Document:

AMENDED AND RESTATED SECURITIES
PURCHASE AGREEMENT

 

THIS
AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of the 20th
day of June, 2013, by and between BeesFree, Inc., a Nevada corporation (the “Company”), BeesFree USA, Inc.,
a Delaware corporation (“BeesFree USA”), and the investors listed on the Schedule of Investors attached hereto
(each an “Investor” and collectively, the “Investors”).

 

WITNESSETH:

 

WHEREAS, the Company
desires to offer and sell to the Investors (the “Offering”), and the Investors desire to purchase from the Company,
(a) 15% senior secured convertible promissory notes in the aggregate principal amount of up to a maximum of $2,520,000 (the “Notes”),
in the form attached as Exhibit A hereto, and (b) a warrant (the “Warrant”), in the form attached as
Exhibit B hereto, to purchase 1,050,000 shares of the Company’s common stock, $0.001 par
value per share (the “Common Stock”) for each $105,000 invested, with an exercise price equal to $1.50
per share; and

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

 

1Purchase and Sale
of Notes and Warrants.

 

1.1           Issuance
and Sale of Notes and Warrants. Subject to the terms and conditions of this Agreement, the Investors severally and not jointly
agree to purchase at the Closing (as hereafter defined), and the Company agrees to issue and sell to the Investors at the Closing,
the amount of Notes and the Warrants (sometimes collectively referred to herein as the “Securities”) set forth
opposite each Investor’s name on the Omnibus Signature Page hereto, for an aggregate purchase price of up to a maximum of
Two Million Five Hundred Twenty Thousand ($2,520,000) Dollars (the “Offering Amount”).

 

1.2           Payment.  Each
Investor is enclosing with its delivery of its Omnibus Signature Page hereto a check payable to, or will promptly make a wire transfer
payment to, BeesFree, Inc. in the full amount of the purchase price of the Notes and Warrants being subscribed for (the “Purchase
Price”).  Wire instructions are as follows:

 

Bank Name: Bank of America, N.A.

Acct.
Name: BeesFree, Inc.

ABA Number:
026009593

A/C Number:483043536352

FBO: Investor Name

Social
Security Number

Address

 

    	 

    	 

    

 

All funds tendered
by Investors will be held in a segregated, non-interest bearing account in the Company’s name at Bank of America, N.A. It
is contemplated that the funds will be released at such time (or promptly thereafter) as all conditions to Closing as set forth
in this Agreement have been satisfied (or otherwise waived) and a Closing is consummated. In the event a Closing does not occur,
the Company will refund all subscription funds, without interest accrued thereon or deduction therefrom, and will return the documents
previously delivered to each Investor, and such documents will be terminated and of no force or effect.   Each Investor
understands and acknowledges that there is no minimum amount of funds that needs to be raised to effectuate a Closing hereunder.

 

1.3           Closing.

 

(a)          First
Closing. Subject to the terms and conditions set forth in this Agreement, the Company shall
issue and sell to each Investor, and each Investor shall, severally and not jointly, purchase from the Company at the first closing,
such principal amount of Notes as set forth on the signature pages attached hereto (and applicable number of Warrants), which will
be reflected opposite such Investor’s name on the Schedule of Investors attached hereto (the “First Closing”).
The date of the First Closing was March 13, 2013 and is hereinafter referred to as the “First Closing Date.”

 

(b)          Subsequent
Closing(s). The Company agrees to issue and sell to each Investor listed on the Subsequent Closing Schedule of Investors, and
each Investor agrees, severally and not jointly, to purchase from the Company on such Subsequent Closing Date such principal amount
of Notes as set forth on the signature pages attached hereto (and applicable number of Warrants), which will be reflected opposite
such Investor’s name on Schedule of Investors attached hereto (a “Subsequent Closing”). There may be more
than one Subsequent Closing. The date of any Subsequent Closing is hereinafter referred to as a “Subsequent Closing Date”).
Notwithstanding the foregoing, the maximum principal amount of Notes to be sold at the First Closing and all Subsequent Closings
shall be $2,520,000 and the date upon which the final Note(s) are sold hereunder shall be referred to as the “Final Closing
Date”.

 

The First Closing and
any applicable Subsequent Closings are each referred to in this Agreement as a “Closing.” The First Closing
Date, any Subsequent Closing Dates and the Final Closing Date are sometimes referred to herein as a “Closing Date.”

 

(c)          Closing
Location. All Closings shall occur on or prior to June 28, 2013, which date may be extended by the Company in its sole discretion,
at the offices of the Company, 2101 Vista Parkway, Suite 122, West Palm Beach, Florida 334111 or remotely via the exchange
of documents and signatures.

 

(d)          At
the Closing, the Company shall deliver the Notes and the Warrants to the Investors against payment of the Purchase Price to the
Company as described above, along with delivery by the Investors of an Accredited Investor Certification and Investor Profile to
the Company provided to Investors separately.

 

(e)          The
Closing is expressly conditioned upon the Company, BeesFree USA and the Investors having entered into the Security Agreement in
the form attached hereto as Exhibit C.

 

1.4           Additional
Definitions. For purposes of this Agreement, certain capitalized terms are defined under Appendix A.

