in the ordinary course of business consistent
with past practices; (e) waived any rights of material value, whether or not in the ordinary course of business, or suffered the
loss of any material amount of existing business; (f) made any increases in employee compensation, except in the ordinary course
of business consistent with past practices; or (g) experienced any material problems with labor or management in connection with
the terms and conditions of their employment.

 

    	8

    	 

    

 

4.9.Full Disclosure.
There is no fact known to the Company or that the Company should know after having made all reasonable inquiries (other than conditions
known to the public generally or as disclosed in the Company’s SEC Documents since the Last Audited Date) that has not been
disclosed in writing to the Buyer that would reasonably be expected to have or result in a Material Adverse Effect.

 

4.10.Absence of
Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of the Company, threatened against or affecting the Company before or by any governmental authority or non-governmental
department, commission, board, bureau, agency or instrumentality or any other person, wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect or which would adversely affect the validity or enforceability of, or the authority
or ability of the Company to perform its obligations under, any of the Transaction Documents. The Company is not aware of any valid
basis for any such claim that (either individually or in the aggregate with all other such events and circumstances) could reasonably
be expected to have a Material Adverse Effect. There are no outstanding or unsatisfied judgments, orders, decrees, writs, injunctions
or stipulations to which the Company is a party or by which the Company or any of its properties is bound, that involve the transactions
contemplated herein or that, alone or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

4.11.Absence of
Events of Default. Neither the Company nor any of its Subsidiaries is in violation of or in default with respect to (a) its
Certificate of Incorporation or bylaws or other organizational documents, each as currently in effect, or any material judgment,
order, writ, decree, statute, rule or regulation applicable to such entity; or (b) any material mortgage, indenture, agreement,
instrument or contract to which such entity is a party or by which it or any of its properties or assets are bound (nor is there
any waiver in effect which, if not in effect, would result in such a violation or default), except such breach or default which
would not have or result in a Material Adverse Effect.

 

4.12.Absence of
Certain Company Control Person Actions or Events. None of the following has occurred during the past five (5) years with respect
to a Company Control Person:

 

(a)A petition under
the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer
was appointed by a court for the business or property of such Company Control Person, or any partnership in which he or she was
a general partner at or within two (2) years before the time of such filing, or any corporation or business association of which
he or she was an executive officer at or within two (2) years before the time of such filing;

 

(b)Such Company
Control Person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);

 

(c)Such Company
Control Person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities:

 

    	9

    	 

    

 

 

(i)acting,
as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any
investment company, bank, savings and loan association or insurance company, as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, any other Person regulated by the Commodity Futures Trading Commission
(“CFTC”) or engaging in or continuing any conduct or practice in connection with such activity;

 

(ii)engaging
in any type of business practice; or

 

(iii)engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal
or state securities laws or federal commodities laws;

 

(d)Such Company
Control Person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal
or state authority barring, suspending or otherwise limiting for more than sixty (60) calendar days the right of such Company Control
Person to engage in any activity described in Section 4.12(c)) above, or to be associated with Persons engaged in any such
activity; or

 

(e)Such Company
Control Person was found by a court of competent jurisdiction in a civil action or by the CFTC or SEC to have violated any federal
or state securities law, and the judgment in such civil action or finding by the CFTC or SEC has not been subsequently reversed,
suspended, or vacated.

 

4.13.No Undisclosed
Liabilities or Events. The Company has no liabilities or obligations other than those disclosed in the Transaction Documents
or the Company’s most recently filed SEC Documents (Form 10-K or 10-Q) or those incurred in the ordinary course of the Company’s
business since the Last Audited Date, or which individually or in the aggregate, do not or would not have a Material Adverse Effect.
No event or circumstance has occurred or exists with respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable laws, rules or regulations, requires public disclosure
or announcement prior to the date hereof by the Company but which has not been so publicly announced or disclosed. There are no
proposals currently under consideration or currently anticipated to be under consideration by the Board of Directors or the executive
officers of the Company which proposal would (a) change the Certificate of Incorporation or bylaws of the Company, each as currently
in effect, with or without stockholder approval, which change would reduce or otherwise adversely affect the rights and powers
of the stockholders of the Common Stock, or (b) materially or substantially change the business, assets or capital of the Company,
including its interests in Subsidiaries.

 

4.14.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 offer or sale of any security of the Company or solicited any offer to buy any such security under circumstances that
would eliminate the availability of the exemption from registration under Regulation D in connection with the offer and sale of
the Securities as contemplated hereby.

 

4.15.Dilution.
Each of the Company and its executive officers and directors is aware that the number of shares of Common Stock issuable upon the
execution of this Agreement, the conversion of the Note and exercise of any of the Warrants, or pursuant to the other terms of
the Transaction Documents may have a dilutive effect on the ownership interests of the other stockholders (and Persons having the
right to become stockholders) of the Company. The Company specifically acknowledges that its obligations to issue (a) the Conversion
Shares upon a conversion of the Note, and (b) the Warrant Shares upon an exercise of a Warrant, are binding upon the Company and
enforceable regardless of the dilution such issuances may have on the ownership interests of other stockholders of the Company,
and the Company will honor such obligations, including honoring every Conversion Notice and Notice of Exercise, unless the Company
is subject to an injunction (which injunction was not sought by the Company or any of its directors or executive officers) prohibiting
the Company from doing so.

 

    	10

    	 

    

 

 

4.16.Fees to Brokers,
Placement Agents and Others. With respect to any brokerage commissions, placement agent or finder’s fees or similar payments
that will or would become due and owing by the Company to any Person as a result of this Agreement or the transactions contemplated
hereby (“Broker Fees”), any such Broker Fees will be made in full compliance with all applicable laws and regulations
and only to a Person that is a registered investment adviser or registered broker-dealer. The Buyer shall have no obligation with
respect to any such Broker Fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated
in this subsection that may be due in connection with the transactions contemplated hereby. The Company shall indemnify and hold
harmless each of the Buyer, the Buyer’s employees, officers, directors, stockholders, managers, agents, and partners, and
their respective Affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorneys’
fees) and expenses suffered in respect of any such claimed or existing fees.

 

4.17.Disclosure.
All information relating to or concerning the Company or its Subsidiaries set forth in the Transaction Documents or in the Company’s
SEC Documents or other public filings provided by or on behalf of the Company to the Buyer is true and correct in all material
respects and the Company has not omitted to state any material fact necessary in order to make the statements made, in light of
the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the
Company or its Subsidiaries or any of their business, properties, prospects, operations or financial conditions, which under applicable
laws, rules or regulations, requires public disclosure or announcement by the Company or any such Subsidiary.

