Exhibit
10.1


 


SECURITIES
PURCHASE AGREEMENT


 


This Securities Purchase
Agreement (this “Agreement”) is dated as of December 27, 2017, between Biostage, Inc., a Delaware corporation
(the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors
and assigns, a “Purchaser” and collectively the “Purchasers”).


 


WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to an exemption from the registration requirements of Section
5 of the Securities Act of 1933, as amended (the “Securities Act”) contained in Section 4(a)(2) thereof and/or
Regulation D 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, for all purposes of this Agreement, 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 4.5.


 


“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 of Preferences, Rights and Limitations of the Preferred Stock as
filed with the Delaware Secretary of State.


 


“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.


 


“Closing
Date” means 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 and (ii)
the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived, but in no event later than
the Trading Day following the date hereof.


 


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


 


“Common
Stock” means the common stock of the Company, par value $0.01 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 Burns & Levinson LLP, with offices located at 125 Summer Street, Boston, MA 02110.


 


“Conversion Shares”
means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in accordance with the
terms hereof.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“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(n).


 


“MOU”
means that certain Memorandum of Understanding executed by and between Bin Zhao and the Company dated as of December 11, 2017.


 


“Per
Share Purchase Price” equals $2.00.


 


“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.


 


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


 


“Preferred Stock”
means the up to 3,108 shares of the Company’s Series D Convertible Preferred Stock issued hereunder having the rights, preferences
and privileges set forth in the Certificate of Designation, with a value equal to the Stated Value.


 


“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.


 


“Purchaser
Designee” means Bin Zhao or a Person designated by Bin Zhao subject to approval by the Company in its reasonable discretion.


 


“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.7.


 


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


 




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“Required
Minimum” means, as of any date, the maximum aggregate number of Shares, shares of Common Stock then issued or potentially
issuable in the future pursuant to the Transaction Documents, including any Shares, 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.


 


“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 Shares, the Preferred Stock, the Warrants, and the Underlying Shares.


 


“Securities
Act” shall have the meaning ascribed to such term in the recitals.


 


“Shares”
means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement.


 


“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.


 


“Subscription
Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants, and if applicable the Preferred
Stock, 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.


 


“Subsidiary”
means any subsidiary of the Company as set forth in the SEC Reports, and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.


 


“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, OTCQB or OTCQX (or any successors to any of the foregoing).


 


“Transaction
Documents” means this Agreement, the Certificate of Designation, the Warrants and any other documents or agreements executed
in connection with the transactions contemplated hereunder.


 


“Transfer
Agent” means Computershare, the current transfer agent of the Company, and any successor transfer agent of the Company.


 


“Underlying Shares”
means the Shares and shares of Common Stock issued and issuable upon conversion or redemption of the Preferred Stock and upon exercise
of the Warrants.


 




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“Warrants”
means, collectively, the warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants
shall have a term of exercise equal to five (5) years from the date of issuance, in the form of Exhibit A attached hereto.


 


“Warrant
Shares” means the shares of Common Stock, or to the extent applicable, Preferred Stock, issuable upon exercise of the
Warrants.


 




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ARTICLE II.

PURCHASE AND SALE


 


2.1           Closing.
On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchasers,
severally and not jointly, agree to purchase, up to an aggregate of $4,000,000 of Shares and/or 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 by pursuant to Section 2.2(a), as such $4,000,000 may be increased
in accordance with Section 4.16 hereof. Notwithstanding anything herein to the contrary, in the event that a Purchaser’s
Subscription Amount (together with such Purchaser’s Affiliates, and any Person acting as a group together with such Purchaser
or any of such Purchaser’s Affiliates) would cause such Purchaser’s beneficial ownership of the Common Stock to exceed
49.99% of the issued and outstanding shares of Common Stock, in lieu of Shares in excess of such amount, such Purchaser shall be
issued shares of Preferred Stock as determined pursuant to Section 2.2(a)(iv). The Company shall deliver to each Purchaser its
respective Shares and a Warrant 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.


