Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities
Purchase Agreement (this “Agreement”) is dated as of July 1, 2015, between Intellect Neurosciences, Inc., a
Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and permitted assigns, a “Purchaser” and collectively, the
“Purchasers”).

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser,
and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described
in this Agreement.

 

NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions.
In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have
the meanings given to such terms in the Certificate of Designation (as defined herein), and (b) the following terms have the meanings
set forth in this Section 1.1:

 

“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.7.

 

“Action”
shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Board of
Directors” means the board of directors of the Company.

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.

 

“Certificate
of Designation” means the Certificate of Designation to be filed prior to the Closing by the Company with the Secretary
of State of Delaware for the Series G Preferred Stock, in the form of Exhibit A attached hereto.

 

“Closing”
means the Closing of the purchase and sale of the Securities pursuant to Section 2.1, or, as the case may be, a Subsequent Closing
pursuant to Section 2.4.

 

“Closing Date”
means each of the Closing Date and Subsequent Closing Date (if any) and is the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations
to pay the Subscription Amount at such Closing and (ii) the Company’s obligations to deliver the Securities to be issued
and sold at such Closing, in each case, have been satisfied or waived, but in no event later than the third Trading Day following
the date hereof.

 

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“Commission”
means the United States Securities and Exchange Commission.

 

“Common Stock”
means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.

 

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

 

“Company Counsel”
means, Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, NY 10006, Attn: Harvey Kesner, Esq.,
facsimile: (212) 930-9725.

 

“Conversion
Price” shall have the meaning ascribed to such term in the Certificate of Designation.

 

“Disclosure
Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

 

“Effective
Date” means the earliest of the date that (a) the initial Registration Statement has been declared effective by the Commission,
or (b) all of the Registrable Securities have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement
for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale
restrictions and Company counsel has delivered to the Transfer Agent and holders a standing written unqualified opinion that resales
may then be made by such holders of the Registrable Securities pursuant to such exemption which opinion shall be in form and substance
reasonably acceptable to such holders.

 

“Equity Line
of Credit” shall have the meaning ascribed to such term in Section 4.13.

 

“Escrow Agreement”
means the escrow agreement to be employed in connection with the sale of the Securities, a copy of which is annexed hereto as Exhibit
E.

 

“Evaluation
Date” shall have the meaning ascribed to such term in Section 3.1(r).

 

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

 

“Exchanged
Series D Preferred Stock” shall have the meaning ascribed to such term in Section 2.1.

 

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“Exempt Issuance”
means the issuance of (a) shares of Common Stock and options to officers, employees, or directors of the Company prior to and after
the Closing Date in the amounts and on the terms set forth on Schedule 4.13, (b) securities upon the exercise or exchange
of or conversion of any Securities issued hereunder, including shares paid as dividends on the Preferred Stock pursuant to Section
3(a) of the Certificate of Designation (subject to adjustment for forward and reverse stock splits and the like that occur after
the date hereof) and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement, provided that such securities and any term thereof have not, except as contemplated
in the Transaction Documents, been amended since the date of this Agreement to increase the number of such securities or to decrease
the issue price, exercise price, exchange price or conversion price of such securities and which securities and the principal terms
thereof are set forth on Schedule 3.1(g), and described in the SEC Reports filed not later than ten (10) days before the
Closing Date, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which
is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business
of the Company and shall be intended to provide to the Company substantial additional benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital
or to an entity whose primary business is investing in securities, and (d) securities issued or issuable pursuant to this Agreement,
the Certificate of Designation or the Warrants, including, without limitation, Section 4.17, or upon exercise or conversion of
any such securities.

 

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

 

“FDA” shall have the
meaning ascribed to such term in Section 3.1(mm).

 

“FDA Product”
shall have the meaning ascribed to such term in Section 3.1(mm).

 

“FDCA”
shall have the meaning ascribed to such term in Section 3.1(mm).

 

“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).

 

“G&M”
shall mean Grushko & Mittman, P.C., with offices located at 515 Rockaway Avenue, Valley Stream, New York 11581, Fax: 212-697-3575.

 

“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(z).

 

“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

 

“Legend Removal
Date” shall have the meaning ascribed to such term in Section 4.1(c).

 

“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).

 

“Maximum Rate”
shall have the meaning ascribed to such term in Section 5.17.

 

“OFAC”
shall have the meaning ascribed to such term in Section 3.1(ii).

 

“Participation
Maximum” shall have the meaning ascribed to such term in Section 4.17(a).

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

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“Preferred
Stock” means the shares of the Company’s Series G Convertible Preferred Stock issued or issuable hereunder having
the rights, preferences and privileges set forth in the Certificate of Designation of the Series G Preferred Stock in the form
of Exhibit A hereto.

 

“Pre-Notice”
shall have the meaning ascribed to such term in Section 4.17.

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Pro-Rata
Portion” shall have the meaning ascribed to such term in Section 4.17.

 

“Public Information
Failure” shall have the meaning ascribed to such term in Section 4.3(b).

 

“Public Information
Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.10.

 

“Put”
shall have the meaning ascribed to such term in Section 2.4.

 

“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

“Required
Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable
in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants
or conversion in full of all shares of Preferred Stock, ignoring any conversion or exercise limits set forth therein, and assuming
that any previously unconverted shares of Preferred Stock will be held until the third anniversary of the Closing Date, and the
number of shares of Common Stock required to be reserved for each Purchaser as set forth on Schedule 4.11(a).

 

“  “Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

“Rule 424”
means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect
as such Rule.

 

“SEC Reports”
shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities”
means the Preferred Stock, the Warrants, and the Underlying Shares issuable to Purchasers in connection with the Transaction Documents
and upon the exercise of the Put.

 

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

 

“Series
B Preferred Stock” means the shares of the Company’s Series B Convertible Preferred Stock issued on various
dates between February 8, 2006 and October 9, 2006.

 

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“Series G
Preferred Stock” means the shares of the Company’s Series G Convertible Preferred Stock issued or issuable hereunder
having the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A hereto.

 

“Series H
Preferred Stock” means the shares of the Company’s Series H Convertible Preferred Stock issued or issuable hereunder
having the rights, preferences and privileges set forth in the Certificate of Designation of the Series H Preferred Stock, in the
form of Exhibit B hereto.

 

“Short Sales”
means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to
include the location and/or reservation of borrowable shares of Common Stock). 

 

“Stated Value”
means $1,000 per share of Preferred Stock.

 

“Stock Option
Plan” means the Stock Option Plan of the Company in effect as the date of this Agreement, the principal terms of which
have been disclosed in the SEC Reports.

 

“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for the Preferred Stock and Warrants purchased hereunder
as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds, including but not limited to Exchanged Series D Preferred
Stock, if any.

 

“Subsidiary”
means with respect to any entity at any date, any direct or indirect corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity of which (A) more than 30% of (i) the outstanding
capital stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other
managing body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital
or profits of such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture
or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination,
owned or controlled directly or indirectly through one or more intermediaries, by such entity, or (B) is under the actual control
of the Company.

 

“Termination
Date” shall have the meaning ascribed to such term in Section 2.1.

 

“Trading Day”
means a day on which the principal Trading Market is open for trading.

 

“Trading Market”
means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question:
the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange,
the OTC Bulletin Board or the OTC-Pink Sheets (or any successors to any of the foregoing).

 

“Transaction
Documents” means this Agreement, Certificates of Designations, the Warrants, the Escrow Agreement, all exhibits and schedules
thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer
Agent” means American Stock Transfer & Trust Company, LLC, with offices located at 6201 15th Avenue, Brooklyn,
NY 11219, and any successor transfer agent of the Company.

 

“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Preferred Stock and
upon exercise of the Warrants and issued and issuable in lieu of the cash payment of dividends on the Preferred Stock in accordance
with the terms of the Certificate of Designation.

 

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“Variable
Priced Equity Linked Instruments” shall have the meaning ascribed to such term in Section 4.13.

 

“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.13.

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the OTCQB is not a Trading Market, the
volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTCQB, (c) if the Common
Stock is not then listed or quoted for trading on the OTCQB and if prices for the Common Stock are then reported on the OTCQX,
OTCQB or OTC Pink Marketplace maintained by the OTC Markets Group, Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the volume weighted average price of the Common Stock on the first such facility (or a similar
organization or agency succeeding to its functions of reporting prices), or (d) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in
interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid
by the Company.

 

“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, in the form of Exhibit C attached hereto.

 

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

 

ARTICLE II.

PURCHASE AND SALE

 

2.1           Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution
and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly,
agree to purchase, an aggregate of not less than 250 shares of Preferred Stock and up to 5,000 shares of Preferred Stock with an
aggregate Stated Value for each Purchaser equal to such Purchaser’s Subscription Amount as set forth on the signature page
hereto executed by such Purchaser, and Warrants as determined pursuant to Section 2.2(a) (such purchase and sale being the “Closing”).
Each Purchaser shall deliver to the Company such Purchaser’s Subscription Amount, and the Company shall deliver to each Purchaser
its respective shares of Preferred Stock and Warrants, as determined pursuant to Section 2.2(a), and the Company and each Purchaser
shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions
set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of G&M or such other location as the parties shall
mutually agree. Notwithstanding anything herein to the contrary, the initial Closing Date shall occur on or before July 15, 2015
(“Termination Date”). If a Closing is not held on or before the Termination Date, the Company shall cause all
subscription documents and funds to be returned, without interest or deduction to each prospective Purchaser. Each Purchaser who
purchases Preferred Stock and Warrants for a cash purchase price of not less than $250,000 shall be entitled to purchase additional
Preferred Stock in exchange for the surrender of previously issued shares of Series D Convertible Preferred Stock (“Exchanged
Series D Preferred Stock”) or previously issued shares of Series C Preferred Stock “Exchanged Series C Preferred
Stock”. (The Exchanged Series C Preferred Stock and the Exchanged Series D Preferred Stock shall be collectively referred
to as the “Exchanged Preferred Stock”). The Stated Value, including accrued dividends of each share of Exchanged Preferred
Stock will be treated as the cash value of such share for purposes of determining the number of Preferred Shares to be issued to
such Purchaser in connection with such exchange.

 

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2.2           Deliveries.

 

(a)          On
or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i)          this
Agreement duly executed by the Company;

 

(ii)         a
legal opinion of Company Counsel, substantially in the form of Exhibit D attached hereto;

 

(iii)        a
legal opinion of Company Counsel opining that the holding period of the Series F Convertible Preferred Stock and Warrants issued
on July 25, 2014 remains unchanged;

 

(iv)        a
certificate evidencing a number of shares of Preferred Stock equal to such Purchaser’s Subscription Amount divided by the
Stated Value, registered in the name of such Purchaser, and evidence of the filing and acceptance of the Certificate of Designation
from the Secretary of State of Delaware;

 

(v)         a
Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 200% of such Purchaser’s
Subscription Amount divided by the Conversion Price, with an exercise price equal to $0.10 per share, subject to adjustment as
provided therein;

 

(vi)        the
Escrow Agreement duly executed by the Company;

 

(vii)       consent
from the “Series F Preferred Majority”, as defined in the Certificate of Designation of the Series F Convertible
Preferred Stock, to further amend the Certificate of Designation to reflect the terms set forth in the form annexed hereto as Exhibit
F. A copy of the filed amendment containing the aforedescribed changes to the Certificate of Designation approved by the Series
F Preferred Majority, will be provided on the Closing Date; and

 

(viii)      a
certificate evidencing a number of Series H Preferred Stock registered in the name of such Purchaser in an amount to be calculated
as follows: the stated value including accrued dividends, of each Share of Exchanged Preferred Stock will be treated as the cash
value of such share for purposes of determining the number of Series H Preferred Stock to be issued to the Purchaser.

 

(b)          On
or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

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(i)          this
Agreement duly executed by such Purchaser;

 

(ii)         Exchanged
Preferred Stock if any;

 

(iii)        Surrendered
Series B Preferred Stock, if any;

 

(iv)        such
Purchaser’s Subscription Amount by wire transfer or as otherwise permitted under the Escrow Agreement, to the Escrow Agent;
and

 

(v)         the
Escrow Agreement duly executed by such Purchaser.