 

4.18.Confirmation.
The Company agrees that, if, to the knowledge of the Company, any events occur or circumstances exist prior to the payment of the
Purchase Price by the Buyer to the Company which would make any of the Company’s representations or warranties set forth
herein materially untrue or materially inaccurate as of such date, the Company shall immediately notify the Buyer in writing prior
to such date of such events or circumstances, specifying which representations or warranties are affected and the reasons therefor.

 

4.19.Title.
The Company and the Subsidiaries, if applicable, own and have good and marketable title in fee simple absolute to, or a valid leasehold
interest in, all their respective real properties and good title to their other respective assets and properties, subject to no
liens, claims or encumbrances except as have been disclosed to the Buyer.

 

4.20.Intellectual
Property.

 

(a)Ownership.
The Company owns or possesses or can obtain on commercially reasonable terms sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses (software or otherwise), information, know-how, inventions, discoveries,
published and unpublished works of authorship, processes and any and all other proprietary rights (“Intellectual Property”)
necessary to the business of the Company as presently conducted, the lack of which could reasonably be expected to have a Material
Adverse Effect. Except for agreements with its own employees or consultants, standard end-user license agreements, support/maintenance
agreements and agreements entered in the ordinary course of the Company’s business, all of which have been made available
for review by the Buyer, there are no outstanding options, licenses or agreements relating to the Intellectual Property of the
Company, and the Company is not bound by or a party to any options, licenses or agreements with respect to the Intellectual Property
of any other person or entity. The Company has not received any written communication alleging that the Company has violated or,
by conducting its business as currently conducted, would violate any of the Intellectual Property of any other person or entity,
nor is the Company aware of any basis therefor. The Company is not obligated to make any payments by way of royalties, fees or
otherwise to any owner or licensor of or claimant to any Intellectual Property with respect to the use thereof in connection with
the present conduct of its business other than in the ordinary course of its business. There are no agreements, understandings,
instruments, contracts, judgments, orders or decrees to which the Company is a party or by which it is bound which involve indemnification
by the Company with respect to infringements of Intellectual Property, other than in the ordinary course of its business.

 

    	11

    	 

    

 

(b)No Breach
by Employees. The Company is not aware that any of its employees is obligated under any contract or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that would materially interfere with the use of his or
her efforts to promote the interests of the Company or that would conflict with the Company’s business as presently conducted.
Neither the execution nor delivery of this Agreement, nor the carrying on of the Company’s business by the employees of the
Company, nor the conduct of the Company’s business as presently conducted, will, to the Company’s knowledge, conflict
with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now obligated. The Company does not believe it is or will be necessary to use any inventions
of any of its employees made prior to their employment by the Company of which it is aware.

 

4.21.Shell Company.
The Company was the type of “issuer” defined in Rule 144(i)(1) under the 1933 Act until December 29, 2010.

 

4.22.Environmental
Matters.

 

(a)No Violation.
There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company,
no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal,
state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of
the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing.
The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection
of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment,
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

(b)No Hazardous
Materials. Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials
are contained on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous
Materials were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries
during the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course
of the Company’s or any of its Subsidiaries’ business.

 

    	12

    	 

    

 

(c)No Storage
Tanks. There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of
its Subsidiaries that are not in compliance with applicable law.

 

5.CERTAIN COVENANTS
AND ACKNOWLEDGMENTS.

 

5.1.Covenants
and Acknowledgements of the Buyer.

 

(a)Transfer
Restrictions. The Buyer acknowledges that (i) the Securities have not been and are not being registered under the provisions
of the 1933 Act and, except as included in an effective Registration Statement, the Shares have not been and are not being registered
under the 1933 Act, and may not be transferred unless (A) subsequently registered thereunder, or (B) the Buyer shall have delivered
to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an exemption from registration under the 1933 Act;
(ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of such Rule and further,
if such Rule is not applicable, any resale of such Securities under circumstances in which the seller, or the Person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in the 1933 Act, may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) except as otherwise provided herein,
neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or to comply with
the terms and conditions of any exemption thereunder.

 

(b)Restrictive
Legend. The Buyer acknowledges and agrees that, until such time as the relevant Securities have been registered under the 1933
Act, and may be sold in accordance with an effective Registration Statement, or until such Securities can otherwise be sold without
restriction, whichever is earlier, the certificates and other instruments representing any of the Securities shall bear a restrictive
legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such Securities):

 

THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE CUSTOMARY
FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED,
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

 

5.2.Covenants,
Acknowledgements and Agreements of the Company. As a condition to the Buyer’s obligation to purchase the Securities contemplated
by this Agreement, and as a material inducement for the Buyer to enter into this Agreement and the other Transaction Documents,
until all of the Company’s obligations hereunder and the Note are paid and performed in full and the Warrants are exercised
in full (or otherwise expired), or within the timeframes otherwise specifically set forth below, the Company shall comply with
the following covenants:

 

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(a)Filings.
From the date hereof until the date that is six (6) months after all the Conversion Shares and Warrant Shares either have been
sold by the Buyer, or may permanently be sold by the Buyer without any restrictions pursuant to Rule 144 (the “Registration
Period”), the Company shall timely make (taking into consideration all allowable Rule 12b-25 filing extensions obtained
by the Company) all filings required to be made by it under the 1933 Act, the 1934 Act, Rule 144 or any United States state securities
laws and regulations thereof applicable to the Company or by the rules and regulations of the Principal Trading Market, and such
filings shall conform to the requirements of applicable laws, regulations and government agencies, and, unless such filings are
publicly available on the SEC’s EDGAR system (via the SEC’s web site at no additional charge), the Company shall provide
a copy thereof to the Buyer promptly after such filings. Without limiting the foregoing, the Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing.
Additionally, within four (4) Trading Days following the date of this Agreement, the Company shall 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
approved by the Buyer and attaching the material Transaction Documents as exhibits to such filing. The Company shall further redact
all confidential information from such Form 8-K. Additionally, the Company shall furnish to the Buyer, so long as the Buyer owns
any Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements
of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the Company, and (iii)
such other information as may be reasonably requested to permit the Buyer to sell such Securities pursuant to Rule 144 without
registration.

 

(b)Reporting
Status. So long as the Buyer beneficially owns Securities and for at least twenty (20) Trading Days thereafter, the Company
shall file all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the 1934 Act, and shall take
all reasonable action under its control to ensure that adequate current public information with respect to the Company, as required
in accordance with Rule 144, is publicly available, and shall not terminate its status as an issuer required to file reports under
the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination.