 

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2Representations
and Warranties of the Company. The Company hereby represents and warrants to the Investors, except as set forth on any Schedule
attached hereto, the following:

 

2.1           Due
Incorporation. The Company and each Subsidiary is a corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with all requisite corporate power to own its properties and to carry on its
business as presently conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing
in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other
than those jurisdictions in which the failure to so qualify would not have a Material Adverse Effect (as defined herein). For purposes
of this Agreement, a “Material Adverse Effect” shall mean a material adverse effect on the financial condition,
results of operations, prospects, properties or business of the Company and its Subsidiaries taken as a whole. As of the Closing
Date, all of the Company’s Subsidiaries and the Company’s other ownership interests therein are set forth on Schedule
2.1. The Company represents that it owns all of the equity of the Subsidiaries and rights to receive equity of the Subsidiaries
set forth on Schedule 2.1, free and clear of all liens, encumbrances and claims, except as set forth on Schedule
2.1. No person or entity other than the Company has the right to receive any equity interest in the Subsidiaries. Other
than as set forth on Schedule 2.1, the Company further represents that neither the Company nor the Subsidiaries have
been known by any other names for the five (5) years preceding the date of this Agreement.

 

2.2           Outstanding
Stock. All issued and outstanding shares of capital stock and equity interests in the Company have been duly authorized and
validly issued and are fully paid and non-assessable.

 

2.3           Authority;
Enforceability. This Agreement, the Notes, Warrants, Security Agreement and any other agreements delivered or required to be
delivered together with or pursuant to this Agreement or in connection herewith (collectively, the “Transaction Documents”)
have been duly authorized, executed and delivered by the Company and/or the Subsidiaries, as the case may be, and are valid and
binding agreements of the Company and/or the Subsidiaries, as the case may be, enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors’ rights generally and to general principles of equity. The Company and/or the Subsidiaries, as the
case may be, have full corporate power and authority necessary to enter into and deliver the Transaction Documents and to perform
their obligations thereunder.

 

2.4           Capitalization
and Additional Issuances. The authorized and outstanding capital stock of the Company and the Subsidiaries on a fully diluted
basis and all outstanding rights to acquire or receive, directly or indirectly, any equity of the Company and/or the Subsidiaries
as of the date of this Agreement and the Closing Date (not including the Securities) are set forth on Schedule 2.4.
Except as set forth on Schedule 2.4, there are no options, warrants or rights to subscribe to securities, rights,
understandings or obligations convertible into or exchangeable for or granting any right to subscribe for any shares of capital
stock or other equity interest of the Company or any of the Subsidiaries. Except as set forth on Schedule 2.4, there
are no outstanding agreements or preemptive or similar rights affecting the Company’s Common Stock or equity.

 

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2.5           Consents.
No consent, approval, authorization or order of any court, governmental agency or body or arbitrator having jurisdiction over the
Company, the Subsidiaries or any of their Affiliates, any Principal Market or the Company’s stockholders is required for
the execution by the Company of the Transaction Documents and compliance and performance by the Company and the Subsidiaries of
their respective obligations under the Transaction Documents, including, without limitation, the issuance and sale of the Securities,
other than (i) the filings required pursuant to this Agreement, and (ii) the filing of Form D with the Commission and such filings
as are required to be made under applicable state securities laws. The Transaction Documents and the Company’s performance
of its obligations thereunder have been unanimously approved by the Company’s board of directors in accordance with the Company’s
articles of incorporation and applicable law. Any such qualifications and filings will, in the case of qualifications, be effective
upon Closing, and will, in the case of filings, be made within the time prescribed by law.

 

2.6           No
Violation or Conflict. Conditioned upon the representations and warranties of Investors in Section 3 hereof being materially
true and correct, neither the issuance nor the sale of the Securities nor the performance of the Company’s obligations under
this Agreement and the other Transaction Documents by the Company, will:

 

(a)          violate,
conflict with, result in a breach of, or constitute a default (or an event which with the giving of notice or the lapse of time
or both would be reasonably likely to constitute a default) under (A) the articles of incorporation or bylaws of the Company, (B)
to the Company’s knowledge, any decree, judgment, order, law, treaty, rule, regulation or determination applicable to the
Company of any court, governmental agency or body, or arbitrator having jurisdiction over the Company or over the properties or
assets of the Company or any of its Affiliates, (C) the terms of any bond, debenture, note or any other evidence of indebtedness,
or any agreement, stock option or other similar plan, indenture, lease, mortgage, deed of trust or other instrument to which the
Company or any of its Affiliates is a party, by which the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject or (D) the terms of any “lock-up” or similar provision of any underwriting
or similar agreement to which the Company, or any of its Affiliates is a party, except the violation, conflict, breach or default
of which would not have a Material Adverse Effect; or

 

(b)          result
in the creation or imposition of any lien, charge or encumbrance upon the Securities or any of the assets of the Company or any
of its Affiliates, except in favor of each Investor as described herein; or

 

(c)          except
as set forth in Schedule 2.6 hereto, result in the activation of any rights of first refusal, participation rights,
preemptive rights, anti-dilution rights or a reset or repricing of any debt, equity or security instrument of any creditor or equity
holder of the Company, or the holder of the right to receive any debt, equity or security instrument of the Company, nor result
in the acceleration of the due date of any obligation of the Company; or

 

(d)          except
as set forth in Schedule 2.6 hereto, result in the triggering of any piggy-back or other registration rights of any
person or entity holding securities of the Company or having the right to receive securities of the Company.