 


2.2           Deliveries.


 


(a)            On
or prior to the Closing Date, the Company agrees to deliver or cause to be delivered to each Purchaser the following (which may
be waived, in whole or in part, but only in writing signed by each Purchaser):


 


(i)          this
Agreement duly executed by the Company;


 


(ii)         a
legal opinion of Company Counsel, in the form and substance reasonably satisfactory to the Purchasers;


 


(iii)        Shares registered in the name of such Purchaser equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase
Price, registered in the name of such Purchaser;


 


(iv)        to
each Purchaser that will receive any Preferred Stock in lieu of Shares pursuant to Section 2.1, shares of Preferred Stock registered
in the name of such Purchaser convertible into a number of shares of Common Stock (keeping in mind that one share of Preferred
Stock has a stated value of $1,000) equal to the difference between (A) such Purchaser’s Subscription Amount divided by the
Per Share Purchase Price and (B) the number of Shares otherwise issuable to such Purchaser that would cause such Purchaser’s
beneficial ownership to equal 49.99% of the issued and outstanding shares of Common Stock, 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 (and as applicable to the
extent provided in the Warrant, Preferred Stock) equal to 150% of the aggregate amount of such Purchaser’s Shares, and if
applicable, Conversion Shares, on the date hereof, with an exercise price equal to $2.00, subject to adjustment therein;


 


(vi)       the
Company’s Chief Executive Officer and Chief Financial Officer shall each have executed an irrevocable waiver of contractual
rights they respectively may have to compensation that is payable as a result of a change of control of the Company;


 


(vii)      the
Company shall have provided each Purchaser with the Company’s wire instructions;


 




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(viii)      updated
budget for the Company for 2018, which budgets have been approved by the Purchaser Designee (the “Budgets”); and


 


(ix)        the Chief
Financial Officer shall have delivered to each Purchaser a certificate certifying that the representations and warranties of the
Company contained herein are true and correct as of the Closing and that the conditions specified in this Section 2.2(a) have been
satisfied.


  


(b)          On
or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, as applicable, the following
(which may be waived, in whole or in part, but only in writing signed by the Company):


 


(i)          this
Agreement duly executed by such Purchaser; and


 


(ii)         such
Purchaser’s Subscription Amount, which shall be delivered to the Company up to four (4) business days following the date
of this Agreement.


 


ARTICLE III.

REPRESENTATIONS AND WARRANTIES


 


3.1           Representations
and Warranties of the Company. Company hereby represents and warrants as of the date hereof and as of the Closing Date to each
Purchaser as follows (unless as of a specific date therein, in which case they shall be accurate as of such date):


 


(a)            Subsidiaries.
The Company has no subsidiaries except for its international subsidiaries, Harvard Apparatus Regenerative Technology GmbH, a German
company, Harvard Apparatus Regenerative Technology AB, a Swedish company and Harvard Apparatus Regenerative Technology Limited,
a company organized under the laws of the United Kingdom, which are not individually or in the aggregate material to the business
or operations of the Company.


 


(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. 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.


 


(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 in connection herewith
or therewith other than in connection with the Required Approvals. 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) insofar as indemnification
and contribution provisions may be limited by applicable law.


 




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(d)           No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to
which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (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, or (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien 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) subject to the Required Approvals, 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 each of clauses (ii)
and (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 4.4 of this Agreement, (ii) application(s) to the applicable Trading Market for the listing
of the Underlying Shares for trading thereon in the time and manner required thereby and (iii) such filings as are required to
be made under applicable state securities laws (collectively, the “Required Approvals”).


  


(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
Underlying Shares, when issued in accordance with the terms of the Transaction Documents, will be 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.


 


(g)           Capitalization.
The capitalization of the Company is as set forth in the SEC Reports as of the time of filing of such SEC Reports. The Company
has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than issuances of
the Company’s equity securities to the Company’s officers, directors, employees or consultants in the ordinary course
of business, pursuant to the grant of equity awards or the exercise of employee stock options under the Company’s stock option
or equity incentive plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase
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. 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 a result of the purchase
and sale of the Securities, outstanding warrants issued in May 2016 and February 2017 as disclosed in the SEC reports, equity securities
of the Company issued to officers, directors, employees or consultants in the ordinary course of business as described above in
this clause (g) or as set forth in the Company’s definitive proxy statement filed with the SEC on March 24, 2017, there are
no outstanding options, 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 the capital stock of the Company or any Subsidiary, 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 or capital stock of the Company or any Subsidiary. The issuance and sale of the Securities will not obligate
the Company or any Subsidiary 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. The Company does not have any stock appreciation rights or “phantom stock” plans or agreements
or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued,
fully paid and nonassessable, have been issued in 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.