 

(c)Listing.
The Common Stock shall be listed or quoted for trading on any of (i) the NYSE Amex, (ii) the New York Stock Exchange, (iii) the
Nasdaq Global Market, (iv) the Nasdaq Capital Market, (v) the OTC Bulletin Board, (vi) the OTCQX or (vii) the OTCQB. The Company
shall promptly secure the listing of all of the Conversion Shares and Warrant Shares upon each national securities exchange and
automated quotation system, if any, upon which the Common Stock is then listed (subject to official notice of issuance) and shall
maintain such listing of all securities from time to time issuable under the terms of the Transaction Documents. The Company shall
comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the
Principal Trading Market and/or the Financial Industry Regulatory Authority, Inc. (“FINRA”) or any successor
thereto, as the case may be, applicable to it at least through the date which is sixty (60) calendar days after the later of (I)
the date on which the Note has been converted or paid in full, and (II) the date on which the Warrants have been exercised in full
(or the date on which all Warrants have expired).

 

(d)Use of Proceeds.
The Company shall use the net proceeds received hereunder for working capital and general corporate purposes only; provided,
however, the Company will not use such proceeds to pay fees payable (i) to any broker or finder relating to the offer and sale
of the Note and/or the Warrants, or (ii) to any other party relating to any financing transaction effected prior to the Closing
Date.

 

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(e)Publicity,
Filings, Releases, Etc. Neither party shall disseminate any information relating to the Transaction Documents or the transactions
contemplated thereby, including issuing any press releases, holding any press conferences or other forums, or filing any reports
(collectively, “Publicity”), without giving the other party reasonable advance notice and an opportunity to
comment on the contents thereof. Neither party will include in any such Publicity any statement or statements or other material
to which the other party reasonably objects, unless in the reasonable opinion of counsel to the party proposing such statement,
such statement is legally required to be included. In furtherance of the foregoing, the Company shall provide to the Buyer’s
Counsel a draft of the first current report on Form 8-K or a quarterly or annual report on Form 10-Q or 10-K, as the case may be,
intended to be made with the SEC which refers to the Transaction Documents or the transactions contemplated thereby as soon as
practicable (but at least two (2) Trading Days before such filing will be made) and shall not include in such filing (or any other
filing filed before then) any statement or statements or other material to which the Buyer reasonably objects, unless in the reasonable
opinion of counsel to the Company such statement is legally required to be included. Notwithstanding the foregoing, each of the
parties hereby consents to the inclusion of the text of the Transaction Documents in filings made with the SEC (but any descriptive
text accompanying or part of such filing shall be subject to the other provisions of this subsection).

 

(f)FINRA Rule
5110. In the event that the Corporate Financing Rule 5110 of FINRA is or becomes applicable to the transactions contemplated
by the Transaction Documents or to the sale by a Holder of any of the Securities, then the Company shall, to the extent required
by such rule, timely make any filings and cooperate with any broker or selling stockholder in respect of any consents, authorizations
or approvals that may be necessary for FINRA to timely and expeditiously permit the Holder to sell the Securities.

 

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

 

(h)Corporate
Existence. The Company shall (i) do all things necessary to remain duly qualified and in good standing in each jurisdiction
in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification
necessary; (ii) preserve and keep in full force and effect all licenses or similar qualifications required by it to engage in its
business in all jurisdictions in which it is at the time so engaged; (iii) continue to engage in business of the same general type
as conducted as of the date hereof; and (iv) continue to conduct its business substantially as now conducted or as otherwise permitted
hereunder.

 

(i)Taxes.
The Company shall pay and discharge promptly when due all taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property before the same shall become delinquent or in default, which, if unpaid,
might reasonably be expected to give rise to liens or charges upon such properties or any part thereof, unless, in each case, the
validity or amount thereof is being contested in good faith by appropriate proceedings and the Company has maintained adequate
reserves with respect thereto in accordance with GAAP.

 

(j)Compliance.
The Company shall comply in all material respects with all federal, state and local laws and regulations, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations and requirements (collectively, “Requirements”)
of all governmental bodies, insurers, departments, commissions, boards, courts, authorities, officials or officers which are applicable
to the Company, its business, operations, or any of its properties, except where the failure to so comply would not have a Material
Adverse Effect; provided, however, that nothing provided herein shall prevent the Company from contesting in good faith
the validity or the application of any Requirements.

 

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(k)Litigation.
From and after the date hereof and until all of the Company’s obligations hereunder and the Note are paid and performed in
full and the Warrants are exercised in full (or otherwise expired), the Company shall notify the Buyer in writing, promptly upon
learning thereof, of any litigation or administrative proceeding commenced or threatened against the Company involving a claim
in excess of $100,000.00.

 

(l)Performance
of Obligations. The Company shall promptly and in a timely fashion perform and honor all demands, notices, requests and obligations
that exist or may arise under the Transaction Documents.

 

(m)Failure to
Make Timely Filings. The Company agrees that, if the Company fails to timely file on the SEC’s EDGAR system any information
required to be filed by it, whether on a Form 10-K, Form 10-Q, Form 8-K, Proxy Statement or otherwise so as to be deemed a “reporting
issuer” with current public information under the 1934 Act, the Company shall be liable to pay to the Holder, in addition
to any other available remedies in the Transaction Documents, an amount based on the following schedule (where, for purposes of
this subsection, “No. Trading Days Late” refers to each Trading Day after the latest due date for the relevant
filing):

 

	 	 	 	No. Trading Days Late	 	 	 	 	Late Filing Payment For Each $10,000.00 of Outstanding Principal of the Note 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	1	 	 	 	 	$100.00	 	 	 	 	 
	 	 	 	2	 	 	 	 	$200.00	 	 	 	 	 
	 	 	 	3	 	 	 	 	$300.00	 	 	 	 	 
	 	 	 	4	 	 	 	 	$400.00	 	 	 	 	 
	 	 	 	5	 	 	 	 	$500.00	 	 	 	 	 
	 	 	 	6	 	 	 	 	$600.00	 	 	 	 	 
	 	 	 	7	 	 	 	 	$700.00	 	 	 	 	 
	 	 	 	8	 	 	 	 	$800.00	 	 	 	 	 
	 	 	 	9	 	 	 	 	$900.00	 	 	 	 	 
	 	 	 	10	 	 	 	 	$1,000.00	 	 	 	 	 
	 	 	 	>10	 	 	 	 	$1,000.00 + $200.00 for each Trading Day late beyond 10	 	 	 	 	 

 

The Company shall pay any payments incurred
under this subsection in immediately available funds upon demand by the Holder; provided, however, that the Holder making
the demand may specify that the payment shall be made in shares of Common Stock at the Conversion Price applicable to the date
of such demand. If the payment is to be made in shares of Common Stock, such shares shall be considered Conversion Shares under
the Note, with the “Delivery Date” for such shares being determined from the date of such demand. The demand
for payment of such amount in shares of Common Stock shall be considered a “Conversion Notice” under the Note
(but the delivery of such shares shall be in payment of the amount contemplated by this subsection and not in payment of any principal
or interest on the Note).