 

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2.7           The
Securities. The Securities upon issuance:

 

(a)  are, or will be, free and clear of any security interests, liens, claims or other encumbrances, subject only to restrictions upon
transfer under the Securities Act and any applicable state securities laws;

 

(b)
have been, or will be, duly and validly authorized and on the dates of issuance of the Notes and Warrants, the Conversion Shares
upon conversion of the Notes, and the Warrant Shares upon exercise of the Warrants, and such Notes 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, and the Warrants, Conversion Shares and Warrant Shares will be duly and validly issued,
fully paid and non-assessable;

 

(c)  will not have been issued or sold in violation of any preemptive or other similar rights of the holders of any securities of the
Company or rights to acquire securities or debt of the Company;

 

(d)        will not subject
the holders thereof to personal liability by reason of being such holders; and

 

(e)         conditioned
upon the representations and warranties of the Investors as set forth in Section 3 hereof being materially true and correct, will
not result in a violation of Section 5 under the Securities Act.

 

2.8           Litigation.
There is no pending or, to the best knowledge of the Company, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company, or any of its Affiliates that would adversely
affect the execution by the Company or the complete and timely performance by the Company of its obligations under the Transaction
Documents. Except as disclosed in the Reports, there is no pending or, to the best knowledge of the Company, basis for or threatened
action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over
the Company, or any of its Affiliates which litigation if adversely determined would have a Material Adverse Effect.

 

2.9           No
Market Manipulation. The Company and its Affiliates have not taken, and will not take, directly or indirectly, any action designed
to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Common Stock
to facilitate the sale or resale of the Securities or affect the price at which the Securities may be issued or resold.

 

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2.10         Information
Concerning Company. As of the date of this Agreement and the Closing Date, the Reports and Other Written Information contain
and will contain all material information relating to the Company and its operations and financial condition as of their respective
dates which information is required to be disclosed therein. Since December 31, 2011, and except as disclosed in the Reports or
modified in the Reports and Other Written Information or in the Schedules hereto, there has been no Material Adverse Effect relating
to the Company’s business, financial condition or affairs. The Reports and Other Written Information including the financial
statements included therein do not contain any untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, taken as a whole, not misleading in light of the circumstances and
when made.

 

2.11         Defaults.
The Company is not in material violation of its articles of incorporation or bylaws. The Company is (i) not in default under or
in violation of any other material agreement or instrument to which it is a party or by which it or any of its properties are bound
or affected, which default or violation would have a Material Adverse Effect, (ii) not in default with respect to any order of
any court, arbitrator or governmental body or subject to or party to any order of any court or governmental authority arising out
of any action, suit or proceeding under any statute or other law respecting antitrust, monopoly, restraint of trade, unfair competition
or similar matters which default would have a Material Adverse Effect, or (iii) not in violation of any statute, rule or regulation
of any governmental authority which violation would have a Material Adverse Effect.

 

2.12         No
Integrated Offering. Neither the Company, nor any of its Affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales of any security of the Company nor solicited any offers to buy any security of the Company
under circumstances that would cause the offer of the Securities pursuant to this Agreement to be integrated with prior offerings
by the Company for purposes of the Securities Act or any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of the OTC Market. No prior offering will impair the exemptions relied upon in this Offering or
the Company’s ability to timely comply with its obligations hereunder. Neither the Company nor any of its Affiliates will
take any action or suffer any inaction or conduct any offering other than the transactions contemplated hereby that may be integrated
with the offer or issuance of the Securities or that would impair the exemptions relied upon in this Offering or the Company’s
ability to timely comply with its obligations hereunder.

 

2.13         No
General Solicitation. Neither the Company, nor any of its Affiliates, nor to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Securities.

 

2.14         No
Undisclosed Liabilities. The Company has no liabilities or obligations which are material, individually or in the aggregate,
other than those incurred in the ordinary course of the Company’s business since December 31, 2011, and which, individually
or in the aggregate, would reasonably be expected to have a Material Adverse Effect, except as disclosed in the Reports or in Schedule
2.14.

 

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2.15         No
Undisclosed Events or Circumstances. Since December 31, 2011, except as disclosed in the Reports, no event or circumstance
has occurred or exists with respect to the Company or its businesses, properties, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof by the Company but which
has not been so publicly announced or disclosed in the Reports.

 

2.16         Dilution.
The Company’s executive officers and directors understand the nature of the Securities being sold hereby and recognize that
the issuance of the Securities will have a potential dilutive effect on the equity holdings of other holders of the Company’s
equity or rights to receive equity of the Company. The board of directors of the Company has concluded, in its good faith business
judgment, that the issuance of the Securities is in the best interests of the Company. The Company specifically acknowledges that
its obligation to issue the Conversion Shares upon conversion of the Notes and the Warrant Shares upon exercise of the Warrants
is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other
stockholders of the Company or parties entitled to receive equity of the Company.

 

2.17         No
Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers previously and presently employed by the
Company, including, but not limited to, disputes or conflicts over payment owed to such accountants and lawyers, nor have there
been any such disagreements during the two years prior to the Closing Date,

 

2.18         Investment
Company. Neither the Company nor any Affiliate of the Company is an “investment company” within the meaning of
the Investment Company Act of 1940, as amended.

 

2.19         Certain
Fees. Other than as set forth on Schedule 2.19 hereto, the Company represents
that to the best of its knowledge, there are no parties entitled to receive fees, commissions, finder’s fees, due diligence
fees or similar payments in connection with the Offering. The Investors 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.

 

2.20         Foreign
Corrupt Practices. Neither the Company, nor to the knowledge of the Company, 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 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 the Foreign Corrupt Practices Act of 1977,
as amended.