 

2.3           Closing
Conditions.

 

(a)          The
obligations of the Company hereunder to effect the Closing are subject to the following conditions being met:

 

(i)          the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific
date therein in which case they shall be accurate as of such date);

 

(ii)         all
obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been
performed;

 

(iii)        the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement; and

 

(iv)        
a certificate from the Company’s Chief Executive Officer certifying that all of the conditions
to closing to be complied with by and on behalf of the Company have been satisfied.

 

(b)          The
respective obligations of a Purchaser hereunder to effect the Closing unless waived by such Purchaser, are subject to the following
conditions being met:

 

(i)          the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date
therein in which case they shall be accurate as of such date);

 

(ii)         all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

 

(iii)        the
Escrow Agent shall have received executed signature pages to this Agreement with an aggregate Subscription Amount of at least $750,000
prior to the Closing;

 

(iv)        the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(v)         there
shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

 

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(vi)        from
the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s
principal Trading Market, and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg
L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are
reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States
or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national
or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the
Closing.

 

2.4           Subsequent
Closings. In the event that the maximum offered amount of up to $5,000,000 of Stated Value of Preferred Stock and Warrants
are not sold and paid for at the Initial Closing, subsequent Closings may be held on the same terms and conditions as the Initial
Closing through October 31, 2015 (each a “Subsequent Closing”). The closing date for each Subsequent Closing
will be the date funds are sent to the Company.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations
and Warranties of the Company. Except as set forth in the SEC Reports or the Disclosure Schedules, which Disclosure Schedules
shall be deemed a part hereof and shall qualify any representation made herein only to the extent of the disclosure contained in
the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to
each Purchaser:

 

(a)          Subsidiaries.
All of the direct and indirect subsidiaries of the Company and the Company’s ownership interests therein are set forth on
Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary
free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company
has no Subsidiaries at a given time relevant to any component of this Agreement, then such reference shall not be applicable.

 

(b)          Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted, except that the Company’s
Israeli subsidiary, Intellect Neurosciences (Israel) Ltd. Which is currently inactive and conducts no operations. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and, no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

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(c)          Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, the Board of Directors or the Company’s stockholders and creditors in connection
herewith including the Required Approvals except those filings to be made with the Commission and State agencies after the Closing
Date. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) to the extent the indemnification provisions contained in this Agreement may be limited
by applicable law and principles of public policy.

 

(d)          No
Conflicts. Assuming that the consent referenced in Section 2.2(a)(viii) have been obtained, the execution, delivery and performance
by the Company of this Agreement and the other Transaction Documents, the issuance and sale of the Securities and the consummation
by it of the transactions contemplated hereby and thereby to which it is a party do not and will not as of the date of this Agreement
and as of each Closing Date: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any
of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing
a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which
any property or asset of the Company or any Subsidiary is bound or affected, or (iii) conflict with or result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property
or asset of the Company or a Subsidiary is bound or affected; except in the case of clause (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.

 

(e)          Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
the filings required pursuant to Section 4.6 of this Agreement, (ii) the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Preferred Stock and Warrant Shares and the listing of the Underlying Shares for trading
thereon in the time and manner required thereby, (iii) the filing of a Form D with the Commission and such filings as are required
to be made under applicable state securities laws, and (iv) the consent described in Section 2.2(a)(viii) of this Agreement (collectively,
the “Required Approvals”). As of the Closing and at all times thereafter so long as Preferred Stock is outstanding,
the Company will have obtained all consents, waivers and approvals required by the Company so as not to be in default of any obligation
owed to any holder of Common Stock, Common Stock Equivalents or debt of the Company, whether pursuant to the Company’s articles
of incorporation or any other agreement, including but not limited to obligations or requirements relating to the reservation of
shares, restrictions against or limiting the issuance of Common Stock, Common Stock Equivalents, or debt or any of the transactions
described in or obligations of the Company under the Transaction Documents.

 

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(f)          Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The
Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares
at least equal to the Required Minimum on the date hereof.

 

(g)          Capitalization.
The capitalization of the Company is as set forth in Schedule 3.1(g). The Company has not issued any capital stock since its
most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under
the Stock Option Plans, the issuance of shares of Common Stock to employees pursuant to the Stock Option Plans and pursuant to
the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report
under the Exchange Act described on Schedule 3.1(g). No Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as disclosed on Schedule
3.1(g), there are no outstanding options, employee or incentive stock option plans, warrants, scrip rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common
Stock or Common Stock Equivalents. Except as set forth on Schedule 3.1(g), the issuance and sale of the Securities will
not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will
not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any
of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid
and nonassessable, have been issued in material compliance with all federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities.
There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(h)          SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and
none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required
by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as
of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

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(i)          Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has
been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any material liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock
and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to the existing
Stock Option Plans. The Company does not have pending before the Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability,
fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to
the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would
be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made
that has not been publicly disclosed at least two Trading Days prior to the date that this representation is made.

 

(j)          Litigation.
Except as described in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local
or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect. Except as set forth in the SEC Reports, neither the Company nor
any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of
or liability under federal or state securities laws or a claim of breach of fiduciary duty which is presently required to be disclosed
pursuant to any relevant law, rule or regulation including the Securities Act and Exchange Act and which if disclosed presently
or in the future could reasonably be expected to result in a Material Adverse Effect. Except as disclosed on Schedule 3.1(j),
there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission
involving the Company or any current or former director or officer of the Company which is presently required to be disclosed pursuant
to any relevant law, rule or regulation including the Securities Act and Exchange Act and which if disclosed presently or in the
future could reasonably be expected to result in a Material Adverse Effect. The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act
or the Securities Act.

 

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(k)          Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(l)          Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.

 

(m)          Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.

 

(n)          Title
to Assets. Except as set forth in the SEC Reports, the Company and the Subsidiaries have good and marketable title in fee simple
to all real property (if any) owned by them and good and marketable title in all personal property owned by them that is material
to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially
affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by
the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves
have been made in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property
and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases
with which the Company and the Subsidiaries are in compliance.

 

(o)          Intellectual
Property.

 

(i)          The
term “Intellectual Property Rights” includes:

 

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1.          the
name of the Company and each Subsidiary, all fictional business names, trading names, registered and unregistered trademarks, service
marks, and applications of the Company and each Subsidiary (collectively, “Marks'');

 

2.          all
patents, patent applications, and inventions and discoveries that may be patentable of the Company and each Subsidiary (collectively,
“Patents'');

 

3.          all
copyrights in both unpublished works and published works of the Company and each Subsidiary (collectively, “Copyrights”);

 

4.          all
rights in mask works of the Company and each Subsidiary (collectively, “Rights in Mask Works''); and

 

5.          all
know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans,
drawings, and blue prints (collectively, “Trade Secrets''); owned, used, or licensed by the Company and each Subsidiary
as licensee or licensor

 

(ii)         Agreements.
Except as disclosed in the Reports, there are no outstanding and, to Company’s knowledge, no threatened disputes or disagreements
with respect to any agreements relating to any Intellectual Property Rights to which the Company is a party or by which the Company
is bound.

 

(iii)        Know-How
Necessary for the Business. The Intellectual Property Rights are all those necessary for the operation of the Company’s
businesses as it is currently conducted. The Company is the owner of all right, title, and interest in and to each of the Intellectual
Property Rights, free and clear of all liens, security interests, charges, encumbrances, equities, and other adverse claims, and
has the right to use all of the Intellectual Property Rights. To the Company’s knowledge, no employee of the Company has
entered into any contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or
requires the employee to transfer, assign, or disclose information concerning his work to anyone other than of the Company.

 

(iv)        Patents.
The Company is the owner of all right, title and interest in and to each of the Patents, free and clear of all Liens and other
adverse claims. All of the issued Patents are currently in compliance with formal legal requirements (including payment of filing,
examination, and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance
fees or taxes or actions falling due within ninety days after the Closing Date. No Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding. To the Company’s knowledge except as disclosed in the SEC Reports: (1)
there is no potentially interfering patent or patent application of any third party, and (2) no Patent is infringed or has been
challenged or threatened in any way. To the Company’s knowledge, none of the products manufactured and sold, nor any process
or know-how used, by the Company infringes or is alleged to infringe any patent or other proprietary right of any other Person.

 

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(v)         Trademarks.
The Company is the owner of all right, title, and interest in and to each of the Marks, free and clear of all Liens and other adverse
claims. All Marks that have been registered with the United States Patent and Trademark Office are currently in compliance with
all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety
days after the Closing Date. Except as set forth in Schedule 3.1(o), no Mark has been or is now involved in any opposition, invalidation,
or cancellation and, to the Company’s knowledge, no such action is threatened with respect to any of the Marks. To the Company’s
knowledge: (1) there is no potentially interfering trademark or trademark application of any third party, and (2) no Mark is infringed
or has been challenged or threatened in any way. To the Company’s knowledge, none of the Marks used by the Company infringes
or is alleged to infringe any trade name, trademark, or service mark of any third party.

 

(vi)        Copyrights.
The Company is the owner of all right, title, and interest in and to each of the Copyrights, free and clear of all Liens and other
adverse claims. All the Copyrights have been registered and are currently in compliance with formal requirements, are valid and
enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the date of the
Closing. To the Company’s knowledge, no Copyright is infringed or has been challenged or threatened in any way. To the Company’s
knowledge, none of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any third party
or is a derivative work based on the work of a third party. All works encompassed by the Copyrights have been marked with the proper
copyright notice.

 

(vii)       Trade
Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient
in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory
of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade
Secrets. The Company has good title and an absolute (but not necessarily exclusive) right to use the Trade Secrets. The Trade Secrets
are not part of the public knowledge or literature, and, to the Company’s knowledge, have not been used, divulged, or appropriated
either for the benefit of any Person (other the Company) or to the detriment of the Company. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.

 

(p)          Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without
a significant increase in cost.

 

(q)          Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports or as disclosed on Schedule 3.1(q), none of the
officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company
or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money
to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity
in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder,
member or partner, in each case in excess of $100,000 other than for: (i) payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements
under any stock option plan of the Company except as disclosed on Schedule 3.1(g).

 

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(r)          Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in material compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of
the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal
control over financial reporting of the Company and its Subsidiaries.

 

(s)          Certain
Fees. No brokerage, finder’s fees, commissions or due diligence fees are or will be payable by the Company or any Subsidiary
to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any such fees
or with respect to any claims made by or on behalf of any Persons for fees of a type contemplated in this Section 3.1(s) that may
be due in connection with the transactions contemplated by the Transaction Documents.

 

(t)          Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.

 

(u)          Registration
Rights. No Person, other than the Purchasers, has any right to cause the Company or any Subsidiary to effect the registration
under the Securities Act of any securities of the Company or any Subsidiary except as set forth on Schedule 3.1(u).

 

(v)         Reporting
Company/Shell Company. The Company is a publicly-held company subject to reporting obligations pursuant to Sections 12(g),
13 or 15(d) of the Exchange Act. Pursuant to the provisions of the Exchange Act, the Company has timely filed all reports and other
materials required to be filed by the Company thereunder with the SEC during the preceding twelve months. As of the Closing Date,
the Company is not a “shell company” but is a “former shell company” as those terms are employed in Rule
144 under the Securities Act. 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.

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(w)          Application
of Takeover Protections. The Company and the Board of Directors will have taken as of the Closing Date all necessary action,
if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of
the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including
without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

 

(x)          Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel
with any information that it believes constitutes or might constitute material, non-public information. The Company understands
and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.
All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, when taken
together as a whole, are true and correct and do not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.
The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do
not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.
The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth herein.

 

(y)          No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of: (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated. None of the transactions or actions described
in the Transaction Documents nor any agreement or document to be delivered in connection with the Transaction Documents will result
in the reset, recalculation, modification, cancellation, extension or redetermination of any holding period calculated under or
in connection with Rule 144 under the Securities Act of any security, Common Stock, or Common Stock Equivalent held by or to be
issued to any Purchaser.