 

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(n)Share Reserve.
In order to allow for, as of the relevant date of determination, the conversion of the entire Outstanding Balance into Common Stock
and the delivery of Warrant Shares necessary for a complete exercise of the Warrants, the Company shall take all action necessary
from time to time to reserve for the benefit of the Holder the number of authorized but unissued shares of Common Stock equal to
the amount calculated as follows (such calculated amount is referred to as the “Share Reserve”): (i) three times
the higher of (A) the Outstanding Balance divided by the Conversion Price, and (B) the Outstanding Balance divided by the Market
Price, plus (ii) three times the number of Delivery Shares that would be required to be delivered to the Holder in order to effect
a complete exercise of the Warrants pursuant to the terms thereof (ignoring any trigger dates set forth therein). If at any time
the Share Reserve is less than required herein, the Company shall immediately increase the Share Reserve in an amount equal to
no less than the deficiency. If the Company does not have sufficient authorized and unissued shares of Common Stock available to
increase the Share Reserve, the Company shall call a special meeting of the stockholders as soon as practicable after such occurrence,
but in no event later than thirty (30) calendar days after such occurrence, and hold such meeting as soon as practicable thereafter,
but in no event later than sixty (60) calendar days after such occurrence, for the sole purpose of increasing the number of authorized
shares of Common Stock. The Company’s management shall recommend to the Company’s stockholders to vote in favor of
increasing the number of authorized shares of Common Stock. Management shall also vote all of its shares in favor of increasing
the number of authorized shares of Common Stock. The Company shall use its best efforts to cause such additional shares of Common
Stock to be authorized so as to comply with the requirements of this subsection. All calculations with respect to determining the
Share Reserve shall be made without regard to any limitations on conversion of the Note or exercise of the Warrants.

 

(o)DWAC Eligibility.
At all times during which any portion of the Note remains outstanding, or any portion of a Warrant remains unexercised, the Company
shall cause all DWAC Eligible Conditions to be satisfied.

 

(p)Anti-Dilution
Certification. For so long as any portion of the Note remains outstanding, the Company shall deliver to the Buyer on or before
the 10th day of each month a certification in the form attached hereto as ANNEX XVIII whereby the Company shall notify the
Buyer of a Dilutive Issuance (as defined in the Note) or any other event(s) that occurred during the previous month that triggers
anti-dilution protection or other adjustments to the applicable Conversion Price or Exercise Price (each an “Anti-Dilution
Event”), or, if no Anti-Dilution Event occurred, certifying to the Buyer that no Anti-Dilution Event occurred during
the previous month.

 

(q)Change in
Nature of Business. The Company shall not directly or indirectly engage in any material line of business substantially different
from those lines of business conducted by or publicly contemplated to be conducted by the Company on the date of this Agreement
or any business substantially related or incidental thereto. The Company shall not, and the Company shall cause each of its Subsidiaries
to not, directly or indirectly, modify its or their corporate structure or purpose if such modification may have a material adverse
effect on any rights of, or benefits to, the Holder under any of the Transaction Documents.

 

(r)Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all
of its properties which are necessary or useful in the proper conduct of its business, in good working order and condition, ordinary
wear and tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases
to which it is a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.

 

(s)Maintenance
of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations (including, without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real properties leased or owned by it) and business, in such
amounts and covering such risks as is required by any governmental authority having jurisdiction with respect thereto or as is
carried generally in accordance with sound business practice by companies in similar businesses similarly situated.

 

    	17

    	 

    

 

(t)Restriction
on Redemption. The Company shall not, directly or indirectly, redeem or repurchase its capital stock without the prior express
written consent of the Holder.

 

(u)Restriction
on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
sell, lease, license, assign, transfer, convey or otherwise dispose of any assets or rights of the Company or any Subsidiary owned
or hereafter acquired, whether in a single transaction or a series of related transactions, other than (i) sales, leases, licenses,
assignments, transfers, conveyances and other dispositions of such assets or rights supported by fair market value consideration
as determined in the reasonable discretion of the board of directors or the Chief Executive Officer of the Company or its Subsidiary,
as the case may be, or (ii) sales of inventory in the ordinary course of business.

 

(v)Existence
of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, allow,
grant, or suffer to exist any mortgage, lien, pledge, charge, security interest, tax lien, judgment, or other encumbrance (collectively,
“Liens”), upon the property or assets (including accounts and contract rights) owned by the Company or any of
its Subsidiaries, other than Permitted Liens.

 

(w)Intellectual
Property. The Company shall not, and the Company shall not permit any of its Subsidiaries, directly or indirectly, to encumber
or allow any Liens on, any of its copyright rights, copyright applications, copyright registrations and like protections in each
work of authorship and derivative work, whether published or unpublished, any patents, patent applications and like protections,
including improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks,
service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the
goodwill of the business of the Company and its Subsidiaries connected with and symbolized thereby, know-how, operating manuals,
trade secret rights, rights to unpatented inventions, and any claims for damage by way of any past, present, or future infringement
of any of the foregoing, other than Permitted Liens.

 

(x)Transactions
with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party
to, any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange
of property or assets of any kind or the rendering of services of any kind) with any Affiliate, except in the ordinary course of
business in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its
business, for fair consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable
arm’s length transaction with a person that is not an Affiliate thereof.

 

(y)Certain Negative
Covenants of the Company. From and after the date hereof and until all of the Company’s obligations hereunder and the
Note are paid and performed in full and all Warrants are exercised in full (or otherwise expired), the Company shall not:

 

(i)Transfer,
assign, sell, pledge, hypothecate or otherwise alienate or encumber any of the Secured Buyer Notes in any way without the prior
written consent of the Buyer.

 

(ii)Enter
into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any
service, with any Affiliate of the Company, or amend or modify any agreement related to any of the foregoing, except on terms that
are no less favorable, in any material respect, than those obtainable from any person or entity who is not an Affiliate of the
Company.

 

    	18

    	 

    

 

(iii)So
long as the Note is outstanding, the Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or
indirectly, pay cash dividends or distributions on any equity securities of the Company or of its Subsidiaries.