 

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

 

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2.22         Listing.
The Company’s Common Stock is quoted on the over-the-counter market maintained by the OTC Markets Group, Inc. (the “OTC
Market”) under the symbol “BEES”. The Company has not received any pending oral or written notice that its
Common Stock is not eligible nor will become ineligible for quotation on the OTC Market nor that its Common Stock does not meet
all requirements for the continuation of such quotation.

 

2.23         DTC
Status. The Company’s transfer agent is a participant in, and the Common Stock shall be eligible for transfer pursuant
to, the Depository Trust Company Automated Securities Transfer Program. The name, address, telephone number, fax number, contact
person and email address of the Company transfer agent is set forth on Schedule 2.23 hereto.

 

2.24         Company
Predecessor and Subsidiaries. The Company makes each of the representations contained in Sections 2.1, 2.2, 2.3, 2.5, 2.6,
2.8, 2.10, 2.11, 2.14, 2.15, 2.17, 2.18 and 2.20 of this Agreement, as same relate or could be applicable to each Subsidiary. All
representations made by or relating to the Company of a historical or prospective nature and all undertakings described in Section
9 shall relate, apply and refer to the Company and the Subsidiaries and their predecessors and successors.

 

2.25         Correctness
of Representations. The Company represents that the foregoing representations and warranties are true and correct as of the
date hereof in all material respects, and, unless the Company otherwise notifies the Investors prior to the Closing Date, shall
be true and correct in all material respects as of the Closing Date; provided that if such representation or warranty is
made as of a different date, such representation or warranty shall be true as of such date.

 

2.26         Survival.
The foregoing representations and warranties shall survive the Closing Date for a period of one year.

 

3Representations
and Warranties of the Investors. Each of the Investors, severally and not jointly, hereby represents and warrants that:

 

3.1           Authorization.
Investor (i) if a natural person, represents that Investor has reached the age of 21 and has full power and authority to execute
and deliver this Agreement and all other Transaction Documents and to carry out the provisions hereof and thereof; (ii) if a corporation,
partnership, or limited liability company or partnership, or association, joint stock company, trust, unincorporated organization
or other entity, represents that such entity was not formed for the specific purpose of acquiring the Securities, such entity is
duly organized, validly existing and in good standing under the laws of the state of its organization, the consummation of the
transactions contemplated hereby is authorized by, and will not result in a violation of state law or its charter or other organizational
documents, such entity has full power and authority to execute and deliver this Agreement and all other Transaction Documents and
to carry out the provisions hereof and thereof and to purchase and hold the Securities the execution and delivery of this Agreement
has been duly authorized by all necessary action, this Agreement has been duly executed and delivered on behalf of such entity
and is a legal, valid and binding obligation of such entity; or (iii) if executing this Agreement in a representative or fiduciary
capacity, represents that it has full power and authority to execute and deliver this Agreement in such capacity and on behalf
of the subscribing individual, ward, partnership, trust, estate, corporation, or limited liability company or partnership, or other
entity for whom Investor is executing this Agreement, and such individual, partnership, ward, trust, estate, corporation, or limited
liability company or partnership, or other entity has full right and power to perform pursuant to this Agreement and make an investment
in the Company, and represents that this Agreement constitutes a legal, valid and binding obligation of such entity. The execution
and delivery of this Agreement will not violate or be in conflict with any order, judgment, injunction, agreement or controlling
document to which Investor is a party or by which it is bound.

 

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3.2           Purchase
Entirely for Own Account. The Securities to be purchased by the Investor will be acquired for investment for the Investor’s
own account and not with a view to the resale or distribution of any part thereof, and such Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same. Such Investor does not have any contract, undertaking,
agreement, or arrangement with any person to sell, transfer, or grant participation to any person with respect to any of the Securities.

 

3.3           Disclosure
of Information. The Investor acknowledges that it has received all the information that it has requested relating to the Company
and the purchase of the Securities. Such Investor acknowledges that it has been furnished with, either by the Company or through
the EDGAR Website of the Commission, copies of the Company’s filings made with the Commission through the tenth (10th)
business day preceding the Closing Date (hereinafter collectively referred to as the “Reports”). Such Investor
is not deemed to have any knowledge of any information not included in the Reports or the Transaction Documents, unless such information
is delivered in the manner described in the next sentence. In addition, such Investor may have received in writing from the Company
such other information concerning its operations, financial condition and other matters as such Investor has requested in writing,
identified thereon as OTHER WRITTEN INFORMATION (such other information is collectively, the “Other Written Information”),
and considered all factors such Investor deems
material in deciding on the advisability of investing in the Securities. In addition to the foregoing, such Investor acknowledges
that it 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. Neither such inquiries nor any other investigation conducted by
or on behalf of such Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to rely
on the truth, accuracy and completeness of the Reports, Other Written Information and the Company’s
representations and warranties contained in the Transaction Documents.

 

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3.4           Information
on Investor. Such Investor is, and will be at the time of the conversion of the Notes and exercise of the Warrants, an “accredited
investor,” as such term is defined in Rule 501 of Regulation D promulgated by the Commission under the Securities Act and
as set forth on the Accredited Investor Certification, is experienced in investments and business matters, has made investments
of a speculative nature and has purchased securities of United States publicly-owned companies in the development stage in private
placements in the past and, with its representatives, if any, has such knowledge and experience in financial, tax and other business
matters as to enable such Investor to utilize the information made available by the Company to evaluate the merits and risks of,
and to make an informed investment decision with respect to, the proposed purchase, which such Investor hereby agrees represents
a speculative investment. Such Investor has the authority and is duly and legally qualified to purchase and own the Securities.
Such Investor is and acknowledges that it is able to fend for itself, able to bear the risk of such investment for an indefinite
period and to afford a complete loss thereof.