 

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(z)          Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, and the Company’s own good faith estimate
of the fair market value of its assets, including its intellectual property, after giving effect to the receipt by the Company
of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds the
amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry
on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. In making the good faith estimate above, the Company has
not received any independent valuation of its intellectual property. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports set forth
as of May 12, 2015, all outstanding liens secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the
Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any
liabilities for borrowed money or amounts owed in excess of $100,000 other than (i) trade accounts payable incurred by the Company
and its Subsidiaries in the ordinary course of business or (ii) debt financing from a licensed United States bank regularly engaged
in such lending activity which may include the issuance of a nominal amount of warrants or options exercisable at or above the
Conversion Price which would then be in effect, and (y) all guaranties, endorsements and other contingent obligations in respect
of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary
course of business, but excluding trade accounts payable incurred by the Company and its Subsidiaries in the ordinary course of
business; and (z) the present value of any lease payments in excess of $100,000 due under leases required to be capitalized in
accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

(aa)         Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of
all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.

 

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

 

(cc)         Accountants
and Lawyers. The Company’s accounting firm is set forth on Schedule 3.1(cc) of the Disclosure Schedules. To the
knowledge and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange
Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report
for the fiscal year ending June 30, 2015. There are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and
the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability
to perform any of its obligations under any of the Transaction Documents.

 

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(dd)         Acknowledgment
Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given
by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to
each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(ee)         Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Section 4.16 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked
by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of
the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any
specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation,
Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions,
may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties
in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently have a
“short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with or control
over any arm’s length counter-party in any “derivative” transaction. The
Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times
during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the
Underlying Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could
reduce the value of the existing stockholders' equity interests in the Company at and after the time that the hedging activities
are being conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of
any of the Transaction Documents, provided that such activities do not breach the Investors’ representations made in Section
3.2 of this Agreement.

 

(ff)         Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company.

 

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

 

(hh)         Stock
Option Plans. Each stock option granted by the Company under the Stock Option Plan was granted (i) in accordance with the terms
of the Stock Option Plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date
such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Stock Option Plan
has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly
grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement
of material information regarding the Company or its Subsidiaries or their financial results or prospects.

 

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(ii)         Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department (“OFAC”).

 

(jj)         Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

(kk)         No
General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

(ll)           Listing
and Maintenance Requirements. The Common Stock is quoted on the OTC Pink Sheets under the symbol ILNS.PK. Except as disclosed
in Schedule 3.1(ll), the Company has not, in the twenty-four (24) months preceding the date hereof, received notice from any 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 Trading Market.

 

(mm)         FDA. 
Except as set forth on Schedule 3.1(mm), as to each product subject to the jurisdiction of the U.S. Food and Drug Administration
(“FDA”) under the Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”)
that is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each
such product, a “FDA Product”), such FDA Product is being manufactured, packaged, labeled, tested, distributed,
sold and/or marketed by the Company in compliance with all applicable requirements under FDCA and similar laws, rules and
regulations relating to registration, investigational use, premarket clearance, licensure, or application approval, good manufacturing
practices, good laboratory practices, good clinical practices, product listing, quotas, labeling, advertising, record keeping and
filing of reports, except where the failure to be in compliance would not reasonably be expected to have a Material Adverse Effect. 
There is no pending, completed or, to the Company’s knowledge, threatened, action (including any lawsuit, arbitration, or
legal or administrative or regulatory proceeding, charge, complaint, or investigation) against the Company or any of its Subsidiaries,
and none of the Company or any of its Subsidiaries has received any notice, warning letter or other communication from the FDA
or any other governmental entity, which (i) contests the premarket clearance, licensure, registration, or approval of, the
uses of, the distribution of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of
any FDA Product, (ii) withdraws its approval of, requests the recall, suspension, or seizure of, or withdraws or orders the
withdrawal of advertising or sales promotional materials relating to, any FDA Product, (iii) imposes a clinical hold on any
clinical investigation by the Company or any of its Subsidiaries, (iv) enjoins production at any facility of the Company or
any of its Subsidiaries, (v) enters or proposes to enter into a consent decree of permanent injunction with the Company or
any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules or regulations by the Company or
any of its Subsidiaries, and which, either individually or in the aggregate, would have a Material Adverse Effect.   Except
as set forth on Schedule 3.1(mm), the properties, business and operations of the Company have been and are being conducted
in accordance with all applicable laws, rules and regulations of the FDA, except for any such non-compliance that would not
reasonably be expected to have a Material Adverse Effect.  The Company has not been informed by the FDA that the FDA will
prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced or marketed
by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product being developed or proposed
to be developed by the Company.

 

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(nn)         Survival.
The foregoing representations and warranties shall survive the Closing Date.

 

3.2           Representations
and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as
of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):

 

(a)          Organization;
Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary
corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) to the extent the indemnification
provisions contained in this Agreement may be limited by applicable law and principles of public policy.

 

(b)          Understandings
or Arrangements. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to a Registration
Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.

 

(c)          Purchaser
Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises any Warrants or converts any shares of Preferred Stock it will be either: (i) an “accredited investor”
as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act. Such Purchaser has the authority and is duly and legally qualified to purchase and own the
Securities. Such Purchaser is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof.
Such Purchaser has provided the information in the Accredited Investor Questionnaire attached hereto as Exhibit F (the “Investor
Questionnaire”). The information set forth on the signature pages hereto and the Investor Questionnaire regarding such
Purchaser is true and complete in all respects. Except as disclosed in the Investor Questionnaire, such Purchaser has had no position,
office or other material relationship within the past three years with the Company or Persons (as defined below) known to such
Purchaser to be affiliates of the Company, and is not a member of the Financial Industry Regulatory Authority or an “associated
person” (as such term is defined under the FINRA Membership and Registration Rules Section 1011).

 

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(d)          Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

(e)          Information
on Company. Such Purchaser has been furnished with or has had access to the EDGAR Website of the Commission to the Company’s
filings made with the Commission during the period from the date that is two years preceding the date hereof through the tenth
business day preceding the Closing Date in which such Purchaser purchases Securities hereunder (hereinafter referred to collectively
as the “SEC Reports”).  Purchasers are not deemed to have any knowledge of any information not included
in the Reports unless such information is delivered in the manner described in the next sentence.  In addition, such
Purchaser may have received in writing from the Company such other information concerning its operations, financial condition and
other matters as such Purchaser has requested, identified thereon as OTHER WRITTEN INFORMATION (such other information is collectively,
the “Other Written Information”). Such Purchaser believes that it has received all the information such Purchaser
considers necessary or appropriate for deciding whether to purchase the Securities and considered all factors such Purchaser deems
material in deciding on the advisability of investing in the Securities.  Such Purchaser was afforded (i) the opportunity
to ask such questions as such Purchaser deemed necessary of, and to receive answers from, representatives of the Company concerning
the merits and risks of acquiring the Securities; (ii) the right of access to information about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient to enable such Purchaser to evaluate the Securities;
and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with respect to acquiring the Securities.

 

(f)          Compliance
with Securities Act; Reliance on Exemptions. Such Purchaser understands and agrees that the Securities have not been registered
under the 1933 Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require
registration under the 1933 Act, and that such Securities must be held indefinitely unless a subsequent disposition is registered
under the 1933 Act or any applicable state securities laws or is exempt from such registration. Such Purchaser understands and
agrees that the Securities are being offered and sold to such Purchaser in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and regulations and that the Company is relying in part upon the
truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility
of such Purchaser to acquire the Securities.

 

(g)          Communication
of Offer. Such Purchaser is not purchasing the Securities as a result of any “general solicitation” or “general
advertising,” as such terms are defined in Regulation D, which includes, but is not limited to, any advertisement, article,
notice or other communication regarding the Securities published in any newspaper, magazine or similar media or on the internet
or broadcast over television, radio or the internet or presented at any seminar or any other general solicitation or general advertisement.

 

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(h)          No
Governmental Review. Such Purchaser understands that no United States federal or state agency or any other governmental or
state agency has passed on or made recommendations or endorsement of the Securities or the suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

(i)          No
Conflicts. The execution, delivery and performance of this Agreement and performance under the other Transaction Documents
and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto or thereto do not
and will not (i) result in a violation of such Purchaser’s charter documents, bylaws or other organizational documents, if
applicable, (ii) conflict with nor constitute a default (or an event which with notice or lapse of time or both would become a
default) under any agreement to which such Purchaser is a party, nor (iii) result in a violation of any law, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such
Purchaser). Such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement
or perform under the other Transaction Documents nor to purchase the Securities in accordance with the terms hereof, provided that
for purposes of the representation made in this sentence, such Purchaser is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.

 

(j)          Survival.
The foregoing representations and warranties shall survive the Closing Date.

 

The Company acknowledges
and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to
rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained
in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement
or the consummation of the transaction contemplated hereby.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1           Transfer
Restrictions.

 

(a)          The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in
connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company
at the Company’s expense, an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the
form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under this
Agreement.

 

(b)          The
Purchasers agree to the imprinting, so long as it is required by this Section 4.1, of a legend on any of the Securities in the
following form:

 

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[NEITHER] THIS SECURITY
[NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

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

 

(c)          Certificates
evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while
a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities
Act, (ii) following any sale of such Underlying Shares pursuant to Rule 144, or (ii) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).
The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required
by the Transfer Agent to effect the removal of the legend hereunder. If all or any shares of Preferred Stock are converted or any
portion of a Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Underlying
Shares, or if such Underlying Shares are to be sold under Rule 144 or if such legend is not otherwise required under applicable
requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission)
then such Underlying Shares shall be issued free of all legends or in the event of a sale of such underlying securities at a time
when the Company is in compliance with its current public information requirements, counsel shall issue an opinion that the Purchaser
may sell the underlying shares under Rule 144. The Company agrees that following such time as such legend is no longer required
under this Section 4.1(c), it will, no later than five Trading Days following the delivery by a Purchaser to the Company or the
Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such fifth Trading
Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing
such shares that is free from all restrictive and other legends (however, the Corporation shall use reasonable best efforts to
deliver such shares within three (3) Trading Days). The Company may not make any notation on its records or give instructions to
the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. In lieu of delivering physical certificates
representing the unlegended shares, upon request of a Purchaser, so long as the certificates therefor do not bear a legend and
the Purchaser is not obligated to return such certificate for the placement of a legend thereon, the Company shall cause its transfer
agent to electronically transmit the unlegended shares by crediting the account of Purchaser’s prime broker with the Depository
Trust Company through its Deposit Withdrawal At Custodian system, provided that the Company’s Common Stock is DTC eligible
and the Company’s transfer agent participates in the Deposit Withdrawal at Custodian system. Such delivery must be made on
or before the Legend Removal Date.

 

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(d)          In
addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities
are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading
Day for each Trading Day after the Legend Removal Date (increasing to $20 per Trading Day after the tenth Trading Day) until such
certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s right to pursue actual damages for
the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, and such
Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief.

 

(e)          In
the event a Purchaser shall request delivery of unlegended shares as described in this Section 4.1 and the Company is required
to deliver such unlegended shares, the Company may not refuse to deliver unlegended shares based on any claim that such Purchaser
or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations under the Transaction
Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice, restraining and
or enjoining delivery of such unlegended shares shall have been sought and obtained by the Company and the Company has posted a
surety bond for the benefit of such Purchaser in the amount of the greater of (i) 15% of the amount of the aggregate purchase price
of the Underlying Shares which is subject to the injunction or temporary restraining order, or (ii) the VWAP of the Common Stock
on the trading day before the issue date of the injunction multiplied by the number of unlegended shares to be subject to the injunction,
which bond shall remain in effect until the completion of arbitration/’litigation of the dispute and the proceeds of which
shall be payable to such Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor. 

 

(f)          Buy-In.
In addition to any other rights available to Purchaser, if the Company fails to deliver to a Purchaser unlegended shares as required
pursuant to this Agreement and after the Legend Removal Date the Purchaser, or a broker on the Purchaser’s behalf, purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of the
shares of Common Stock which the Purchaser was entitled to receive in unlegended form from the Company (a “Buy-In”),
then the Company shall promptly pay in cash to the Purchaser (in addition to any remedies available to or elected by the Purchaser)
the amount, if any, by which (A) the Purchaser’s total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased exceeds (B) the aggregate purchase price of the shares of Common Stock delivered to the Company for
reissuance as unlegended shares together with interest thereon at a rate of 15% per annum accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if a Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of Shares delivered to the Company for reissuance as unlegended shares, the Company shall be required to pay the Purchaser
$1,000, plus interest, if any. The Purchaser shall provide the Company written notice indicating the amounts payable to the Purchaser
in respect of the Buy-In.