 




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(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 Section 13(a) or 15(d) of the Exchange Act 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, except with respect to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2017, 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 Exchange Act, 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 Company has never been an issuer subject to Rule 144(i) under the Securities Act. 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.


 


(i)             Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest financial statements included within
the SEC Reports: (i) and except as disclosed in the SEC Reports, 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) and except as disclosed in the SEC Reports, the
Company has not incurred any 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 existing Company stock option, equity incentive
or stock purchase plans. The Company does not have pending before the Commission any request for confidential treatment of information.


 




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(j)             Litigation.
Except as disclosed 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 disclosed 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. 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. 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.


  


(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 of
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 the case of
clause (iii) as could not have or reasonably be expected to result in a Material Adverse Effect.


 


(m)          Environmental
Laws. The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating to pollution
or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or subsurface
strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants,
or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses, notices or notice
letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental Laws”);
(ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or approval where
in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect.


 




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(n)           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
(“Permits”) except where the failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Permit.


 


(o)           Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them 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 therefor 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.


 


(p)           Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights necessary or required for use in connection with their respective businesses as described in the SEC Reports
(collectively, the “Intellectual Property Rights”). None of, and neither the Company nor any Subsidiary has
received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned,
or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company
nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written
notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any
Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement
by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their intellectual properties.


 


(q)           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, including,
but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. 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.


 


(r)            Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, 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 $120,000 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.


 




    	 	10	 



     


    

 


(s)           Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in 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.


 


(t)            Certain
Fees. No brokerage or finder’s fees or commissions 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 fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection
with the transactions contemplated by the Transaction Documents.


 


(u)           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.


 


(v)           Registration
Rights. Except for the Registration Rights Agreement between the Company and Aspire Capital Fund, LLC, dated as of December
15, 2015, filed as an exhibit to the Company’s Current Report on Form 8-K on December 15, 2015, no Person 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.


 


(w)           Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. Except as disclosed in the SEC Reports, the Company has not, in the 12 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. The Common Stock is currently eligible for electronic
transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment
of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic
transfer.


 




    	 	11	 



     


    

 


(x)            Application
of Takeover Protections. The Company and the Board of Directors have taken 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.


 


(y)           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.


 


(z)            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.


  


(aa)          Accountants.
The Company’s accounting firm is KPMG LLP. 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 December 31, 2017.


 


(bb)         Acknowledgement
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.


 


(cc)           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.


 




    	 	12	 



     


    

 


(dd)         FDA.
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 or on behalf of the Company or any of its Subsidiaries (each such product,
a “Pharmaceutical Product”), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed,
sold and/or marketed by the Company or on behalf of in compliance in all material respects 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. 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 Pharmaceutical 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 Pharmaceutical
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. The properties, business and operations of the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of the FDA.  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.


  


(ee)         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 or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”).


 


(ff)           U.S.
Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s
request.


 


(gg)         Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act
of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly
or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or
more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.


 


(hh)         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 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.


 


(ii)        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.


 


(jj)        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 Shares, the shares of Preferred Stock,
the Warrants and the Underlying Shares for sale only to the Purchasers.


 




    	 	13	 



     


    

 


(kk)     No
Disqualification Events.  With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under
the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under
the Securities Act) connected with the Company in any capacity at the time of sale (each, an "Issuer Covered Person"
and, together, "Issuer Covered Persons") is subject to any of the "Bad Actor" disqualifications described
in Rule 506(d)(1)(i) to (viii) under the Securities Act (a "Disqualification Event"), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person
is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under
Rule 506(e).


 


(ll)       Termination
of Rights Plan. The Company has taken all actions necessary to terminate the Company’s Shareholder Rights Agreement,
dated as of October 31, 2013, as amended.


 


(mm)   The
officers of the Company, in connection with the communications or negotiations of MOU and Transaction Documents related to this
private placement, have not made any untrue statement of a material fact and have not omitted any material fact necessary to make
the said officers’ statements contained therein misleading.


 


(nn)     The foregoing
representations and warranties set forth in this Section 3.1 shall be deemed renewed by the Company at the Closing as if made at
such time.


   


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, in which case they
shall be accurate as of such date):


 


(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 this Agreement and each
of the other 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) insofar as indemnification and contribution provisions may be limited by applicable law.