 

3.5           Restricted
Securities. Such Investor understands that the Securities have not been registered under the Securities Act, are characterized
as “Restricted Securities” under federal securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering, and such Investor shall not sell, offer to sell, assign, pledge, hypothecate or otherwise
transfer any of the Securities unless pursuant to an effective registration statement under the Securities Act, or unless an exemption
from registration is available. Notwithstanding anything to the contrary contained in this Agreement, such Investor may transfer
(without restriction and without the need for an opinion of counsel) the Securities to its Affiliates, provided that each
such Affiliate is an “accredited investor,” as such term is defined under Regulation D, and such Affiliate agrees in
writing to be bound by the terms and conditions of this Agreement. For the purposes of this Agreement, an “Affiliate”
of any person or entity means any other person or entity directly or indirectly controlling, controlled by or under direct or indirect
common control with such person or entity. Without limiting the foregoing, each Subsidiary is an Affiliate of the Company. For
purposes of this definition, “control” means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract or otherwise. Other than consummating the transactions
contemplated hereunder, such Investor has not, nor has any person acting on behalf of or pursuant to any understanding with such
Investor, directly or indirectly executed any purchases or sales, including short sales, of the securities of the Company
during the period commencing from the time that such Investor first received a term sheet (written or oral) from the Company or
any other person representing the Company setting forth the material terms of the transactions contemplated hereunder. Other than
to other persons party to this Agreement, such Investor has maintained the confidentiality of all disclosures made to it in connection
with this transaction (including the existence and terms of this transaction). Investor represents that it is familiar with SEC
Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

3.6           High
Risk and Speculative Investment. Investor recognizes that the purchase of the Securities involves a high degree of risk
including, but not limited to, the risk factors set forth on Schedule 3.6 and in the Reports and the following: (a) the
Company may require funds in addition to the proceeds of the Offering; (b) an investment in the Company is highly speculative,
and only investors who can afford the loss of their entire investment should consider investing in the Company and the Securities;
(c) the Investor may not be able to liquidate its investment; (d) transferability of the Securities is extremely limited; (e) the
Company may issue additional securities in the future which have rights and preferences that are senior to those of the Securities,
Conversion Shares and Warrant Shares; and (f) that the Common Stock may not successfully become actively traded. Investor has reviewed
the Risk Factors which are set forth in Schedule 3.6 hereto.

 

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3.7           Use
of Proceeds. Investor acknowledges and understands that the proceeds from the sale of the Securities are expected to be used
by the Company for its general working capital needs.

 

3.8           General
Solicitation. The offer to sell the Securities was directly communicated to such Investor by the
Company. Investor is not purchasing the Securities as a result of any advertisement, article, notice, or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
in any seminar or any other general solicitation or general advertisement.

 

3.9           Fees.
Except as set forth on Schedule 2.19, 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 Investors 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.

 

3.10         Legends.
It is understood that the certificates evidencing the Securities (and the Conversion Shares and Warrant Shares, respectively) will
bear the following legend:

 

“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, TRANSFERRED,
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, REASONABLY
ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT
REGISTRATION UNDER THE ACT.”

 

3.11         For
ERISA plans only. The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed
of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan
assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification
of plan assets and impose other fiduciary responsibilities. Investor fiduciary or Plan (a) is responsible for the decision to invest
in the Company; (b) is independent of the Company or any of its affiliates; (c) is qualified to make such investment decision;
and (d) in making such decision, Investor fiduciary or Plan has not relied primarily on any advice or recommendation of the Company
or any of its affiliates

 

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3.12         Investor
should check the Office of Foreign Assets Control (“OFAC”) website at http://www.treas.gov/ofac before
making the following representations. Investor represents that the amounts invested by it in the Company in the Offering were
not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations,
including anti-money laundering laws and regulations. Federal regulations and Executive Orders administered by OFAC prohibit,
among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories,
entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website
at http://www.treas.gov/ofac. In addition, the programs administered by OFAC (the “OFAC Programs”) prohibit
dealing with individuals1 or entities in certain countries regardless of whether such individuals or entities appear
on the OFAC lists;

 

3.13         To
the best of Investor’s knowledge, none of: (1) Investor; (2) any person controlling or controlled by Investor; (3) if Investor
is a privately-held entity, any person having a beneficial interest in Investor; or (4) any person for whom Investor is acting
as agent or nominee in connection with this investment is a country, territory, individual or entity named on an OFAC list, or
a person or entity prohibited under the OFAC Programs. Please be advised that the Company may not accept any amounts from a prospective
investor if such prospective investor cannot make the representation set forth in the preceding paragraph. Investor agrees to promptly
notify the Company should Investor become aware of any change in the information set forth in these representations. Investor understands
and acknowledges that, by law, the Company may be obligated to “freeze the account” of Investor, either by prohibiting
additional subscriptions from Investor, declining any redemption requests and/or segregating the assets in the account in compliance
with governmental regulations, and the Company may also be required to report such action and to disclose Investor’s identity
to OFAC. Investor further acknowledges that the Company may, by written notice to Investor, suspend the redemption rights, if any,
of Investor if the Company reasonably deems it necessary to do so to comply with anti-money laundering regulations applicable to
the Company or any of the Company’s other service providers. These individuals include specially designated nationals, specially
designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.