 

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(g)          Each
Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell the Securities
pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom, and that if Securities are sold pursuant to a registration statement, they will be sold in compliance
with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

 

4.2           Acknowledgment
of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction
Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless
of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the Company.

 

4.3           Furnishing
of Information; Public Information.

 

(a)          Until
no Purchaser owns any Securities, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or
12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period)
all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act and file such reports even if
the Company is not then subject to the reporting requirements of the Exchange Act.

 

(b)          At
any time commencing on the Closing Date and ending at such time that all of the Securities may be sold without the requirement
for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if
the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to
a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability
to sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate Stated Value of Preferred Stock held by
such Purchaser on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods totaling less
than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that
such public information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144. The payments
to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “Public Information Failure
Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month
during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure
giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure
Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated
for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the
Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief.

 

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4.4           Integration.
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require
the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior
to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

4.5           Conversion
and Exercise Procedures. Each of the form of Notice of Exercise included in the Warrants and the form of Notice of Conversion
included in the Certificate of Designation set forth the totality of the procedures required of the Purchasers in order to exercise
the Warrants or convert the Preferred Stock. No additional legal opinion, other information or instructions shall be required of
the Purchasers to exercise their Warrants or convert their Preferred Stock. The Company shall honor exercises of the Warrants and
conversions of the Preferred Stock and shall deliver Underlying Shares in accordance with the terms, conditions and time periods
set forth in the Transaction Documents.

 

4.6           Securities
Laws Disclosure; Publicity. The Company shall file a Current Report on Form 8-K including the Transaction Documents as exhibits
thereto within four Business Days of the date hereof. From and after the filing of such Form 8-K, the Company represents to the
Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the
Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. The Company and each Purchaser shall consult with each other in issuing
any press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue
any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any
press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company,
which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing
party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market unless the name of such Purchaser is already included in the body of the
Transaction Documents, without the prior written consent of such Purchaser, except: (a) as required by federal or state securities
law in connection with the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required
by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (b).

 

4.7           Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

4.8           Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto
such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information.
The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in
securities of the Company.

 

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4.9           Use
of Proceeds. Except as set forth on Schedule 4.9 and as described in the Transaction Documents, the Company shall use
the net proceeds from the sale of the Securities hereunder for working capital purposes and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the
Company’s business and prior practices), (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for
the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations. The proceeds of the offering will
be employed by the Company substantially for the purposes set forth on Schedule 4.9.

 

4.10         Indemnification
of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a
Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against Purchaser
Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents
or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser
Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful
misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right
to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party
shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for
the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party
under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability
is attributable to any Purchaser Party’s breach of its representations, warranties or covenants under the Transaction Documents
or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser
Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful
misconduct or malfeasance. The indemnification required by this Section 4.10 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained
herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any
liabilities the Company may be subject to pursuant to law.

 

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4.11         Reservation
and Listing of Securities.

 

(a)          The
Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents
in such amount as may then be required to fulfill its obligations in full under the Transaction Documents, but not less than the
Required Minimum. As of the Closing, the Company shall have reserved for each Purchaser the amount of Common Stock set forth on
Schedule 4.11(a). The Company agrees that under no circumstances will such reserved shares be unreserved or allocated to
any Person other than each such Purchaser for so long as such Purchaser owns any Common Stock Equivalent, nor will the Company
take any action which will hinder, interfere or prevent the rights of the Purchasers set forth in the next sentence. Each Purchaser
may employ such reserved shares in connection with the exercise, conversion, trade or exchange for any Common Stock Equivalent
owned by such Purchaser including but not limited to the Preferred Stock, any other class of the Company’s preferred stock,
convertible notes and any warrants or options at any time issued to each such Purchaser.

 

(b)          If,
on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required
Minimum on such date, then the Board of Directors shall amend the Company’s certificate or articles of incorporation to increase
the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time, as soon as possible
and in any event not later than the 60th day after such date.

 

(c)          The
Company hereby agrees to maintain the listing or quotation of the Common Stock on the Trading Market on which it is currently listed,
and concurrently with the Closing, the Company shall apply to list or quote all of the Underlying Shares at least equal to the
Required Minimum on such Trading Market and promptly secure the listing of all of the Underlying Shares at least equal to the Required
Minimum on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other
Trading Market, it will then include in such application all of the Underlying Shares at least equal to the Required Minimum, and
will take such other action as is necessary to cause all of the Underlying Shares at least equal to the Required Minimum to be
listed or quoted on such other Trading Market as promptly as possible. The Company will then take all action necessary to continue
the listing or quotation and trading of its Common Stock on a Trading Market until the later of (i) at least five years after the
Closing Date, and (ii) for so long as the Warrants are outstanding, and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Trading Market at least until five years after the Closing Date and
for so long as the Warrants are outstanding. In the event the aforedescribed listing is not continuously maintained for five years
after the Closing Date (a “Listing Default”), then in addition to any other rights the Purchasers may have hereunder
or under applicable law, on the first day of a Listing Default and on each monthly anniversary of each such Listing Default date
(if the applicable Listing Default shall not have been cured by such date) until the applicable Listing Default is cured, the Company
shall pay to each Purchaser an amount in cash, as partial liquidated damages and not as a penalty, equal to 2% of the aggregate
Subscription Amount and purchase price of Warrant Shares held by such Purchaser on the day of a Listing Default and on every thirtieth
day (pro-rated for periods less than thirty days) thereafter until the date such Listing Default is cured. If the Company fails
to pay any liquidated damages pursuant to this Section in a timely manner, the Company will pay interest thereon at a rate of 1.5%
per month (pro-rated for partial months) to the Purchaser.

 

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4.12         Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers
at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide
evidence of such actions promptly upon request of any Purchaser.

 

4.13         Subsequent
Equity Sales. From the date hereof until one (1) year after the Closing Date hereof, the Company will not, without the consent
of the Purchasers, enter into any Equity Line of Credit or similar agreement, nor issue nor agree to issue any common stock, floating
or Variable Priced Equity Linked Instruments nor any of the foregoing or equity with price reset rights at a price per share or
effective price per share of less than $0.10 (subject to adjustment for stock splits, distributions, dividends, recapitalizations
and the like) (collectively, the “Variable Rate Transaction”).   For purposes hereof, “Equity
Line of Credit” shall include any transaction involving a written agreement between the Company and an investor or underwriter
whereby the Company has the right to “put” its securities to the investor or underwriter over an agreed period of time
and at an agreed price or price formula, and “Variable Priced Equity Linked Instruments” shall include: (A)
any debt or equity securities which are convertible into, exercisable or exchangeable for, or carry the right to receive additional
shares of Common Stock either (1) at any conversion, exercise or exchange rate or other price that is based upon and/or varies
with the trading prices of or quotations for Common Stock at any time after the initial issuance of such debt or equity security,
or (2) with a fixed conversion, exercise or exchange price that is subject to being reset at some future date at any time after
the initial issuance of such debt or equity security due to a change in the market price of the Company’s Common Stock since
date of initial issuance, and (B) any amortizing convertible security which amortizes prior to its maturity date, where the Company
is required or has the option to (or any investor in such transaction has the option to require the Company to) make such amortization
payments in shares of Common Stock which are valued at a price that is based upon and/or varies with the trading prices of or quotations
for Common Stock at any time after the initial issuance of such debt or equity security (whether or not such payments in stock
are subject to certain equity conditions).  For purposes of determining the total consideration for a convertible instrument
(including a right to purchase equity of the Company) issued, subject to an original issue or similar discount or which principal
amount is directly or indirectly increased after issuance, the consideration will be deemed to be the actual cash amount received
by the Company in consideration of the original issuance of such convertible instrument. Until twelve (12) months after the Closing
Date, the Company will not issue any Common Stock or Common Stock Equivalents to officers, directors, employees, consultants and
service providers of the Company except in the amounts and on the terms set forth on Schedule 4.13. Except as may be issued
to the Purchasers pursuant to this Agreement, the Company will not issue or reissue any Preferred Stock. For so long as Preferred
Stock or Warrants are outstanding, except for an Exempt Issuance, the Company will not amend the terms of any securities or Common
Stock Equivalents or of any agreement outstanding or in effect as of the date of this Agreement pursuant to which same were or
may be acquired; nor will the Company, until twelve (12) months after the Closing Date issue any Common Stock or Common Stock Equivalents,
if such issuance or the result of such amendment would be at an effective price per share of Common Stock less than the higher
of (i) the Conversion Price, or Warrant Exercise Price in effect at the time of such lower price issuance or amendment, or (ii)
would be issued or made on terms more favorable to such other holder or recipient than the Purchaser, with respect to the terms
of the offering pursuant to the Transaction Documents, or (iii) $0.01 per Share of Common Stock, subject to adjustment for stock
splits, dividends and similar events.

 

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

 

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4.15         Capital
Changes. Until the one year anniversary of the Closing Date, the Company shall not undertake a reverse or forward stock split
or reclassification of the Common Stock without 10 days prior written notice to the Purchasers, unless such reverse or forward
stock split is made in conjunction with the listing of the Common Stock on a national securities exchange.

 

4.16         Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither
it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including
Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending
at such time that the transactions contemplated by this Agreement are first publicly announced via a press release or Form 8-K
as described in Section 4.6.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such
time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to a press release or Form
8-K as described in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction
and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes
any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company
after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to a press release or
Form 8-K as described in Section 4.6, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any
securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated
by this Agreement are first publicly announced in a press release or pursuant to the Form 8-K as described in Section 4.6 and (iii)
no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the filing of the Form 8-K or disclosed
in a press release as described in Section 4.6.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s
assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that
made the investment decision to purchase the Securities covered by this Agreement.

 

4.17         Participation
in Future Financing.

 

(a)          From
the date hereof until the date that is the twenty-four (24) month anniversary of the Closing Date, upon any proposed issuance by
the Company or any of its Subsidiaries of Common Stock, Common Stock Equivalents for cash consideration, Indebtedness or a combination
thereof, other than (i) a rights offering to all holders of Common Stock (which may include extending such rights offering to holders
of Preferred Stock) or (ii) an Exempt Issuance, (a “Subsequent Financing”), each Purchaser shall have the right
to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation
Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing, unless the Subsequent Financing
is an underwritten public offering, in which case the Company shall offer each Purchaser the right to participate in such public
offering when it is lawful for the Company to do so, but no Purchaser shall be entitled to purchase any particular amount of such
public offering.

 

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(b)          At
least seven (7) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written
notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall
promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The
requesting Purchaser shall be deemed to have acknowledged that the Subsequent Financing Notice may contain material non-public
information. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing
is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.

 

(c)          Any
Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice that
the Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and representing
and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no such notice from a Purchaser as of such fifth (5th) Trading Day, such Purchaser
shall be deemed to have notified the Company that it does not elect to participate.

 

(d)          If
by 5:30 p.m. (New York City time) on the fifth (5th ) Trading Day after all of the Purchasers have received the Pre-Notice,
notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to
participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may affect the remaining
portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.

 

(e)          If
by 5:30 p.m. (New York City time) on the fifth (5th) Trading Day after all of the Purchasers have received the Pre-Notice,
the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the
Participation Maximum.  “Pro Rata Portion” means the ratio of (x) the Subscription Amount of shares of
Preferred Stock and Warrants purchased hereunder by a Purchaser participating under this Section 4.17 and (y) the sum of the aggregate
Subscription Amounts of Securities purchased hereunder by all Purchasers participating under this Section 4.17.

 

(f)          The
Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of
participation set forth above in this Section 4.17, if the Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice.

 

(g)          The
Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree
to any restrictions on trading as to any of the Securities purchased hereunder (for avoidance of doubt, the securities purchased
in the Subsequent Financing shall not be considered securities purchased hereunder) or be required to consent to any amendment
to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior
written consent of such Purchaser.