 

(z)Rule 144
Opinion. Either counsel to the Company has delivered to the Buyer an opinion letter, or the Company shall accept, in its reasonable
discretion, an opinion letter prepared by legal counsel of Buyer’s choosing (in either case, the “Opinion Letter”),
stating that (i) the Company is not a shell company or the type of “issuer” defined in Rule 144(i)(1) under the 1933
Act (a “Shell Company”), (ii) the Company has been a Shell Company, (iii) the Company is in compliance with
all filing requirements under Rule 144 as of the date hereof, and (iv) the Shares may be sold by the Buyer without any restrictions
pursuant to Rule 144, so long as the applicable holding period specified by Rule 144 is satisfied, and, as applicable, the Company
shall give instructions to its Transfer Agent to issue shares of Common Stock upon conversion of the Note based upon or otherwise
consistent with such Opinion Letter.

 

(aa)Transfer
Agent Reserve. From and after the date hereof and until all of the Company’s obligations hereunder and the Note are paid
and performed in full and all Warrants are exercised in full (or otherwise expired):

 

(i)the
Company shall at all times require its Transfer Agent to establish a reserve of shares of authorized but unissued Common Stock
in an amount not less than the Share Reserve (the “Transfer Agent Reserve”);

 

(ii)the
Company shall require its Transfer Agent to hold the Transfer Agent Reserve for the exclusive benefit of the Holder and shall authorize
the Transfer Agent to issue the shares of Common Stock held in the Transfer Agent Reserve to the Holder only (subject to subsection
(iii) immediately below);

 

(iii)the
Company shall cause the Transfer Agent to agree that when the Transfer Agent issues shares of Common Stock to the Holder pursuant
to the Transaction Documents, the Transfer Agent will not issue such shares from the Transfer Agent Reserve, unless such issuance
is pre-approved in writing by the Holder;

 

(iv)the
Company shall cause the Transfer Agent to agree that it will not reduce the Transfer Agent Reserve under any circumstances, unless
such reduction is pre-approved in writing by the Holder;

 

(v)no
less frequently than at the end of each calendar quarter, the Company shall recalculate the Transfer Agent Reserve as of such time
(each a “Transfer Agent Reserve Calculation”), and if additional shares of Common Stock are required to be added
to the Transfer Agent Reserve pursuant to subsection (i) immediately above, the Company shall immediately give written instructions
to the Transfer Agent to cause the Transfer Agent to set aside and increase the Transfer Agent Reserve by the necessary number
of shares of Common Stock; and

 

 

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(vi)no
less frequently than quarterly, the Company shall certify in writing to the Holder (A) the correctness of the Company’s Transfer
Agent Reserve Calculation and (B) that either (1) the Company has instructed the Transfer Agent to increase the Transfer Agent
Reserve in accordance with the terms hereof, or (2) there was no need to increase the Transfer Agent Reserve, in either case consistent
with the Transfer Agent Reserve Calculation.

 

For the avoidance of
any doubt, the requirements of this Section 5.2 are material to this Agreement and any violation or breach thereof by the Company
shall constitute a default under this Agreement.

 

6.TRANSFER AGENT.

 

6.1.Instructions.
The Company covenants that, with respect to the Securities, other than the stop transfer instructions to give effect to Section 5.1(a)
hereof, the Company will give the Transfer Agent no instructions inconsistent with the Transfer Agent Letter. Except as required
by Sections 5.1(a) and 5.1(b) of this Agreement and the Transfer Agent Letter, the Shares 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. Nothing
in this subsection shall affect in any way the Buyer’s obligations and agreement to comply with all applicable securities
laws upon resale of the Securities. If the Buyer provides the Company with an opinion of counsel reasonably satisfactory to the
Company that registration of a resale by the Buyer of any of the Securities in accordance with clause (i)(B) of Section 5.1(a)
of this Agreement is not required under the 1933 Act or upon request from a Holder while an applicable Registration Statement is
effective, the Company shall (except as provided in clause (ii) of Section 5.1(a) of this Agreement) permit the transfer of the
Securities and, in the case of the Conversion Shares or the Warrant Shares, as may be applicable, use its best efforts to cause
the Transfer Agent to promptly deliver to the Holder or the Holder’s broker, as applicable, such Conversion Shares or Warrant
Shares by way of the DWAC system.

 

6.2.DWAC Eligible.
The Company specifically covenants that, as of the Closing Date, all DWAC Eligible Conditions are satisfied. The Company shall
notify the Buyer in writing if the Company at any time while the Holder holds Securities becomes aware of any plans of the Transfer
Agent to voluntarily or involuntarily terminate its participation in the DTC/FAST Program. While Holder holds Securities, the Company
shall at all times after the Closing Date maintain a transfer agent which participates in the DTC/FAST Program, and the Company
shall not appoint any transfer agent which does not participate in the DTC/FAST Program. Nevertheless, if at any time the Company
receives a Conversion Notice or Notice of Exercise and all DWAC Eligible Conditions are not then satisfied (including without limitation
because the Transfer Agent is not then participating in the DTC/FAST Program or the Conversion Shares or Warrant Shares are not
otherwise transferable via the DWAC system), then the Company shall instruct the Transfer Agent to immediately issue one or more
certificates for Common Stock without legend in such name and in such denominations as specified by the Holder and consistent with
the terms and conditions of the Transaction Documents.

 

6.3.Transfer Fees.
The Company shall assume any fees or charges of the Transfer Agent or Company Counsel regarding (a) the removal of a legend or
stop transfer instructions with respect to the Securities, and (b) the issuance of certificates or DWAC registration to or in the
name of the Holder or the Holder’s designee or to a transferee as contemplated by an effective Registration Statement.

 

7.DELIVERY OF
SHARES.

 

7.1.Delay in Issuing
Shares. The Company understands that a delay in the delivery of Conversion Shares, whether on conversion of all or any portion
of the Note and/or in payment of accrued interest, or a delay in the delivery of Warrant Shares, whether on exercise of all or
any portion of a Warrant, beyond the relevant Delivery Date could result in economic loss to the Holder. As compensation to the
Holder for such loss, in addition to any other available remedies in the Transaction Documents, the Company shall pay late payments
to the Holder for late delivery of the Conversion Shares or Warrant Shares in accordance with the following schedule (where, for
purposes of this subsection, “No. Trading Days Late” is defined as the number of Trading Days beyond three (3)
Trading Days after the applicable Delivery Date):

 

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	 	 	 	No. Trading Days Late	 	 	 	 	Late Payment For Each $10,000.00 of
     Principal or Interest Being Converted under the Note or Aggregate Exercise Price under a Warrant	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	1	 	 	 	 	$100.00	 	 	 	 	 
	 	 	 	2	 	 	 	 	$200.00	 	 	 	 	 
	 	 	 	3	 	 	 	 	$300.00	 	 	 	 	 
	 	 	 	4	 	 	 	 	$400.00	 	 	 	 	 
	 	 	 	5	 	 	 	 	$500.00	 	 	 	 	 
	 	 	 	6	 	 	 	 	$600.00	 	 	 	 	 
	 	 	 	7	 	 	 	 	$700.00	 	 	 	 	 
	 	 	 	8	 	 	 	 	$800.00	 	 	 	 	 
	 	 	 	9	 	 	 	 	$900.00	 	 	 	 	 
	 	 	 	10	 	 	 	 	$1,000.00	 	 	 	 	 
	 	 	 	>10	 	 	 	 	$1,000.00 + $200.00 for each Trading Day late beyond 10	 	 	 	 	 