 

3.14         To
the best of Investor’s knowledge, none of: (1) Investor; (2) any person controlling or controlled by Investor; (3) if Investor
is a privately-held entity, any person having a beneficial interest in Investor; or (4) any person for whom Investor is acting
as agent or nominee in connection with this investment is a senior foreign political figure,2 or any immediate family3
member or close associate4 of a senior foreign political figure, as such terms are defined in the footnotes
below.

 

 

1 These individuals include
specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo
programs.

 

2 A “senior foreign political
figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches of a
foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign
government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or
other entity that has been formed by, or for the benefit of, a senior foreign political figure.

 

3 “Immediate family”
of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws.

 

4 A “close associate”
of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with
the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international
financial transactions on behalf of the senior foreign political figure.

 

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3.15         If
Investor is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if Investor receives deposits
from, makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, Investor represents and warrants
to the Company that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the
Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking
activities; (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking
activities; and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical
presence in any country and that is not a regulated affiliate.

 

3.16         Correctness
of Representations. Investor represents that the foregoing representations and warranties are true and correct as of the date
hereof and, unless Investor otherwise notifies the Company in writing prior to the Closing Date, shall be true and correct as of
the Closing Date.

 

3.17         Survival.
The foregoing representations and warranties shall survive the Closing Date.

 

4Conditions
of the Investors’ Obligations at Closing. The obligations of the Investors under subsection 1.2 of this Agreement
are subject to the fulfillment on or before each Closing of each of the following conditions:

 

4.1           Representations
and Warranties. The representations and warranties of the Company contained in Section 2 hereof shall be true on and as
of the Closing with the same effect as though such representations and warranties had been made on and as of the date of such Closing.

 

4.2           Performance.
The Company shall have performed and complied with all agreements, obligations, and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.

 

4.3           Suspension
of Offering. No order suspending or enjoining the Offering or sale of the Notes and Warrants has been issued, and no proceedings
for that purpose or a similar purpose have been initiated or are pending, or, to the best of the Company’s knowledge, are
contemplated or threatened.

 

4.4           No
Material Adverse Effect. There shall have been no Material Adverse Effect with respect to the Company since the date hereof
within ten (10) business days of a Closing hereunder.

 

4.5           Delivery
of Notes and Warrants. The Company shall have delivered the Notes and the Warrants to the Investors, as specified in Section 1.

 

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5Conditions
of the Company’s Obligations at Closing. The obligations of the Company to the Investors under this Agreement are subject
to the fulfillment on or before each Closing of each of the following conditions by the Investors:

 

5.1           Representations
and Warranties. The representations and warranties of the Investors contained in Section 3 shall be true on and as of such
Closing with the same effect as though such representations and warranties had been made on and as of such Closing.

 

5.2           Payment
of Purchase Price. The Investors shall have delivered the purchase price specified in Section 1.2.

 

6Indemnification.
The Investors, severally and not jointly, agree to indemnify and hold harmless the Company and its officers, directors, employees,
agents, control persons and affiliates from and against all losses, liabilities, claims, damages, costs, fees and expenses whatsoever
(including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced
or threatened) based upon or arising out of any actual or alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Investor of any covenant or agreement made by the Investor herein or in
any other document delivered in connection with this Agreement.

 

The Company agrees
to indemnify and hold harmless the Investors and any of Investors’ general partners, employees,
officers, directors, members, agents and other representatives from and against all losses, liabilities, claims, damages,
costs, fees and expenses whatsoever (including, but not limited to, any and all expenses incurred in investigating, preparing or
defending against any litigation commenced or threatened) based upon or arising out of any actual or alleged false acknowledgment,
representation or warranty, or misrepresentation or omission to state a material fact, or breach by the Company of any covenant
or agreement made by the Company herein or in any other document delivered in connection with this Agreement.

 

7Registration
Rights.

 

7.1           Company
hereby grants the following registration rights to holders of the Securities:

 

(a)          On
one occasion, commencing thirty (30) days after the Final Closing Date, but not later than two years after the Final Closing Date,
upon a written request therefor from any Investor or Investors of more than 50% of the Conversion Shares issued and issuable upon
conversion of the outstanding Notes and outstanding Warrant Shares issued and issuable upon exercise of the outstanding Warrants,
the Company shall prepare and not later than sixty (60) days after such request (“Filing Date”) file, subject to Section
7.1(d) hereof, with the Commission a registration statement under the Securities Act registering the Registrable Securities (as
defined below) which are the subject of such request, subject to applicable Commission rules and regulations, for unrestricted
public resale by the holder thereof. For purposes of Sections 7.1(a) and 7.1(b) hereof, the definition of Registrable Securities
shall not include Securities (A) which are registered for resale in an effective registration statement, (B) which are included
for registration in a pending registration statement, (C) which have been issued without further transfer restrictions after a
sale or transfer pursuant to Rule 144 under the Securities Act or (D) which may be resold under Rule 144 without volume limitations.
Upon the receipt of such written request, the Company shall promptly give written notice to all other Investors (as of the date
of delivery of such written notice) of the Registrable Securities that such registration statement is to be filed and shall include
in such registration statement Registrable Securities for which it has received written requests within ten (10) days after the
Company gives such written notice. Such other requesting Investors shall be deemed to have exercised their demand registration
right under this Section 7.1(a). “Registrable Securities” shall mean all of the Conversion Shares and the Warrant
Shares issuable upon complete conversion of the Notes and exercise of the Warrants issued in the Offering.