 

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(h)          Notwithstanding
anything to the contrary in this Section 4.17 and unless otherwise agreed to by such Purchaser, the Company shall either confirm
in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser
will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the
Subsequent Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to
the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by such
Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession
of any material, non-public information with respect to the Company or any of its Subsidiaries.

 

4.18         Reimbursement.
If any Purchaser becomes involved in any capacity in any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by such Purchaser to or with any current stockholder),
solely as a result of such Purchaser’s acquisition of the Securities under this Agreement, the Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any investigation preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred. The reimbursement obligations of the Company under
this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and
conditions to any Affiliates of the Purchasers who are actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may be, of the Purchasers and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the
Purchasers and any such Affiliate and any such Person. The Company also agrees that neither the Purchasers nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any liability to the Company or any Person asserting claims
on behalf of or in right of the Company solely as a result of acquiring the Securities under this Agreement.

 

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

 

4.20         Maintenance
of Property and Insurance. The Company shall keep all of its property, which is necessary or useful to the conduct of its business,
in good working order and condition, ordinary wear and tear excepted. The Company will maintain the insurance described in Section
3.1(p).

 

4.21         Indebtedness.
For so long as any Preferred Stock is outstanding, the Company will not incur any Indebtedness without the consent of the Holders.

 

4.22         Preservation
of Corporate Existence. The Company shall preserve and maintain its corporate existence, rights, privileges and franchises
in the jurisdiction of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which
such qualification is necessary in view of its business or operations and where the failure to qualify or remain qualified might
reasonably have a Material Adverse Effect upon the financial condition, business or operations of the Company taken as a whole.

 

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4.23         Most
Favored Nation Provision. From the date hereof and for so long as a Purchaser holds any Preferred Stock, in the event that
the Company issues or sells any Common Stock or Common Stock Equivalents, if a Purchaser then holding outstanding Securities reasonably
believes that any of the terms and conditions appurtenant to such issuance or sale are more favorable to such investors than are
the terms and conditions granted to the Purchasers hereunder, upon notice to the Company by such Purchaser within five Trading
Days after disclosure of such issuance or sale, the Company shall amend the terms of this transaction as to such Purchaser only
so as to give such Purchaser the benefit of such more favorable terms or conditions. This Section 4.23 shall not apply with respect
to an Exempt Issuance. The Company shall provide each Purchaser with notice of any such issuance or sale in the manner for disclosure.

 

4.24         Purchaser’s
Exercise Limitations. The Company shall not effect any exercise of the option granted to each Purchaser in Sections 4.17 and
4.23 of this Agreement, and a Purchaser shall not have the right to exercise any portion of such option, pursuant to Sections 4.17
and 4.23 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Exercise
Notice, the Purchaser (together with the Purchaser’s Affiliates, and any other Persons acting as a group together with the
Purchaser or any of the Purchaser’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation
(as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the
Purchaser and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of the option with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon
(i) exercise of the remaining, nonexercised portion of the option beneficially owned by the Purchaser or any of its Affiliates
and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without
limitation, any other Preferred Stock or other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous
to the limitation contained herein beneficially owned by the Purchaser or any of its Affiliates.  Except as set forth in the
preceding sentence, for purposes of this Section 4.24, beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Purchaser that the Company
is not representing to the Purchaser that such calculation is in compliance with Section 13(d) of the Exchange Act and the Purchaser
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this Section 4.24 applies, the determination of whether the option is exercisable (in relation to other securities owned by
the Purchaser together with any Affiliates) and of which portion of the option is exercisable shall be in the sole discretion of
the Purchaser, and the submission of an Exercise Notice shall be deemed to be the Purchaser’s determination of whether the
option is exercisable (in relation to other securities owned by the Purchaser together with any Affiliates) and of which portion
of the option is exercisable, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction,
a Purchaser will be deemed to represent to the Company when it delivers an Exercise Notice that such Exercise Notice has not violated
the restrictions set forth in this paragraph, and the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4.24, in determining
the number of outstanding shares of Common Stock, a Purchaser may rely on the number of outstanding shares of Common Stock as reflected
in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent
public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number
of shares of Common Stock outstanding.  Upon the written or oral request of a Purchaser, the Company shall within two Trading
Days confirm orally and in writing to the Purchaser the number of shares of Common Stock then outstanding.  In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company, including the Warrants, by the Purchaser or its Affiliates since the date as of which such number of outstanding
shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99%, unless a Purchaser
elects on its signature page hereto a different amount for its own Beneficial Ownership Limitation (which shall also apply to and
supercede the corresponding Beneficial Ownership Limitation as same relates to the Warrants issued to such electing Purchaser)
of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
issuable upon exercise of the option. The Purchaser may decrease the Beneficial Ownership Limitation at any time and the Purchaser,
upon not less than 61 days’ prior notice to the Company, may increase the Beneficial Ownership Limitation provisions of this
Section 4.24, provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of the option held by
the Purchaser and the provisions of this Section 4.24 shall continue to apply. Any such increase will not be effective until the
61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 4.24 to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor holder of the option right. In the event the limitations in this Section 4.24 would prevent the exercise of
a Purchaser’s rights under Sections 4.17 or 4.23, then such Purchaser may exercise all such rights and comply with all obligations
applicable thereto except that the delivery of Common Stock will be deferred until such time as such Purchaser provides notice
to the Company that such Purchaser may receive or beneficially own such Common Stock which exceeds the Beneficial Ownership Limitation
without exceeding the then applicable Beneficial Ownership Limitation.

 

    	34

    	 

    

 

4.25         Piggy-Back
Registrations. If at any time after the Closing Date there is not an effective registration statement covering all of the Conversion
Shares, Warrant Shares and conversion shares underlying the Series H Preferred Stock (“Series H Conversion Shares”)
and the Company determines to prepare and file with the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity securities, but excluding Forms S-4 or S-8 and similar
forms which do not permit such registration, then the Company shall send to each holder of any of the issued Securities written
notice of such determination and, if within fifteen calendar days after receipt of such notice, any such holder shall so request
in writing, the Company shall include in such registration statement all or any part of the Conversion Shares, Warrant Shares and
Series H Conversion Shares, such holder requests to be registered and which inclusion of such Conversion Shares, Warrant Shares
and Series H Conversion Shares will be subject to customary underwriter cutbacks applicable to all holders of registration rights
and minimum cutbacks in accordance with guidance provided by the Securities and Exchange Commission (including, but not limited
to, Rule 415). The obligations of the Company under this Section may be waived by any holder of any of the Securities entitled
to registration rights under this Section 4.25. The holders whose Conversion Shares and Warrant Shares are included or required
to be included in such registration statement are granted the same rights, benefits, liquidated or other damages and indemnification
granted to other holders of securities included in such registration statement. In no event shall the liability of any holder of
Securities or permitted successor in connection with any Conversion Shares, Warrant Shares and Series H Conversion Shares included
in any such registration statement be greater in amount than the dollar amount of the net proceeds actually received by such Purchaser
upon the sale of the Conversion Shares, Warrant Shares and Series H Conversion Shares sold pursuant to such registration or such
lesser amount in proportion to all other holders of Securities included in such registration statement. All expenses incurred by
the Company in complying with Section 4.25, including, without limitation, all registration and filing fees, printing expenses
(if required), fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state securities or “blue sky” laws, fees of the
FINRA, transfer taxes, and fees of transfer agents and registrars, are called “Registration Expenses.” All underwriting
discounts and selling commissions applicable to the sale of Registrable Securities are called "Selling Expenses."
The Company will pay all Registration Expenses in connection with the registration statement under Section 4.25. Selling Expenses
in connection with each registration statement under Section 4.25 shall be borne by the holder and will be apportioned among such
holders in proportion to the number of Shares included therein for a holder relative to all the securities included therein for
all selling holders, or as all holders may agree. It shall be a condition precedent to the obligations of the Company to complete
the registration pursuant to this Agreement with respect to the Conversion Shares, Warrant Shares and Series H Conversion Shares
of a particular Purchaser that such Purchaser shall furnish to the Company in writing such information and representation letters,
including a completed form of the Investor Questionnaire, with respect to itself and the proposed distribution by it as the Company
may reasonably request to assure compliance with federal and applicable state securities laws.

 

    	35

    	 

    

 

4.26         Other
Agreements of Parties. Each Holder of Series B Preferred Stock or Series C Preferred Stock who purchases Preferred Stock and
Warrants for a cash purchase price of not less than $250,000 shall be entitled to exchange shares of Series B Preferred Stock or
Series C Preferred Stock previously issued by the Company for shares of Series H Preferred Stock. The Series H Preferred Stock
will have rights and preferences identical to the Series G Preferred Stock except as described in the Certificate of Designation
of the Series H Preferred Stock in the form of Exhibit B attached hereto.

 

ARTICLE V.

MISCELLANEOUS

 

5.1           Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing
has not been consummated on or before July 15, 2015; provided, however, that such termination will not affect the
right of any party to sue for any breach by any other party (or parties).

 

5.2           Fees
and Expenses. At the Closing, the Company has agreed to pay G&M for the legal fees in connection with the Closing for representation
of some, but not all, of the Purchasers in the amount of $35,000. Except as expressly set forth in the Transaction Documents and
on Schedule 3.1(s), each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance
of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser),
stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

5.3           Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.4           Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Intellect Neurosciences, Inc., 550 Sylvan Avenue, Suite 101, Englewood
Cliffs, NJ 07632, Attn: Elliot Maza, CEO, facsimile: (212) 448-9600, with a copy to: Sichenzia, Ross Friedman Ference LLP, 61 Broadway,
32nd Floor, New York, NY 10006, Attn: Harvey Kesner, Esq., facsimile: (212) 930-9725, and (ii) if to the Purchasers,
to: the addresses and fax numbers indicated on the signature pages hereto, with an additional copy by fax only to (which shall
not constitute notice): Grushko & Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, facsimile: (212) 697-3575.

 

    	36

    	 

    

 

 

5.5           Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers holding at least 75% of the component of the affected Securities
then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

5.6           Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

5.7           Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
each Purchaser (other than by merger). Following the Closing, any Purchaser may assign any or all of its rights under this Agreement
to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

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

 

5.9           Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any action,
suit or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper or is an 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 the address in effect for notices to it under
this Agreement 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. If either
party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations
of the Company under Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.

 

    	37

    	 

    

 

 

5.10         Survival.
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

 

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

 

5.12         Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

5.13         Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser
may, at any time prior to the Company’s performance of such obligations, rescind or withdraw, in its sole discretion from
time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice
to its future actions and rights; provided, however, that in the case of a rescission of a conversion of the Preferred
Stock or exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any
such rescinded conversion or exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid
to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s
Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

 

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

 

    	38

    	 

    

 

 

5.15         Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of
the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.

 

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

 

5.17         Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the Closing Date thereof
forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such
excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at such Purchaser’s election.

 

5.18         Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance
or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate
legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each
Purchaser and its respective counsel have chosen to communicate with the Company through G&M. The Company has elected to provide
all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required
or requested to do so by any of the Purchasers. It is expressly understood and agreed that each provision contained in this Agreement
and in each other Transaction Document is between the Company and a Purchaser, solely, and not between the Company and the Purchasers
collectively and not between and among the Purchasers.

 

    	39

    	 

    

 

 

5.19         Liquidated
Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages
or other amounts are due and payable shall have been canceled.

 

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

 

5.21         Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock or Preferred Stock or Warrants in any Transaction Document shall be
subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.

 

5.22         WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 

 

5.23         Equitable
Adjustment. Trading volume amounts, price/volume amounts and similar figures in the Transaction Documents shall be equitably
adjusted (but without duplication) to offset the effect of reverse or forward stock splits, similar events and as otherwise described
in this Agreement.

 

(Signature Pages Follow)

 

    	40

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.