 




    	 	14	 



     


    

 


(b)           Understandings
or Arrangements. Such Purchaser is acquiring the Securities as principal for his, her or its own account and has no direct
or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities
(this representation and warranty not limiting such Purchaser’s right to sell the Securities in compliance with applicable
federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. 
Such Purchaser understands that the Shares, the shares of Preferred Stock, the Warrants and the Underlying Shares are “restricted
securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring
such 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 such Securities pursuant to a registration statement or otherwise in compliance with applicable federal and state
securities laws).


 


(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 of converts any shares of Preferred Stock into Common Stock, it will be an “accredited investor”
as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.


 


(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)           Access
to Information. Such Purchaser acknowledges that it has had the opportunity to review the Transaction Documents (including
all exhibits and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering
of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its
financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate
its investment; 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 the investment.


 


(f)           Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not,
nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any
purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that
such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting
forth the material pricing terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.
Other than to other Persons party to this Agreement or to such Purchaser’s representatives, including, without limitation,
its officers, directors, partners, legal and other advisors, employees, agents and Affiliates, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty,
or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow
in order to effect Short Sales or similar transactions in the future.


 


(g)          Sufficiency
of Funds. Each Purchaser has sufficient cash on hand to enable it to make payment of the Subscription Amount.



 


The Company acknowledges and agrees that
the representations contained in this 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.


 




    	 	15	 



     


    

 


ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES


 


4.1               Removal
of Legends.


 



 


(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
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.


 


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


 


[NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAS] [THIS SECURITY 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. THIS
SECURITY [AND THE SECURITIES ISSUABLE UPON EXERCISE 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 pledged or secured 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.


 


(c)        Certificates
evidencing the Shares or the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof):
(i) while a registration statement covering the resale of such security is effective under the Securities Act, or (ii) following
any sale of such Securities pursuant to Rule 144, or (iii) if such Securities are eligible for sale under Rule 144, without the
requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Securities
and without volume or manner-of-sale restrictions, or (iv) 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 “Effective
Date”). 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 portion of such Securities
is exercised at a time when there is an effective registration statement to cover the resale of such Securities, or if such Securities
may be sold under Rule 144 and the Company is then in compliance with the current public information required under Rule 144, or
if such Securities may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Securities and without volume or manner-of-sale restrictions 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 Securities shall be issued free of all legends. The Company agrees that following
the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than three
Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing such Securities,
as applicable, issued with a restrictive legend (such third 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.
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.


 




    	 	16	 



     


    

 


4.2               Furnishing
of Information. Until no Purchaser owns Securities, the Company covenants 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.


 


4.3               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 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.


 


4.4               Securities
Laws Disclosure; Publicity. The Company shall by 9:00 a.m. (New York City time) on the Trading Day immediately following the
date hereof, file a Current Report on Form 8-K, including the Transaction Documents as exhibits thereto, with the Commission within
the time required by the Exchange Act. Effective upon the issuance of such press release, the Company acknowledges and agrees that
any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and any of the Purchasers
or any of their Affiliates on the other hand, shall terminate. The Company and each Purchaser shall consult with each other in
issuing any other 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.


 


4.5               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 or other acquisition of Securities
including purchases on the open market. The Company agrees not to adopt a poison pill or shareholder rights plan or similar anti-takeover
plan or arrangement without the prior written consent of the Purchaser Designee.


 


4.6               Conversion
and Exercise Procedures. The terms and provisions expressly described in each Warrant and the Certificate of Designation, including
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 (except for mandatory conversions of the Preferred Stock as set forth in the Certificate of Designation). Without limiting
the preceding sentences, no ink-original Notice of Exercise or Notice of Conversion shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise or Notice of Conversion form be required 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, properly submitted in accordance with the respective terms thereof, and in each
such case shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction
Documents.


 




    	 	17	 



     


    

 


4.7               Indemnification
of Purchasers. Subject to the provisions of this Section 4.7, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, managers, 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, managers, 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 the
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 (provided that the failure
to provide such notice shall only affect the Company’s obligations under this Section 4.7 if and only to the extent that
the Company is prejudiced by the failure to provide such notice) , 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 (plus any reasonably necessary local 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 any of the representations, warranties, covenants
or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required
by this Section 4.7 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.


 


4.8               Reservation
of Common Stock. As of the Closing Date the Company will have reserved, and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the
Company to issue Shares and shares of Preferred Stock pursuant to this Agreement, Warrant Shares pursuant to any exercise of the
Warrants and Conversion Shares pursuant to the conversion of any shares of Preferred Stock.