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(b)          If
the Company at any time proposes to register any of its securities under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both, except with respect to registration statements on Forms S-4,
S-8 or another form not available for registering the Registrable Securities for sale to the public, provided the Registrable
Securities are not otherwise registered for resale by the Investors pursuant to an effective registration statement, each such
time it will give at least ten (10) days’ prior written notice to the Investors (as of the date of delivery of such written
notice) of its intention so to do. Upon the written request of any Investor that is received by the Company within ten (10) days
after the giving of any such notice by the Company to register any of the Registrable Securities held by such Investor not previously
registered, the Company will cause such Registrable Securities as to which registration shall have been so requested to be included
with the securities to be covered by the registration statement proposed to be filed by the Company, all to the extent required
to permit the sale or other disposition of the Registrable Securities so registered by such Investor (each, a “Seller”
and together, the “Sellers”). In the event that any registration pursuant to this Section 7.1(b) shall be, in
whole or in part, an underwritten public offering of common stock of the Company, the number of shares of Registrable Securities
to be included in such an underwriting may be reduced on a pro rata basis among the Investors so requesting registration by the
managing underwriter if and to the extent that the Company and the underwriter shall reasonably be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by the Company therein; provided, however, that the Company
shall notify the Seller in writing of any such reduction. Unless the Investor notifies the Company in writing that it elects to
deem the registration statement filed or to be filed pursuant to this Section 7.1(b) as a registration statement filed or to be
filed pursuant to Section 7.1(a), the Company may withdraw or delay or suffer a delay of any registration statement referred to
in this Section 7.1(b) without thereby incurring any liability to the Sellers.

 

(c) If, at the
time any written request for registration is received by the Company pursuant to Section 7.1(a) hereof, the Company has determined
to proceed with the actual preparation and filing of a registration statement under the Securities Act in connection with the proposed
offer and sale for cash of any of its securities for the Company’s own account and the Company actually does file such other
registration statement, such written request shall be deemed to have been given pursuant to Section 7.1(b) rather than Section
7.1(a), and the rights of the holders of Registrable Securities covered by such written request shall be governed by Section 7.1(b).

 

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(d) Notwithstanding
any other provision of this Section 7.1, if due to any SEC Guidance (as defined herein) (a) the Commission does not declare the
Registration Statement effective on or before the period set forth in Section 7.4 hereof, or (b) if the Commission allows the Registration
Statement to be declared effective at any time before or after such date, subject to the withdrawal of certain Registrable Securities
from the Registration Statement, and the reason for (a) or (b) is the Commission’s determination that (x) the offering of
any of the Registrable Securities constitutes a primary offering of securities by the Company, (y) Rule 415 of the Securities Act
may not be relied upon for the registration of the resale of any or all of the Registrable Securities, and/or (z) a holder of any
Registrable Securities must be named as an underwriter (and the Company has made a commercially reasonable effort to advocate with
the SEC for the registration of all or a greater number of Registrable Securities), the Investors understand and agree that in
the case of (b) the Company may reduce, on a pro rata basis, subject to the senior registration right of other holders (the
“Other Holders”), the total number of Registrable Securities to be registered on behalf of each such Investor,
and, in the case of (a) or (b), that an Investor shall not be entitled to any liquidated damages under Section 7.4 hereof with
respect to the Registrable Securities not registered for the reason set forth in (a), or so reduced on a pro rata basis
as set forth in (b). In any such pro rata reduction, the number of Registrable Securities to be registered on such Registration
Statement will first be reduced by the Registrable Securities represented by the Warrant Shares (applied, in the case that some
Warrant Shares may be registered, to the Investors on a pro rata basis based on the total number of unregistered Warrant Shares
held by such Investors on a fully diluted basis), and second by Registrable Securities represented by Conversion Shares (applied,
in the case that some Conversion Shares may be registered, to the Investors on a pro rata basis based on the total number of unregistered
Conversion Shares held by such Investors). The Investors acknowledge and agree the provisions
of this paragraph may apply to more than one Registration Statement. The Company shall file a new registration statement as soon
as reasonably practicable covering the resale by the Investors and Other Holders of not less than the number of such Registrable
Securities that are not registered in the registration statement. For the purpose of this Section 7.1, Investors understand and
acknowledge that the holders of the Company’s warrants issued with the Company’s Series A Cumulative Convertible Preferred
Stock and holders of the Company’s Series B Cumulative Convertible Preferred Stock and warrants issued with the Company’s
Series B Cumulative Convertible Preferred Stock shall be considered to have registration rights senior to the Investors and all
shares of common stock underlying such warrants and shares of Series B Cumulative Convertible Preferred Stock shall be considered
Registrable Securities hereunder. “SEC Guidance” means (i) any publicly-available written guidance, or
rule of general applicability of the SEC staff, or (ii) oral or written comments, requirements or requests of the SEC staff
to the Company in connection with the review of a registration statement, including, but not limited to, such guidance as may effect
a reduction in the number of Registrable Securities that may be registered by the Company.