 

	Intellect Neurosciences, Inc.	 	Address for Notice:
	 	 	 
	 	 	550 Sylvan Avenue, Suite 101
	 	 	Englewood Cliffs, NJ 07632
	 	 	Fax: (212) 448-9600
	 	 	 
	By:	/s/ Elliot Maza	 	 
	 	Name: Elliot Maza	 	 
	 	Title: Chief Executive Officer	 	 
	 	 	 
	With a copy to (which shall not constitute notice):	 	 
	 	 	 
	Sichenzia Ross Friedman Ference LLP	 	 
	61 Broadway, 32nd Floor	 	 
	New York, NY 10006	 	 
	Attn: Harvey Kesner, Esq.	 	 
	Fax: (212) 930-9725	 	 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

    	41

    	 

    

 

[PURCHASER
SIGNATURE PAGE TO Intellect Neurosciences, Inc.

SECURITIES
PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.

 

Name of Purchaser: ________________________________________________________

 

Signature of Authorized Signatory of
Purchaser: __________________________________

 

Name of Authorized Signatory: ____________________________________________________

 

Title of Authorized Signatory: _____________________________________________________

 

Email Address of Authorized Signatory:
_____________________________________________

 

Facsimile Number of Authorized Signatory:
__________________________________________

 

Address for Notice to Purchaser:

 

Address for Delivery of Securities to Purchaser
(if not same as address for notice):

 

______________________________________________________________________________

 

______________________________________________________________________________

 

______________________________________________________________________________

 

Subscription Amount: US$                                    

 

Preferred
Stock:                                                                   Warrants:
                                    

 

Cash Value of Exchanged Series D Preferred
Stock or Series C Preferred Stock (including accrued dividends): US$___________

 

Preferred
Stock:                                     

 

EIN Number, if applicable, will be provided
under separate cover: ________________________

 

[SIGNATURE PAGES CONTINUE]

 

    	42

    	 

    

 

DISCLOSURE SCHEDULES

 

The following disclosure schedules (the
“Disclosure Schedules”) are being delivered by Intellect Neurosciences, Inc. (the “Company”) in connection
with the Securities Purchase Agreement by and among the Company and the Purchasers identified thereto, dated June ___, 2015 (with
all of the exhibits and schedules appended thereto, the “Agreement”). Unless the context otherwise requires, all capitalized
terms used in these Disclosure Schedules shall have the respective meanings assigned to them in the Agreement. Reference is made
to the current and periodic reports filed by the Company with the Securities and Exchange Commission that are publicly available
on www.sec.gov.

 

    	43

    	 

    

 

Schedule 3.1(a) – List of Subsidiaries

 

Intellect USA, Inc. (a Delaware corporation)

 

Schedule 3.1(g) – Capitalization

 

Capitalization as of June 24, 2015:

 

	 	 	Outstanding
 Shares
	 	 	Stated Value (+
 accrued dividends)
	 	 	Conversion/Ex
 Price
	 	 	Underlying Shares	 	 	Fully Diluted Shares	 
	Pre Transaction Cap Table	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Common	 	 	3,431,514	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3,431,514	 
	Series B	 	 		 	 	$	1,636,554	 	 	$	375	 	 	 	4,364	 	 	 	4,364	 
	Series C	 	 	 	 	 	$	24,465,666	 	 	$	1.25	 	 	 	19,572,532	 	 	 	19,572,532	 
	Series D	 	 	 	 	 	$	3,745,031	 	 	$	1.25	 	 	 	2,996,025	 	 	 	2,996,025	 
	Series E	 	 	 	 	 	$	24,526,570	 	 	$	2.50	 	 	 	9,810,628	 	 	 	9,810,628	 
	Series F	 	 	 	 	 	$	1,290,667	 	 	$	0.25	 	 	 	5,162,667	 	 	 	5,162,667	 
	Notes	 	 	 	 	 	$	4,747,870	 	 	 	Various	 	 	 	14,946,576	 	 	 	14,946,576	 
	Warrants	 	 	12,372,000	 	 	 	 	 	 	 	Various	 	 	 	 	 	 	 	12,372,000	 
	 	 	 	 	 	 	$	60,412,357	 	 	 	 	 	 	 	 	 	 	 	68,296,306	 

 

Schedule 3.1(i) – Material Changes; Undisclosed Events,
Liabilities or Developments

 

None.

 

Schedule 3.1(j) – Litigation

 

None.

 

Schedule 3.1(o) – Trademarks

 

None.

 

Schedule 3.1(q) – Transactions with Affiliates and
Employees

 

None.

 

Schedule 3.1(u) – Registration Rights

 

None.

 

Schedule 3.1(cc) – Accounting Firm

 

Paritz & Company, P.A.

 

Schedule 3.1 (mm) – FDA

 

None.

 

    	44

    	 

    

 

Schedule 4.9 – Use of Proceeds

 

Use of proceeds is to pay up front payments and fund monthly
budget going forward, as shown in the table below:

 

	Vendor	 	Description	 	Amount	 
	Liabilities	 	 	 	 	 	 
	Sichenzia Ross	 	FINRA, DTC, Registration statement fees	 	$	53,500	 
	Sichenzia Ross	 	Deal fee	 	$	25,000	 
	Grushko & Mittman	 	Deal fee	 	$	35,000	 
	Fish & Richardson	 	Oustanding patent fees prior years	 	$	25,000	 
	Davidson Davidson & Kappel	 	Oustanding patent fees prior years	 	$	25,000	 
	NYU and SAMSF	 	Outstanding license fees for OX1, the drug licensed to Shire	 	$	20,000	 
	Mass General Research Center	 	Balance due on ongoing harvard study for Tau program (50%)	 	$	62,500	 
	 	 	Total Up front payments	 	$	246,000	 
	 	 	 	 	 	 	 
	Monthly budget for next six months	 	 	 	 	 	 
	G&A Consulting Fees	 	Daniel	 	$	10,000	 
	Executive Comp	 	Elliot	 	$	27,000	 
	Employee Benefits	 	Health insurance	 	$	2,000	 
	G&A Travel & Entertainment	 	Air, etc (reflects increased IR activity)	 	$	5,000	 
	Professional fees	 	Patent firms; Sichenzia; Paritz CPAs	 	$	20,000	 
	Corp & Sh Expense	 	SEC filings; stock transfer agent; misc taxes;	 	$	3,500	 
	Board Fees	 	Isaac Onn	 	$	3,500	 
	IR & Website Fees	 	Equisolve; Zazoff; press release distribution	 	$	17,500	 
	Office Expense	 	Rent; supplies, misc	 	$	5,000	 
	Miscellaneous	 	Unexpected expenses	 	$	3,500	 
	R&D Preclinical Studies	 	Tau program	 	 	 	 
	License Fees	 	NYU and SAMSF - license fees for OX1, the drug licensed to Shire	 	 	 	 
	 	 	 	 	$	97,000	 

 

Expectation is to obtain a positive decision
from Shire within 6 months to proceed into the next phase of clinical development with SHP622, which will enable ILNS to finance
itself in the public markets. Plan B is to invest in subsequent Tau animal study to enhance chances of licensing Tau antibody

 

Schedule 4.11(a) - Reservation and Listing of Securities.

 

The Company will reserve for each Purchaser the amount of Common
Stock set forth on the Table below under the heading “Underlying Shares.”

 

	 	 	Alpha
    Capital	 	 	Michael
    Jesselson Trusts	 	 	Barry
    Honig	 
	 	 	Liquidation
    Value	 	 	Underlying
    Shares	 	 	Liquidation
    Value	 	 	Underlying
    Shares	 	 	Liquidation
    Value	 	 	Underlying
    Shares	 
	Series B	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Series C	 	$	2,947,457	 	 	 	2,357,966	 	 	$	2,955,350	 	 	 	2,364,280	 	 	$	1,711,343	 	 	 	1,369,074	 
	Series D	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Series E	 	$	601,000	 	 	 	240,400	 	 	$	2,404,000	 	 	 	961,600	 	 	$	601,000	 	 	 	240,400	 
	Series F	 	$	430,222	 	 	 	4,302,222	 	 	$	430,222	 	 	 	4,302,222	 	 	$	430,222	 	 	 	4,302,222	 
	Series G	 	$	2,539,196	 	 	 	12,695,978	 	 	$	1,538,822	 	 	 	7,694,111	 	 	$	1,900,000	 	 	 	9,500,000	 
	Series H	 	$	2,233,608	 	 	 	581,669	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Notes	 	$	555,902	 	 	 	6,948,779	 	 	$	732,197	 	 	 	5,229,980	 	 	$	18,190	 	 	 	14,552	 
	Warrants	 	 	 	 	 	 	8,890,000	 	 	 	 	 	 	 	8,500,000	 	 	 	 	 	 	 	8,230,000	 
	 	 	$	9,307,385	 	 	 	36,017,014	 	 	$	8,060,592	 	 	 	29,052,193	 	 	$	4,660,755	 	 	 	23,656,248	 

 

Schedule 4.13 – Subsequent Equity Sales

 

None.

 

    	45

    	 

    

 

LIST OF EXHIBITS

 

EXHIBIT A – CERTIFICATE OF DESIGNATION OF SERIES G PREFERRED
STOCK

 

EXHIBIT B – CERTIFICATE OF DESIGNATION OF SERIES H PREFERRED
STOCK

 

EXHIBIT C – FORM OF WARRANT

 

EXHIBIT D – FORM OF LEGAL OPINION

 

EXHIBIT E –ESCROW AGREEMENT

 

EXHIBIT F – INVESTOR QUESTIONNAIRE

 

EXHIBIT G – AMENDMENT TO SERIES F PREFERRED STOCK

 

EXHIBIT H – CONSENT RE: SERIES F PREFERRED STOCK

 

    	46

    	 

    

 

EXHIBIT F

 

ACCREDITED INVESTOR QUESTIONNAIRE

IN CONNECTION WITH INVESTMENT IN PREFERRED
STOCK AND WARRANTS

OF INTELLECT NEUROSCIENCES, INC,

A DELAWARE CORPORATION

PURSUANT TO SECURITIES PURCHASE AGREEMENT
DATED JUNE ___, 2015

 

	TO :	Intellect Neurosciences, Inc.
	 	550 Sylvan Avenue, Suite 101
	 	Englewood Cliffs, NJ 07632
	 	Fax: (212) 448-9600

 

INSTRUCTIONS

 

PLEASE ANSWER ALL QUESTIONS. If the appropriate
answer is “None” or “Not Applicable”, so state. Please print or type your answers to all questions. Attach
additional sheets if necessary to complete your answers to any item.

 

Your answers will be kept strictly confidential
at all times. However, Intellect Neurosciences, Inc. (the “Company”) may present this Questionnaire to such parties
as it deems appropriate in order to assure itself that the offer and sale of securities of the Company will not result in a violation
of the registration provisions of the Securities Act of 1933, as amended, or a violation of the securities laws of any state.

 

1.          Please
provide the following information:

 

Name: ___________________________________________________________________________________

 

Name of additional purchaser:_________________________________________________________________

(Please complete information in Question 5)

 

Date of birth, or if other than an individual, year of organization
or incorporation:

 

__________________________________________________________________________________________

 

__________________________________________________________________________________________

 

2.          Residence
address, or if other than an individual, principal office address:

 

_________________________________________________________________________________________

 

_________________________________________________________________________________________

 

_________________________________________________________________________________________

 

Telephone number: __________________________________________________________________________

 

Social Security Number: _______________________________________________________________________

 

Taxpayer Identification Number: ________________________________________________________________

 

    	47

    	 

    

 

3. Business address: _______________________________________________________________________________

 

_______________________________________________________________________________________________

 

_______________________________________________________________________________________________

 

Business telephone number: _________________________________________________________________________

 

4. Send mail to:              Residence
____________             Business ____________

 

5.          With
respect to tenants in common, joint tenants and tenants by the entirety, complete only if information differs from that above:

 

Residence address: ______________________________________________________________________________________

 

______________________________________________________________________________________________

 

______________________________________________________________________________________________

 

Telephone number: _______________________________________________________________________________

 

Social Security Number: ___________________________________________________________________________

 

Taxpayer Identification Number: _____________________________________________________________________

 

Business address: _______________________________________________________________________________

 

______________________________________________________________________________________________

 

______________________________________________________________________________________________

 

Business telephone number: ________________________________________________________________________

 

Send Mail to:             Residence
____________             Business ____________

 

6.          Please
describe your present or most recent business or occupation and indicate such information as the nature of your employment, how
long you have been employed there, the principal business of your employer, the principal activities under your management or supervision
and the scope (e.g. dollar volume, industry rank, etc.) of such activities:

 

______________________________________________________________________________________________

 

______________________________________________________________________________________________

 

______________________________________________________________________________________________

 

    	48

    	 

    

 

7.          Please
state whether you (i) are associated with or affiliated with a member of the Financial Industry Regulatory Association, Inc. (“FINRA”),
(ii) are an owner of stock or other securities of FINRA member (other than stock or other securities purchased on the open market),
or (iii) have made a subordinated loan to any FINRA member:

 

	 	_______	 	_______
	 	Yes	 	No

 

If you answered yes to any of (i) –
(iii) above, please indicate the applicable answer and briefly describe the facts below:

 

_______________________________________________________________________________________________

 

_______________________________________________________________________________________________

 

_______________________________________________________________________________________________

 

8A.           Applicable
to Individuals ONLY. Please answer the following questions concerning your financial condition as an “accredited investor”
(within the meaning of Rule 501 of Regulation D). If the purchaser is more than one individual, each individual must initial an
answer where the question indicates a “yes” or “no” response and must answer any other question fully,
indicating to which individual such answer applies. If the purchaser is purchasing jointly with his or her spouse, one answer may
be indicated for the couple as a whole:

 

8.1           Does
your net worth* (or joint net worth with your spouse) exceed $1,000,000?

 

	 	_______	 	_______
	 	Yes	 	No

 

8.2           Did
you have an individual income** in excess of $200,000 or joint income together with your spouse in excess of $300,000 in each of
the two most recent years and do you reasonably expect to reach the same income level in the current year?