 

 

As elected by the Holder,
the amount of any payments incurred under this Section 7.1 shall either be automatically added to the principal balance of
the Note (without the need to provide any notice to the Company) or otherwise paid by the Company in immediately available funds
upon demand. Nothing herein shall limit the Holder’s right to pursue additional damages for the Company’s failure to
issue and deliver the Conversion Shares or Warrant Shares, as applicable, to the Holder within a reasonable time. The Company acknowledges
that if the Company fails to effect delivery of the Conversion Shares or the Warrant Shares as and when required, the Holder may
revoke the Conversion Notice or Notice of Exercise pursuant to the terms set forth in the Note or a Warrant, as applicable. Notwithstanding
any such revocation, the charges described in this Section 7.1 which have accrued through the date of such revocation shall remain
due and owing to the Holder.

 

7.2.Bankruptcy.
The Holder of the Note shall be entitled to exercise the Holder’s conversion privilege with respect to such Note, and exercise
privilege with respect to the Warrants, notwithstanding the commencement of any case under 11 U.S.C. §101 et seq. (the “Bankruptcy
Code”). In the event the Company is a debtor under the Bankruptcy Code, the Company hereby waives, to the fullest extent
permitted, any rights to relief it may have under 11 U.S.C. §362 in respect of such Holder’s exercise privileges. The
Company hereby waives, to the fullest extent permitted, any rights to relief it may have under 11 U.S.C. §362 in respect of
the conversion of the Note or exercise of the Warrants. The Company agrees, without cost or expense to such Holder, to take or
to consent to any and all action necessary to effectuate relief under 11 U.S.C. §362.

 

8.CLOSING DATE.

 

8.1.The Closing Date
shall occur on the date which is the first Trading Day after each of the conditions contemplated by Sections 9 and 10 hereof
shall have either been satisfied or been waived by the party in whose favor such conditions run.

 

8.2.Closing of the
purchase and sale of the Securities, which the parties anticipate shall occur concurrently with the execution of this Agreement,
shall occur at the offices of the Buyer and shall take place no later than 3:00 P.M., Eastern Time, or on such day or such other
time as is mutually agreed upon by the Company and the Buyer.

 

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9.CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL. The Company’s obligation to sell the Securities to the Buyer pursuant to this
Agreement on the Closing Date is conditioned upon and subject to the fulfillment, on or prior to the Closing Date, of all of the
following conditions, any of which may be waived in whole or in part by the Company:

 

9.1.The execution
and delivery of this Agreement and, as applicable, the other Transaction Documents by the Buyer, including without limitation,
the original fully executed Secured Buyer Notes.

 

9.2.Delivery by the
Buyer of good funds as payment in full of an amount equal to the Initial Cash Purchase Price in accordance with this Agreement.

 

9.3.The accuracy
on the Closing Date of the representations and warranties of the Buyer contained in this Agreement, each as if made on such date,
and the performance by the Buyer on or before such date of all covenants and agreements of the Buyer required to be performed on
or before such date.

 

9.4.There shall not
be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent
or approval which shall not have been obtained.

 

10.CONDITIONS
TO THE BUYER’S OBLIGATION TO PURCHASE. The Buyer’s obligation to purchase the Securities from the Company pursuant
to this Agreement on the Closing Date is conditioned upon and subject to the fulfillment, on or prior to the Closing Date, of all
of the following conditions, any of which may be waived in whole or in part by the Buyer:

 

10.1.The execution
and delivery of this Agreement, the Company Security Agreement, the Transfer Agent Letter, the Secretary’s Certificate, and,
as applicable, the other Transaction Documents by the Company.

 

10.2.The delivery
by the Company to the Buyer of the Note and the Warrants, each in original form, duly executed by the Company, in accordance with
this Agreement.

 

10.3.On the Closing
Date, each of the Transaction Documents executed by the Company on or before such date shall be in full force and effect and the
Company shall not be in default thereunder.

 

10.4.The Company
shall have authorized and reserved for the purpose of issuance under the Transaction Documents shares of Common Stock in an amount
no less than the Share Reserve as of the Closing Date.

 

10.5.The accuracy
in all material respects on the Closing Date of the representations and warranties of the Company contained in this Agreement and
the other Transaction Documents, each as if made on such date, and the performance by the Company on or before such date of all
covenants and agreements of the Company required to be performed on or before such date.

 

    	22

    	 

    

 

 

10.6.There shall
not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any
consent or approval which shall not have been obtained.

 

10.7.From and after
the date hereof up to and including the Closing Date, each of the following conditions will remain in effect: (a) the trading of
the Common Stock shall not have been suspended by the SEC or on the Principal Trading Market; (b) trading in securities generally
on the Principal Trading Market shall not have been suspended or limited; (c) no minimum prices shall have been established for
securities traded on the Principal Trading Market; and (d) there shall not have occurred any Material Adverse Effect.

 

10.8.Except for any
notices required or permitted to be filed after the Closing Date with certain federal and state securities commissions, the Company
shall have obtained (a) all governmental approvals required in connection with the lawful sale and issuance of the Securities,
and (b) all third party approvals required to be obtained by the Company in connection with the execution and delivery of the Transaction
Documents by the Company or the performance of the Company’s obligations thereunder.

 

10.9.All corporate
and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident
to such transactions shall be reasonably satisfactory in substance and form to the Buyer.

 

11.INDEMNIFICATION.

 

11.1.The Company
agrees to defend, indemnify and forever hold harmless the Buyer and the Buyer’s stockholders, directors, officers, managers,
members, partners, Affiliates, employees, attorneys, and agents, and each Buyer Control Person (collectively, the “Buyer
Parties”) from and against any losses, claims, damages, liabilities or expenses incurred (collectively, “Damages”),
joint or several, and any action in respect thereof to which the Buyer or any of the other Buyer Parties becomes subject, resulting
from, arising out of or relating to any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant
or agreement on the part of the Company contained in this Agreement or any of the other Transaction Documents, as such Damages
are incurred. The Buyer Parties with the right to be indemnified under this subsection (the “Indemnified Parties”)
shall have the right to defend any such action or proceeding with attorneys of their own selection, and the Company shall be solely
responsible for all costs and expenses related thereto. If the Indemnified Parties opt not to retain their own counsel, the Company
shall defend any such action or proceeding with attorneys of its choosing at its sole cost and expense, provided that such attorneys
have been pre-approved by the Indemnified Parties, which approval shall not be unreasonably withheld, and provided further that
the Company may not settle any such action or proceeding without first obtaining the written consent of the Indemnified Parties.