 


4.9               Listing
of Common Stock. The Company hereby agrees to use best efforts to maintain the quotation of the Common Stock on the Trading
Market on which it is currently listed, and prior to or concurrently with the Closing, the Company shall apply to quote all of
the Shares and Underlying Shares on such Trading Market and promptly secure the quotation of all of the Shares and Underlying Shares
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 Shares and Underlying Shares, and will take such other action as is
necessary to cause all of the Shares and Underlying Shares to be listed or quoted on such other Trading Market as promptly as possible.


 




    	 	18	 



     


    

 


4.10             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 the Transaction Documents unless the same consideration
is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate
right granted to each 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.


 


4.11             Certain
Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until
such time as the transactions contemplated by this Agreement, and any other material non-public information that may be in the
Purchaser’s possession, are publicly disclosed by the Company, including pursuant to the initial press release as described
in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information
included in the disclosure schedules attached hereto, and such other information, if any.  Notwithstanding the foregoing and
notwithstanding anything contained in this Agreement to the contrary, the Purchaser expressly acknowledges and agrees that Purchaser
will not engage in effecting transactions in any securities of the Company unless such transactions are in compliance with all
applicable laws, including without limitation, federal and state securities laws and regulations.


 


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             Board
Composition. As soon as is practicable following the Closing, the Company agrees to appoint from time to time persons nominated
by the Purchaser Designee at the direction of the Purchasers, which initially shall be limited to two persons, but in the event
that that Purchasers own more than 50% in the aggregate of the outstanding Common Stock of the Company (assuming issuance of all
Conversion Shares), then such number of persons to be nominated shall be fixed at and limited to the minimum amount that ensures
that the designees of the Purchasers hereunder constitute a majority of the members of the Board of Directors (collectively, the
“Board Designees”) to the Board of Directors and agrees to cause to be created vacancies for such purpose; provided,
however, that no such appointments shall be required unless each such Board Designee shall be qualified and suitable to
serve as a member of the Board of Directors under all applicable legal, regulatory and stock market requirements; and provided,
further, that no such appointments shall be required if the Purchasers cease to own 10% or more in the aggregate of the outstanding
Common Stock of the Company (assuming issuance of all Underlying Shares). As soon as is reasonably practicable following the Closing,
the Company agrees to appoint Bin Zhao as one of the two initial Board Designees, and agrees to cause to be created vacancies for
such purpose. The Company agrees that Bin Zhao may visit the company or participate in any company meetings, including but not
limited to the Board meetings with up to two assistants at her choice, in addition to Shunfu Hu, without the Company’s prior
approval. The Company agrees to use reasonable best efforts to maintain director’s and officer’s liability insurance
with coverage equal to or greater than the Company’s existing insurance.


 


4.14             Future
Stockholder Meetings. At each meeting of stockholders of the Company at which directors are nominated and elected, in the event
that the class of directors nominated at such meeting includes any Board Designee, the Company agrees to nominate for election
at any such meeting, the respective Board Designees that Purchasers are entitled to designate pursuant to Section 4.13 and to take
all necessary action to support the election of each such Board Designee and to oppose any challenges to any such Board Designee.
If at any meeting of Stockholders of the Company, a Board Designee fails to receive sufficient votes to be elected, the Company
shall hold a meeting of stockholders as soon as practicable after the last meeting for the purpose of electing an alternative Board
Designee or alternative Board Designees designated by the Purchasers. Each Board Designee nominated under this Section 4.14 shall
satisfy each of the conditions set forth in Section 4.13 above.


 




    	 	19	 



     


    

 


4.15             Expenditures,
Financial Updates and New Hire.


 


(a)               Without
the prior written consent of the Purchaser Designee, in its sole discretion, the Company shall not make any material expenditure
that is not set forth in the Budgets, or make expenditures for items in amounts that are materially in excess of the amount set
forth in such Budgets (materiality being defined as 0.2% of the total amount of such annual Budget). Following the Closing, Biostage
shall meet at least once every two (2) weeks in person or by telephone with Purchaser Designee and its representatives, unless
otherwise agreed to by Purchaser Designee, to provide updates to the Investors relating to the Company’s financial and development
status.