 

	 	_______	 	_______
	 	Yes	 	No

 

8.3           Are
you an executive officer of the Company?

 

	 	_______	 	_______
	 	Yes	 	No

 

* For purposes hereof, net worth shall be deemed to include
ALL of your assets, liquid or illiquid MINUS any liabilities.

 

** For purposes hereof, the term “income” is not
limited to “adjusted gross income” as that term is defined for federal income tax purposes, but rather includes certain
items of income which are deducted in computing “adjusted gross income”. For investors who are salaried employees,
the gross salary of such investor, minus any significant expenses personally incurred by such investor in connection with earning
the salary, plus any income from any other source including unearned income, is a fair measure of “income” for purposes
hereof. For investors who are self-employed, “income” is generally construed to mean total revenues received during
the calendar year minus significant expenses incurred in connection with earning such revenues.

 

    	49

    	 

    

 

8.BApplicable to Corporations, Partnerships, Trusts, Limited
Liability Companies and other Entities ONLY:

 

The purchaser is an accredited investor because the purchaser
falls within at least one of the following categories (Check all appropriate lines):

 

		___	(i) a bank as defined in Section 3(a)(2) of the Act or a savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity;

 

		___	(ii) a broker-dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended;

 

		___	(iii) an insurance company as defined in Section 2(13) of the Act;

 

		___	(iv) an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Act”)
or a business development company as defined in Section 2(a)(48) of the Investment Act;

 

		___	(v) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958, as amended;

 

		___	(vi) a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, where such plan has total assets in excess of $5,000,000;

 

		___	(vii) an employee benefit plan within the meaning of Title 1 of the Employee Retirement Income Security Act of 1974, as amended
(the “Employee Act”), where the investment decision is made by a plan fiduciary, as defined in Section 3(21) of the
Employee Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or an
employee benefit plan that has total assets in excess of $5,000,000, or a self-directed plan the investment decisions of which
are made solely by persons that are accredited investors;

 

		___	(viii) a private business development company, as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as
amended;

 

		___	(ix) an organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar
business trust, or a partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in
excess of $5,000,000;

 

		___	(x) a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered,
whose purchase is directed by a “sophisticated” person, as described in Rule 506(b)(2)(ii) promulgated under the Act,
who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and
risks of the prospective investment;

 

    	50

    	 

    

 

		___	(xi) an entity in which all of the equity investors are persons or entities described above (“accredited investors”).
ALL EQUITY OWNERS MUST COMPLETE “EXHIBIT A” ATTACHED HERETO.

 

9.ADo you have sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks associated with investing in the Company?

 

	 	_______	 	_______
	 	Yes	 	No

 

ANSWER QUESTION 9B ONLY IF THE ANSWER TO QUESTION 9A WAS “NO.”

 

9.BIf the answer to Question 9A was “NO,” do
you have a financial or investment adviser (a) that is acting in the capacity as a purchaser representative and (b) who has sufficient
knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks associated with
investing in the Company?

 

	 	_______	 	_______
	 	Yes	 	No

 

If you have a financial or investment adviser(s), please identify
each such person and indicate his or her business address and telephone number in the space below. (Each such person must complete,
and you must review and acknowledge, a separate Purchaser Representative Questionnaire which will be supplied at your request).

 

________________________________________________________________________________________________

 

________________________________________________________________________________________________

 

10.         You
have the right, will be afforded an opportunity, and are encouraged to investigate the Company and review relevant factors and
documents pertaining to the officers of the Company, and the Company and its business and to ask questions of a qualified representative
of the Company regarding this investment and the properties, operations, and methods of doing business of the Company.

 

Have you or has your purchaser representative, if any, conducted
any such investigation, sought such documents or asked questions of a qualified representative of the Company regarding this investment
and the properties, operations, and methods of doing business of the Company?

 

	 	_______	 	_______
	 	Yes	 	No

 

If so, briefly describe: ______________________________________________________________________________

 

________________________________________________________________________________________________

 

If so, have you completed your investigation and/or received
satisfactory answers to your questions?

 

	 	_______	 	_______
	 	Yes	 	No

 

    	51

    	 

    

 

11.         Do
you understand the nature of an investment in the Company and the risks associated with such an investment?

 

	 	_______	 	_______
	 	Yes	 	No

 

12.         Do
you understand that there is no guarantee of any financial return on this investment and that you will be exposed to the risk of
losing your entire investment?

 

	 	_______	 	_______
	 	Yes	 	No

 

13.         Do
you understand that this investment is not liquid?

 

	 	_______	 	_______
	 	Yes	 	No

 

14.         Do
you have adequate means of providing for your current needs and personal contingencies in view of the fact that this is not a liquid
investment?

 

	 	_______	 	_______
	 	Yes	 	No

 

15.         Are
you aware of the Company’s business affairs and financial condition, and have you acquired all such information about the
Company as you deem necessary and appropriate to enable you to reach an informed and knowledgeable decision to acquire the Interests?

 

	 	_______	 	_______
	 	Yes	 	No

 

16.         Do
you have a “pre-existing relationship” with the Company or any of the officers of the Company?

 

	 	_______	 	_______
	 	Yes	 	No

 

(For purposes hereof, “pre-existing relationship”
means any relationship consisting of personal or business contacts of a nature and duration such as would enable a reasonably prudent
investor to be aware of the character, business acumen, and general business and financial circumstances of the person with whom
such relationship exists.)

 

If so, please name the individual or other person with whom
you have a pre-existing relationship and describe the relationship:

 

________________________________________________________________________________________________

 

________________________________________________________________________________________________

 

    	52

    	 

    

 

17.         Exceptions
to the representations and warranties made in Section 3.2 of the Securities Purchase Agreement (if no exceptions, write “none”
– if left blank, the response will be deemed to be “none”): ___________________________________________________

 

_________________________________________________________________________________________

 

Dated: _______________, 2015

 

If purchaser is one or more individuals (all individuals must
sign):

 

________________________________________________________________________________________________

(Type or print name of prospective purchaser)

 

________________________________________________________________________________________________

Signature of prospective purchaser

 

________________________________________________________________________________________________

Social Security Number

 

________________________________________________________________________________________________

(Type or print name of additional purchaser)

 

________________________________________________________________________________________________

Signature of spouse, joint tenant, tenant in common or other signature, if required

 

________________________________________________________________________________________________

Social Security Number

 

    	53

    	 

    

Annex A

 

Definition of Accredited Investor

 

The securities will only be sold to investors
who represent in writing in the Securities Purchase Agreement that they are accredited investors, as defined in Regulation D, Rule
501 under the Act which definition is set forth below:

 

1.          A
natural person whose net worth, or joint net worth with spouse, at the time of purchase exceeds $1 million (excluding home); or

 

2.          A
natural person whose individual gross income exceeded $200,000 or whose joint income with that person’s spouse exceeded $300,000
in each of the last two years, and who reasonably expects to exceed such income level in the current year; or

 

3.          A
trust with total assets in excess of $5 million, not formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person described in Regulation D; or

 

4.          A
director or executive officer of the Company; or

 

5.          The
investor is an entity, all of the owners of which are accredited investors; or

 

6.          (a)
bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A)
of the Act, (b) any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, (c) an insurance
Company as defined in Section 2(13) of the Act, (d) an investment Company registered under the Investment Company Act of 1940 or
a business development Company as defined in Section 2(a)(48) of such Act, (e) a Small Business Investment Company licensed by
the United States Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, (f) an
employee benefit plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a
state or its political subdivisions, if such plan has total assets in excess of $5 million, (g) an employee benefit plan within
the meaning of Title I of the Employee Retirement Income Securities Act of 1974, and the employee benefit plan has assets in excess
of $5 million, or the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, that is either
a bank, savings and loan institution, insurance Company, or registered investment advisor, or, if a self-directed plan, with an
investment decisions made solely by persons that are accredited investors, (h) a private business development company as defined
in Section 202(a)(22) of the Investment Advisers Act of 1940, or (i) an organization described in Section 501(c)(3) of the Internal
Revenue code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring
the securities offered, with assets in excess of $5 million.

 

    	54

    	 

    

 

EXHIBIT “A” TO ACCREDITED INVESTOR
QUESTIONNAIRE

 

ACCREDITED CORPORATIONS, PARTNERSHIPS, LIMITED LIABILITY COMPANIES,
TRUSTS OR OTHER ENTITIES INITIALING QUESTION 8B(xi) MUST PROVIDE THE FOLLOWING INFORMATION.

 

I hereby certify that set forth below is a complete list of
all equity owners in __________________ [NAME OF ENTITY], a                                               
[TYPE OF ENTITY] formed pursuant to the laws of the State of                                    
. I also certify that EACH SUCH OWNER HAS INITIALED THE SPACE OPPOSITE HIS OR HER NAME and that each such owner understands
that by initialing that space he or she is representing that he or she is an accredited individual investor satisfying the test
for accredited individual investors indicated under “Type of Accredited Investor.”

 

	 	 
	 	signature of authorized corporate officer, general partner or trustee

 

	 	Name of Equity Owner	 	Type of Accredited Investor1
	 	 	 	 
	1.	 	 	 
	 	 	 	 
	2.	 	 	 
	 	 	 	 
	3.	 	 	 
	 	 	 	 
	4.	 	 	 
	 	 	 	 
	5.	 	 	 
	 	 	 	 
	6.	 	 	 
	 	 	 	 
	7.	 	 	 
	 	 	 	 
	8.	 	 	 
	 	 	 	 
	9.	 	 	 
	 	 	 	 
	10.	 	 	 

 

 

		1	Indicate which Subparagraph of 8.1 - 8.3 the equity owner
satisfies.

 

    	55Exhibit 10.1

 

SEPARATION AND RELEASE AGREEMENT

 

This Separation and Release Agreement (this “Separation Agreement”) between AXIALL CORPORATION (“Company” or “Axiall”) and you sets forth certain terms of your separation from the Company, in order to receive certain separation payments and benefits, as set forth in detail below.

 

By signing this Separation Agreement, you and the Company agree as follows:

 

1.             STATUS OF EMPLOYMENT

 

You agree that, at the direction of the Board, you are resigning from your positions as President, Chief Executive Officer and Director with the Company effective July 5, 2015 (“Retirement Date”).  As of the Retirement Date, you also agree that you resign from all positions you hold as an officer, employee or director of the Company’s subsidiaries and affiliates, and will promptly execute any such documents and take such actions as may be necessary or reasonably requested by the Company to effectuate or memorialize your resignation from all positions with the Company.