 

11.2.The indemnity
contained in this Agreement shall be in addition to (a) any cause of action or similar rights of the Buyer Parties against the
Company or others, and (b) any other liabilities the Company may be subject to.

 

12.PERFORMANCE.
The Company, upon receipt of a Conversion Notice concerning a Conversion Eligible Tranche (as defined in the Note) or a Notice
of Exercise, (a) may not fail or refuse to deliver shares or certificates representing shares of Common Stock in accordance with
the terms and conditions of the Transaction Documents, or (b) if there is a claim for a breach by the Company of any other provision
of this Agreement or any of the other Transaction Documents, the Company shall not raise as a legal defense to performance any
claim that the Holder or anyone associated or affiliated with the Holder has violated any provision hereof or any of the other
Transaction Documents or has engaged in any violation of law or any other claim or defense, in either case, unless the Company
has first posted a bond for one hundred fifty percent (150%) of the principal amount and, if relevant, then obtained a court order
specifically directing it not to deliver such shares or certificates to the Holder. The proceeds of such bond shall be payable
to the Holder to the extent that the Holder obtains judgment or the Holder’s defense is recognized. Such bond shall remain
in effect until the completion of the relevant proceeding and, if the Holder appeals therefrom, until all such appeals are exhausted.
This provision is deemed incorporated by reference into each of the Transaction Documents as if set forth therein in full.

 

    	23

    	 

    

 

13.OWNERSHIP
LIMITATION. Notwithstanding anything to the contrary contained in this Agreement or any of the other Transaction Documents,
if at any time after the date hereof, the Holder shall or would receive shares of Common Stock in payment of interest or principal
under the Note or upon conversion of the Note, so that the Holder would, together with other shares of Common Stock held by it
or its Affiliates, own or beneficially own by virtue of such action or receipt of additional shares of Common Stock a number of
shares exceeding 9.99% of the number of shares of the Company’s Common Stock outstanding on such date (the “9.99%
Cap”), the Company shall not be obligated and shall not issue to the Holder shares of its Common Stock which would exceed
the 9.99% Cap, but only until such time as the 9.99% Cap would no longer be exceeded by any such receipt of shares of Common Stock
by the Company. The foregoing limitations are enforceable, unconditional and non-waivable.

 

14.MISCELLANEOUS.

 

14.1.Governing
Law; Venue. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Illinois for contracts
to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Each party
hereto hereby (a) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting
in Cook County, Illinois in connection with any dispute or proceeding arising out of or relating to this Agreement, (b) agrees
that all claims in respect of any such dispute or proceeding may only be heard and determined in any such court, (c) expressly
submits to the venue of any such court for the purposes hereof, and (d) waives any claim of improper venue and any claim or objection
that such courts are an inconvenient forum or any other claim or objection to the bringing of any such proceeding in such jurisdictions
or to any claim that such venue of the suit, action or proceeding is improper. Each party hereto hereby irrevocably consents to
the service of process of any of the aforementioned courts in any such proceeding by the mailing of copies thereof by reputable
overnight courier (e.g., FedEx) or certified mail, postage prepaid, to such party’s address as set forth herein, such service
to become effective ten (10) calendar days after such mailing.

 

14.2.Successors
and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. Except as otherwise expressly provided herein, no Person other than the parties hereto
and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

 

14.3.Pronouns.
All pronouns and any variations thereof in this Agreement refer to the masculine, feminine or neuter, singular or plural, as the
context may permit or require.

 

14.4.Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together
shall constitute one instrument. The parties hereto confirm that any electronic copy of another party’s executed counterpart
of this Agreement (or such party’s signature page thereof) will be deemed to be an executed original thereof.

 

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14.5.Headings.
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this
Agreement.

 

14.6.Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such provision shall be modified
to achieve the objective of the parties to the fullest extent permitted and such invalidity or unenforceability shall not affect
the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other
jurisdiction.

 

14.7.Entire Agreement.
This Agreement, together with the other Transaction Documents, constitutes and contains the entire agreement and understanding
between the parties hereto, and supersedes all prior oral or written agreements and understandings between Buyer, Company, their
Affiliates and Persons acting on their behalf with respect to the matters discussed herein and therein, and, except as specifically
set forth herein or therein, neither Company nor Buyer makes any representation, warranty, covenant or undertaking with respect
to such matters.

 

14.8.Amendment.
Any amendment, supplement or modification of or to any provision of this Agreement, shall be effective only if it is made or given
by an instrument in writing (excluding any email message) and signed by Company and Buyer.

 

14.9.No Waiver.
No forbearance, failure or delay on the part of a party hereto in exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. Any waiver of any provision of this Agreement shall be effective
(a) only if it is made or given in writing (including an email message) and (b) only in the specific instance and for the specific
purpose for which made or given.

 

14.10.Currency.
All dollar amounts referred to or contemplated by this Agreement or any other Transaction Documents shall be deemed to refer to
US Dollars, unless otherwise explicitly stated to the contrary.

 

14.11.Assignment.
Notwithstanding anything to the contrary herein, the rights, interests or obligations of the Company hereunder may not be assigned,
by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of the Buyer, which consent
may be withheld at the sole discretion of the Buyer; provided, however, that in the case of a merger, sale of substantially
all of the Company’s assets or other corporate reorganization, the Buyer shall not unreasonably withhold, condition or delay
such consent. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Buyer
hereunder may be assigned by Buyer to a third party, including the Buyer’s financing sources, in whole or in part, without
the need to obtain the Company’s consent thereto.

 

14.12.Advice of
Counsel. In connection with the preparation of this Agreement and all other Transaction Documents, the Company, for itself
and on behalf of its stockholders, officers, agents, and representatives acknowledges and agrees that Buyer’s Counsel prepared
initial drafts of this Agreement and all of the other Transaction Documents and acted as legal counsel to the Buyer only. The Company,
for itself and on behalf of its stockholders, officers, agents, and representatives, (a) hereby acknowledges that he/she/it has
been, and hereby is, advised to seek legal counsel and to review this Agreement and all of the other Transaction Documents with
legal counsel of his/her/its choice, and (b) either has sought such legal counsel or hereby waives the right to do so.

 

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14.13.No Strict
Construction. The language used in this Agreement is the language chosen mutually by the parties hereto and no doctrine of
construction shall be applied for or against any party.