 


(b)               Following
the Closing, promptly following the request of the Purchaser Designee, the Company shall hire one employee as designated in writing
by the Purchaser Designee in connection with the Closing to become part of the Company’s management team (the “New
Hire”) so long as the Purchasers collectively maintain at least 10% in the aggregate of the outstanding Common Stock of the
Company (assuming issuance of all Underlying Shares), subject to a customary offer letter and background and related diligence
checks.


 


4.16               Additional
Investors. Notwithstanding anything to the contrary contained herein, the Purchasers acknowledge and agree that other parties
identified by the Company following the execution of the MOU, but before the execution this Agreement, may participate in the this
private placement for aggregate gross proceeds of up to $2.0 million on the same financial terms as the Purchasers and with the
same warrant coverage, and that the closing(s) with respect to such additional parties may occur after the Closing, provided that
with respect to any such parties that are not collaborators of the Company with respect to the development of product candidates
(such as hospitals, medical institutions, or their affiliates), such parties must close and provide the funding on such participation
within three (3) business days of the Closing. In the event any such other parties participate in this private placement, the Purchasers
may elect, at such other closing or within fourteen (14) days of such other closing, to purchase additional shares of common stock,
Preferred Stock and Warrants, in each case on the same terms as the other securities purchased by the investors in the other transaction,
to extent necessary to maintain the same post-transaction percentage of voting power that the Purchasers would have received if
no such additional parties participated in this private placement.


 


ARTICLE V.

MISCELLANEOUS


 


5.1               Fees
and Expenses. Except as expressly set forth in the Transaction Documents, 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 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.


 


5.2               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 (including the MOU), which the parties acknowledge have been merged into such documents,
exhibits and schedules. In particular, the Company hereby agrees that following the Closing, the individual obligations of Bin
Zhao with respect the MOU shall be deemed satisfied in full.


 


5.3               Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile or email attachment at the facsimile number or email address as set forth on the signature pages attached hereto
at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile or email attachment at the facsimile number or email address as set forth on
the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight
courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices
and communications shall be as set forth on the signature pages attached hereto. To the extent that any notice provided pursuant
to any Transaction Document constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.


 




    	 	20	 



     


    

 


5.4               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 Purchasers which purchased at least a majority in interest of the Shares and shares
of Preferred Stock based on the initial Subscription Amounts hereunder or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adversely
impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers)
shall also be required. 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. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations
of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent
of such adversely affected Purchaser. Any amendment effected in accordance with accordance with this Section 5.4 shall be binding
upon each Purchaser and holder of Securities and the Company.


 


5.5               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.


 


5.6               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). 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.”


 


5.7               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 4.7.


 


5.8               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 Commonwealth of Massachusetts, 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 Commonwealth of Massachusetts. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the Commonwealth of Massachusetts 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 or Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such 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 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 any 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 4.7, the prevailing party in such Action or Proceeding shall be reimbursed by the non-prevailing party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action
or Proceeding.


 




    	 	21	 



     


    

 


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


 


5.10              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.


 


5.11             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.


 


5.12             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 Warrant or converts Preferred Stock and the Company
does not timely perform its related obligations in connection with such exercise within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any such relevant
exercise 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 an exercise of a Warrant or conversion of Preferred Stock, the applicable Purchaser shall be
required to return any shares of Common Stock subject to any such rescinded exercise notice concurrently with the return to such
Purchaser of the aggregate exercise price paid to the Company for such shares (in the case of a Warrant) and the restoration of
such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant or Preferred Stock (including, issuance
of a replacement warrant certificate or Preferred Stock certificate evidencing such restored right).


 


5.13              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 provide a customary indemnity associated with the issuance of such replacement Securities which indemnity by the applicant
the Company agrees shall be sufficient.


 


5.14              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, including but not limited to the obligations in Section 4.15 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 and agree that
it shall not be necessary to post a bond or other security.


 




    	 	22	 



     


    

 


5.15             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.


  


5.16             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.


 


5.17             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 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.


 


(Signature Pages Follow)


 




    	 	23	 



     


    

 


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.


 


	Biostage Inc.	 	Address for Notice:
	 	 	 
	By:	 /s/ James McGorry	 	84 October Hill Road
	 	Name:  James McGorry	 	Holliston, MA 01746
	 	Title:    Chief Executive Officer	 	Attention: James McGorry
	 	 	 	 
	With a copy to (which shall not constitute notice):	 	Fax: (774) 233-7302
	 	 	 
	Burns & Levinson LLP	 	 
	 	 	 
	125 Summer Street	 	 
	 	 	 
	Boston, MA 02110	 	 
	 	 	 
	Attention: Josef B. Volman, Esq.	 	 
	 	 	 