 

2.             SEVERANCE BENEFITS

 

In consideration for you signing this Separation Agreement no earlier than the Retirement Date, you will receive payments and benefits as specified in Exhibit A attached hereto (the “Severance Benefits”).  You acknowledge that the compensation and benefits provided under this Separation Agreement are greater than what you would be legally entitled to receive in the absence of this Separation Agreement.

 

3.             RESTRICTIVE COVENANTS

 

By signing this Separation Agreement, you reaffirm that you will continue to abide by the covenants set forth in Paragraph 8 of each of the Restricted Stock Unit Agreements granted to you in May 2013, May 2014 and May 2015 (collectively, the “RSU Agreements”) and the post-employment covenants set forth in any applicable equity incentive agreement; provided, however, that the Company’s sole remedy for violation of any such post-employment covenant shall be limited to the remedies set forth in such RSU Agreement or other applicable equity incentive agreement.  Paragraph 8 of each RSU Agreement expressly survives the termination of your employment and the terms of Paragraph 8 are incorporated herein.  You shall no longer be subject to any post-employment covenants set forth in any agreement between you and the Company other than described in Paragraph 8 of each RSU Agreement or in any other equity incentive agreement.

 

 

4.             LIMITATIONS

 

Nothing in this Separation Agreement shall be binding upon the parties to the extent it is void or unenforceable for any reason, including, without limitation, as a result of any law regulating competition or proscribing unlawful business practices; provided, however, that to the extent that any provision in this Separation Agreement could be modified to render it enforceable under applicable law, it shall be deemed so modified and enforced to the fullest extent allowed by law.

 

5.             WAIVER AND RELEASE

 

In exchange for the Severance Benefits the Company will provide you under this Separation Agreement, you release and forever discharge the Company, any and all past, present or future parents, subsidiaries and affiliates (the “Axiall Companies”), and any and all past, present, or future related persons or entities, including but not limited to the Company’s and the Axiall Companies’ officers, directors, managers, employees, shareholders, agents, attorneys, successors and assigns, specifically including without limitation Axiall Corporation (the “Released Parties”) from, any and all actions, claims, demands and damages, whether actual or potential, known or unknown, and specifically but not exclusively, which you may have or claim to have against the Released Parties as of the date you sign this Separation Agreement including, without limitation, any and all claims related or in any manner incidental to your employment with the Company or termination of that employment relationship (“claims”) which you or your heirs, successors, executors, or other representatives may have. All such claims are forever barred by this Separation Agreement regardless of the forum in which such claims might be brought, including, but not limited to, claims (a) under any federal, state or local law governing the employment relationship or its termination (including, but not limited to, Title VII of the Civil Rights Acts of 1964 and 1991; the Americans with Disabilities Act; the Family Medical Leave Act; the Employee Retirement Income Security Act of 1974, the Rehabilitation Act, the Worker Adjustment and Retraining Notification Act, any state, local, and other federal employment laws, and any amendments to any of the foregoing) and/or (b) under the common law for breach of contract, wrongful discharge, personal injuries and/or torts. You understand that this is a general waiver and release of all claims, known or unknown, that you may have against the Released Parties based on any act, omission, matter, cause or thing that occurred through the date of your execution of this Separation Agreement.

 

The above release does not waive claims (i) that may arise after you sign this Separation Agreement, (ii) which cannot be released by private agreement or (iii) to enforce the terms of this Separation Agreement, including the payment of the compensation and benefits specified in Exhibit A.

 

2

 

6.             COVENANT NOT TO SUE

 

You understand that this release will be final and binding.  You promise that you will not pursue any claim that you have settled by this release.  You further understand that nothing in this release generally prevents you from filing a charge or complaint with or from participating in an investigation or proceeding conducted by the EEOC, NLRB, or any other federal, state or local agency charged with the enforcement of any employment laws, although by signing this release you are waiving your right to individual relief based on claims asserted in such a charge or complaint.  The Company agrees that this Separation Agreement does not extend to, release or modify any rights to indemnification or advancement of expenses to which you are entitled from the Company or its insurers under the Company’s Certificate of Incorporation, Bylaws, or other corporate governing law or instruments.

 

7.             MATERIAL BREACH

 

You agree that in any breach of those provisions set forth in Paragraph 8 of the RSU Agreements, the Company will be entitled to equitable and/or injunctive relief and, because the damages for such a breach will be impossible or impractical to determine and will not therefore provide a full and adequate remedy, the Company or Axiall Companies will also be entitled to specific performance by you.  No amount owing to you under this Separation Agreement shall be subject to set-off or reduction by reason of any claims which the Company has or may have against you.  You will be entitled to recover actual damages and reasonable legal or other fees and expenses incurred by you to enforce the terms of this Separation Agreement if the Company breaches this Separation Agreement, including any unexcused late or non-payment of any amounts owed under this Separation Agreement, or any unexcused failure to provide any other benefits specified in this Separation Agreement; provided, however, that (a) the amount of such fees and expenses eligible for reimbursement in accordance with this sentence in any one calendar year shall not affect the amount of fees and expenses eligible for reimbursement in any other calendar year; (b) the reimbursement of an eligible taxable expense shall be made as soon as practicable but not later than December 31 of the year following the year in which the expense was incurred; and (c) your rights to reimbursement pursuant to this sentence shall not be subject to liquidation or exchange for another benefit.  Failure by either party to enforce any term of condition of this Separation Agreement at any time shall not preclude that party from enforcing that provision, or any other provision, at a later time.

 

8.             NO RE-EMPLOYMENT

 

You understand that your employment with the Company terminated on July 5, 2015.  You agree that you will not seek or accept employment with the Company, including assignment to or on behalf of the Company as an independent

 

3

 

contractor or through any third party, and the Company has no obligation to consider you for any future employment or assignment.

 

9.             REVIEW OF SEPARATION AGREEMENT

 

This Separation Agreement is important.  You are advised to review it carefully and consult an attorney before signing it, as well as any other professional whose advice you value, such as an accountant or financial advisor.  If you agree to the terms of this Separation Agreement, sign in the space below where your agreement is indicated.  The payments and benefits specified in this Separation Agreement are contingent on your signing this Separation Agreement no earlier than the Retirement Date.

 

10.          RETURN OF PROPERTY

 

You affirm that you have, or will within a reasonable time after the date of this Separation Agreement, returned to the Company all Company Property, as described more fully below.  “Company Property” includes company-owned motor vehicles, equipment, supplies and documents.  Such documents may include but are not limited to customer lists, financial statements, cost data, price lists, invoices, forms, passwords, electronic files and media, mailing lists, contracts, reports, manuals, personnel files, correspondence, business cards, drawings, employee lists or directories, lists of vendors, photographs, maps, surveys, and the like, including copies, notes or compilations made there from, whether such documents are embodied on “hard copies” or contained on computer disk or any other medium. You further agree that you will not retain any copies or duplicates of any such Company Property.

 

11.          NON-DISPARAGEMENT

 

You agree that you will not make or issue, or procure any person, firm, or entity to make or issue, any statement in any form, including written, oral and electronic communications of any kind, which conveys negative or adverse information concerning the Released Parties, the Company or Axiall Companies, their business, their actions or their officers or directors, to any person or entity, regardless of the truth or falsity of such statement.  The Company shall direct the officers and directors of the Company and Axiall Companies not to make or issue, or procure any person, firm, or entity to make or issue, any statement in any form, including written, oral and electronic communications of any kind, which conveys negative or adverse information about you. This paragraph does not apply to truthful testimony compelled by applicable law or legal process.

 

12.          NATURE OF AGREEMENT

 

By signing this Separation Agreement, you acknowledge that you are doing so freely, knowingly and voluntarily. You acknowledge that in signing this Separation Agreement you have relied only on the promises written in this Separation Agreement and not on any other promise made by the Company or

 

4

 

Axiall Companies.  This Separation Agreement is not, and will not be considered, an admission of liability or of a violation of any applicable contract, law, rule, regulation, or order of any kind.  This Separation Agreement contains the entire agreement between the Company, other Axiall Companies and you regarding your departure from the Company, provided that, except as set forth in Paragraph 3 of this Separation Agreement, all post-employment covenants contained in Paragraph 8 of the RSU Agreements or in any other equity incentive agreement, remain in full force and effect.  The Severance Benefits are in full satisfaction of all compensation arrangements between you and the Company and any severance benefits under the Company’s Executive Officer and Key Employee Severance Plan. This Separation Agreement may not be altered, modified, waived or amended except by a written document signed by a duly authorized representative of the Company and you.  Except as otherwise explicitly provided, this Separation Agreement will be interpreted and enforced in accordance with the laws of the state of Georgia.  The headings in this document are for reference only, and shall not in any way affect the meaning or interpretation of this Separation Agreement.  Nothing in this Separation Agreement shall be binding on the parties to the extent it is void or unenforceable.  The provisions of this Separation Agreement are severable.  If any provision of this Separation Agreement is ruled unenforceable or invalid, such ruling shall not affect the enforceability or validity of other provisions of this Separation Agreement.

 

5

 

IN WITNESS WHEREOF, you and the Company have executed this Separation Agreement as of the dates set forth below.

 

 

	
 
    	
PAUL D. CARRICO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Paul D. Carrico
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Date: July 5, 2015
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AXIALL CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Timothy Mann, Jr.
    
	
 
    	
 
    	
Name:
    	
Timothy Mann, Jr.
    
	
 
    	
 
    	
Title:
    	
Executive Vice President,
   General Counsel and Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Date: July 5, 2015
    

 

 

Exhibit A
  Severance and Other Benefits*

 

1.     Severance benefits under the Axiall Corporation Executive Officer and Key Employee Severance Plan (the “Severance Plan”), which severance benefits consist of the following (as further described in, and qualified by reference to, the Severance Plan):

 

·      A lump sum cash payment equal to 1 times your base salary (as in effect immediately prior to the Retirement Date) in an amount equal to $975,000.00, payable on February 1, 2016 (or, in the event of death prior to February 1, 2016, within thirty (30) days following your death);

 

·      A lump sum cash payment equal to 1 times your target payment under the Company’s short term cash incentive plan for the year in which the Retirement Date occurs in an amount equal to $1,072,500.00, payable on February 1, 2016 (or, in the event of death prior to February 1, 2016, within thirty (30) days following your death);

 

·      Monthly COBRA reimbursement payments as calculated under the Severance Plan until the earlier of (a) your eligibility for group health benefits through new employment or otherwise, or (b) 18 months after the Retirement Date, which amount shall not exceed $17,838.00; and

 

·      Payment for outplacement benefits provided by a Company-selected service group up to a maximum of $25,000.00 during the 12 consecutive months after the Retirement Date.

 

2.     Treatment of outstanding equity awards in accordance with the terms of the applicable equity incentive plans and related equity award agreements, with the termination treated as a retirement, including the following benefits (as further described in, and qualified by reference to, such plans and agreements):

 

·      Pro-rata vesting of the Performance Restricted Stock Units granted to you in May 2014 and May 2015 pursuant to the Company’s form of TSR-Based Performance Restricted Stock Unit Agreement, with the pro-rata amount (a) based on the number of full weeks from the date of grant until the Retirement Date relative to the total number of full weeks in the performance period, and (b) determined and contingent upon actual achievement of the applicable management objectives; and

 

·      Continued exercisability of the stock options that you hold immediately prior to your retirement until ten years after the date of grant.

 

3.     A special bonus in the amount of $500,000.00, payable within three (3) business days after execution of the Separation and Release Agreement.

 

4.     Accrued salary, payable within three (3) business days after execution of the Separation and Release Agreement, and vested benefits under the Axiall Corporation Deferred

 

* Except as otherwise expressly provided, all benefits to be paid or provided in the manner and at the time specified in the underlying plan or agreement, or as required under applicable law.

 

 

Compensation Plan, the Axiall Corporation Retirement Plan, and the Axiall Corporation 401(k) Retirement Savings Plan.

 

5.     Your spouse and other dependents will be entitled to elect continuation coverage under COBRA after you become entitled to benefits under title XVIII of the Social Security Act.

 

6.     Reimbursement of legal fees incurred by you in connection with your termination of employment and the negotiation of the Separation and Release Agreement, in an amount not to exceed $25,000.

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