 

14.14.Attorney’s
Fees. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement or any of the other
Transaction Documents, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for
all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses
paid by such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the
individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power
to award fees and expenses for frivolous or bad faith pleading.

 

14.15.Waiver
of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE
TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE,
LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING SUCH PARTY’S
RIGHT TO DEMAND TRIAL BY JURY.

 

14.16.Rights and
Remedies Cumulative. All rights, remedies, and powers conferred in this Agreement and the Transaction Documents are cumulative
and not exclusive of any other rights or remedies granted in this Agreement or any other Transaction Document; and any and all
such rights and remedies may be exercised from time to time and as often and in such order as the Buyer may deem expedient.

 

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

 

14.18.Notices.
Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of:

 

(a)the date delivered,
if delivered by personal delivery as against written receipt therefor or by email to an executive officer, or by facsimile (with
successful transmission confirmation),

 

(b)the fifth Trading
Day after deposit, postage prepaid, in the United States Postal Service (with delivery confirmation or by certified mail), or

 

(c)the second Trading
Day after mailing by domestic or international express courier (e.g., FedEx), with delivery costs and fees prepaid,

 

    	26

    	 

    

 

in each case, addressed to each of the
other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by five (5)
Trading Days’ advance written notice similarly given to each of the other parties hereto):

 

If to the Company:

Solar Wind Energy Tower
Inc.

Attn: Ronald Pickett,
CEO

1997 Annapolis Exchange
Parkway

Annapolis, MD 21401

 

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

 

Anslow & Jaclin,
LLP

Attn: Gregg E. Jaclin

195 Route 9 South,
Suite 204

Manalapan, New Jersey
07726

If to the Buyer:

Typenex Co-Investment,
LLC

Attn: John M. Fife

303 East Wacker Drive,
Suite 1200

Chicago, Illinois 60601

 

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

 

Hansen Black Anderson
PLLC

Attn: Jonathan K. Hansen

2940 West Maple Loop
Drive, Suite 103

Lehi, Utah 84043

Telephone: 801.922.5000

Email: jhansen@HBAfirm.com

 

14.19.Cross Default.
Any Event of Default (as defined in the Note) shall be deemed a default under this Agreement. Upon such a default of this Agreement
by the Company, the Buyer shall have all those rights and remedies available in the Transaction Documents.

 

14.20.Expenses.
Except as provided in Section 14.14, and except for the Transaction Expense Amount required to be paid by the Company to the Buyer
pursuant to Section 2.3, the Company and the Buyer shall be responsible for paying such party’s own fees and expenses (including
legal expenses) incurred in connection with the preparation and negotiation of this Agreement and the other Transaction Documents
and the closing of the transactions contemplated hereby and thereby.

 

14.21.Replacement
of the Note. Subject to any restrictions on or conditions to transfer set forth in the Note, the Holder of the Note, at such
Holder’s option, may in person or by duly authorized attorney surrender the same for exchange at the Company’s principal
corporate office, and promptly thereafter and at the Company’s expense, except as provided below, receive in exchange therefor
one or more new secured convertible promissory note(s), each in the principal amount requested by such Holder, dated the date to
which interest shall have been paid on the Note so surrendered or, if no interest shall have yet been so paid, dated the date of
the Note so surrendered and registered in the name of such person or persons as shall have been designated in writing by such Holder
or such Holder’s attorney for the same principal amount as the then unpaid principal amount of the Note so surrendered. As
applicable, upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction
or mutilation of the Note and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (b)
in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in lieu thereof a new
secured convertible promissory note executed in the same manner as the Note being replaced, in the same principal amount as the
unpaid principal amount of such Note and dated the date to which interest shall have been paid on the Note or, if no interest shall
have yet been so paid, dated the date of the Note.

 

    	27

    	 

    

 

14.22.Time of
the Essence. Time is expressly made of the essence of each and every provision of this Agreement and the other Transaction
Documents.

 

15.SURVIVAL
OF COVENANTS, REPRESENTATIONS AND WARRANTIES. The Company’s and the Buyer’s covenants, agreements, representations
and warranties contained herein shall survive the execution and delivery of this Agreement and the other Transaction Documents
and the Closing hereunder for the maximum time allowed by applicable law, and shall inure to the benefit of the Buyer and the Company
and their respective successors and permitted assigns.

 

[Remainder of the page intentionally
left blank; signature page to follow]

 

 

    	28

    	 

    

 

IN WITNESS WHEREOF,
each of the undersigned parties represents that the foregoing statements made by such party above are true and correct and that
such party has caused this Agreement to be duly executed (if an entity, on such party’s behalf by one of its officers thereunto
duly authorized) as of the date first above written.

 

	PURCHASE PRICE:	 	 	 	$500,000.00
	 	 	 	 	 
	INITIAL CASH PURCHASE PRICE:	 	 	 	$100,000.00
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	THE BUYER:
	 	 	 	 	 
	 	 	 	 	TYPENEX CO-INVESTMENT, LLC
	 	 	 	 	 
	 	 	 	 	By: Red Cliffs Investments, Inc.,
its Manager
	 	 	 	 	 
	 	 	 	 	By: /s/ John Fife
	 	 	 	 	       John M. Fife, President
	 	 	 	 	 
	 	 	 	 	THE COMPANY:
	 	 	 	 	 
	 	 	 	 	SOLAR WIND ENERGY TOWER INC.
	 	 	 	 	 
	 	 	 	 	By: /s/ Ronald Pickett
	 	 	 	 	Printed Name: Ronald Pickett
	 	 	 	 	Title: Chief Executive Officer

 

 

[Signature page
to Securities Purchase Agreement]

 

    	29

    	 

    

 

ATTACHMENTS:

 

	ANNEX I	WIRE INSTRUCTIONS
	ANNEX II	NOTE
	ANNEX III	COMPANY SECURITY AGREEMENT
	ANNEX IV	WARRANT #1
	ANNEX V	WARRANT #2
	ANNEX VI	WARRANT #3
	ANNEX VII	WARRANT #4
	ANNEX VIII	WARRANT #5
	ANNEX IX	TRANSFER AGENT LETTER
	ANNEX X	SECRETARY’S CERTIFICATE
	ANNEX XI	SHARE ISSUANCE RESOLUTION
	ANNEX XII	INVESTOR SECURITY AGREEMENT
	ANNEX XIII	ALLOCATION OF PURCHASE PRICE
	ANNEX XIV	SECURED BUYER NOTE #1
	ANNEX XV	SECURED BUYER NOTE #2
	ANNEX XVI	SECURED BUYER NOTE #3
	ANNEX XVII	SECURED BUYER NOTE #4
	ANNEX XVIII	FORM OF ANTI-DILUTION CERTIFICATION

 

 

    	30

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