	Fax: (617) 345-3299	 	 


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 




    	 	24	 



     


    

 


[PURCHASER SIGNATURE
PAGES TO BSTG SECURITIES PURCHASE AGREEMENT]


 


IN WITNESS WHEREOF,
the undersigned has caused this Securities Purchase Agreement to be duly executed by its authorized signatory as of the date first
indicated above.


 


Name of Purchaser: DST Capital LLC


 


	Signature of Authorized Signatory of Purchaser:	/s/ Bin Zhao	 


 


Name of Authorized Signatory: Bin Zhao


 


Title of Authorized Signatory: Owner


 


Email Address of Authorized Signatory:


 


Facsimile Number of Authorized Signatory:


 


Address for Notice to Purchaser:


 


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


 


Law Offices of Ye Edward Huang


60 Walnut Street, 4th Floor


Wellesley, MA 02481


Attention: Ye Edward Huang, Esq.


Fax: (508) 983-6688


 


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


 


Subscription Amount: $4,000,000


 


Shares of Common Stock: 500,000


 


Shares of Preferred Stock: 3,000 (convertible into 1,500,000
Shares of Common Stock)


 


Warrant Shares: 3,000,000


 




    	 	25	 



     


    

 


[PURCHASER SIGNATURE
PAGES TO BSTG SECURITIES PURCHASE AGREEMENT]


 


IN WITNESS WHEREOF,
the undersigned has duly executed this Securities Purchase Agreement as of the date first indicated above.


 


Name of Purchaser: Jing Chen


 


	Signature of Purchaser:	/s/ Jing Chen	 


 


Email Address of Purchaser:


 


Facsimile Number of Purchaser:


 


Address for Notice to Purchaser:


 


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


 


Law Offices of Ye Edward Huang


60 Walnut Street, 4th Floor


Wellesley, MA 02481


Attention: Ye Edward Huang, Esq.


Fax: (508) 983-6688


 


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


 


Subscription Amount: $72,000


 


Shares of Common Stock: 9,000


 


Shares of Preferred Stock: 54 (convertible into 27,000 Shares
of Common Stock)


 


Warrant Shares: 54,000




    	 	26	 



     


    

 


[PURCHASER SIGNATURE
PAGES TO BSTG SECURITIES PURCHASE AGREEMENT]


 


IN WITNESS WHEREOF,
the undersigned has duly executed this Securities Purchase Agreement as of the date first indicated above.


 


Name of Purchaser: Jiong Shao


 


	Signature of Purchaser:	/s/ Jiong Shao	 


 


Email Address of Purchaser:


 


Facsimile Number of Purchaser:


 


Address for Notice to Purchaser:


 


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


 


Law Offices of Ye Edward Huang


60 Walnut Street, 4th Floor


Wellesley, MA 02481


Attention: Ye Edward Huang, Esq.


Fax: (508) 983-6688


 


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


 


Subscription Amount: $52,000


 


Shares of Common Stock: 6,500


 


 


Shares of Preferred Stock: 39 (convertible into 19,500 Shares
of Common Stock)


 


Warrant Shares: 39,000




    	 	27	 



     


    

 


[PURCHASER SIGNATURE
PAGES TO BSTG SECURITIES PURCHASE AGREEMENT]


 


IN WITNESS WHEREOF,
the undersigned has caused this Securities Purchase Agreement to be duly executed by its authorized signatory as of the date first
indicated above.


 


Name of Purchaser: Polyvia LLC


 


	Signature of Authorized Signatory of Purchaser:	/s/ Wenxiang Huang	 


 


Name of Authorized Signatory: Wenxiang
Huang


 


Title of Authorized Signatory: Manager/Director


 


Email Address of Authorized Signatory:


 


Facsimile Number of Authorized Signatory:


 


Address for Notice to Purchaser:


 


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


 


Law Offices of Ye Edward Huang


60 Walnut Street, 4th Floor


Wellesley, MA 02481


Attention: Ye Edward Huang, Esq.


Fax: (508) 983-6688


 


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


 


Subscription Amount: $20,000


 


Shares of Common Stock: 2,500


 


Shares of Preferred Stock: 15 (convertible into 7,500 Shares
of Common Stock)


 


Warrant Shares: 15,000


 




    	 	28