 

7.2           Registration
Procedures. If and whenever the Company is required by the provisions of Section 7.1 to effect the registration of any Registrable
Securities under the Securities Act, the Company will, as expeditiously as possible:

 

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(a)          subject
to the timelines provided in this Agreement, (i) prepare and file with the Commission a registration statement required by Section
7.1 with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement
to become and remain effective for the period of the distribution contemplated thereby (determined as herein provided), (ii) promptly
provide to the holders of the Registrable Securities copies of all filings and Commission letters of comment and notify the Sellers
(by telecopier and by e-mail addresses provided by the Investors) on or before the second (2nd) business days thereafter
that the Company receives notice that (A) the Commission has no comments or no further comments on the registration statement,
and (B) the registration statement has been declared effective (failure to timely provide notice as required by this Section 7.2(a)
shall be a material breach of the Company’s obligation and an Event of Default as defined in the Notes and a Non-Registration
Event as defined in Section 7.4 of this Agreement);

 

(b)          prepare
and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective until such registration statement has been effective
for a period of one (1) year, and comply with the provisions of the Securities Act with respect to the disposition of all of the
Registrable Securities covered by such registration statement in accordance with the Sellers’ intended method of disposition
set forth in such registration statement for such period;

 

(c)          furnish
to the Sellers, at the Company’s expense, such number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the public sale or
their disposition of the securities covered by such registration statement, or make them electronically available;

 

(d)          use
its commercially reasonable efforts to register or qualify the Registrable Securities covered by such registration statement under
the securities or “blue sky” laws of New York and such jurisdictions as the Sellers shall reasonably request in writing,
provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such
jurisdiction;

 

(e)          as
applicable, list or make available for quotation the Registrable Securities covered by such registration statement with any securities
exchange or quotation system on which the Common Stock of the Company is then listed or quoted;

 

(f)          notify
the Sellers within two (2) business days of the happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light
of the circumstances then existing, or which becomes subject to a Commission, state or other governmental order suspending the
effectiveness of the registration statement covering any of the Registrable Securities; and

 

(g)          provide
to the Sellers copies of the registration statement and amendments thereto at least two (2) days prior to the filing thereof with
the Commission. A Seller’s failure to comment on any registration statement or other document provided to an Investor or
its counsel shall be construed to constitute approval thereof nor the accuracy thereof.

 

    	17

    	 

    

 

7.3.          Provision
of Documents. In connection with each registration described in this Section 7, each Seller will furnish to the Company in
writing such information and representation letters with respect to itself and the proposed distribution by it as reasonably shall
be necessary in order to assure compliance with federal and applicable state securities laws.

 

7.4.          Non-Registration
Events. The Company agrees that the Sellers will suffer damages if any registration statement required under Section 7.1(a)
or 7.1(b) is not filed within sixty (60) days after written request and declared effective by the Commission within one hundred
eighty (180) days after such request, and maintained in the manner and within the time periods contemplated by Section 7, and it
would not be feasible to ascertain the extent of such damages with precision. Accordingly, if (A) if the registration statement
described in Section 7.1(a) or 7.1(b) is not filed within sixty (60) days after such written request, or is not declared effective
within one hundred eighty (180) days after such written request, or (B) any registration statement described in Sections 7.1(a)
or 7.1(b) is filed and declared effective but shall thereafter cease to be effective without being succeeded within thirty (30)
business days by an effective replacement or amended registration statement or for a period of time which shall exceed sixty (60)
days in the aggregate per year (defined as every rolling period of 365 consecutive days commencing on the actual effective date
of such registration statement) (each such event referred to in clauses A and B of this Section 7.4 is referred to herein as a
“Non-Registration Event”), then the Company shall pay to the holder of Registrable Securities, as “Liquidated
Damages”, an amount equal to one percent (1%) for each thirty (30) days (or such lesser pro-rata amount for any period
of less than thirty (30) days) of the (i) purchase price of the outstanding Notes and (ii) purchase price of the Conversion Shares
and Warrant Shares issued upon conversion of Notes and exercise of Warrants held by Investors which are subject to such Non-Registration
Event; provided, however, that the Company shall not be required to pay any Liquidated Damages to any Investor pursuant
to this Section 7.4 in excess of four percent (4%) of a Investor’s aggregate Purchase Price hereunder. The Company must pay
the Liquidated Damages in cash. The Liquidated Damages must be paid within ten (10) business days after the end of each thirty
(30) day period or shorter part thereof for which Liquidated Damages are payable. In the event a registration statement but is
withdrawn prior to being declared effective by the Commission, then such Registration Statement will be deemed to have not been
filed and Liquidated Damages will be calculated accordingly. Liquidated Damages shall not be payable pursuant to this Section 7.4
in connection with Registrable Securities for such times as such Registrable Securities may be sold by the holder thereof without
volume limitations or other restrictions pursuant to Section 144(b)(1)(i) of the Securities Act. The Company may require,
from time to time, information from a holder of the Securities that is necessary to complete the registration statement in accordance
with the requirements of the Securities Act.  In the event of the failure by such holder to comply with the Company’s
request within fifteen (15) business days from the date of such request, the Company shall be permitted to exclude such holder
from a registration statement without being subject to the payment of any amount of Liquidated Damages to such holder. At such
time that such holder complies with the Company’s request, the Company shall use its reasonable best efforts to include such
holder in the registration statement. 

 

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7.5.          Expenses.
All expenses incurred by the Company in complying with Section 7, including, without limitation, all registration and filing fees,
printing expenses (if required), fees and disbursements of Company counsel and independent public accountants for the Company,
fees and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or “blue
sky” laws, fees of FINRA, and fees of transfer agents and registrars are herein called “Registration Expenses.”
All underwriting discounts, selling commissions and transfer applicable to the sale of Registrable Securities are herein called
“Selling Expenses.” The Company will pay all Registration Expenses in connection with any registration statement
described in Section 7. Selling Expenses in connection with each such registration statement shall be borne by the Seller and may
be apportioned among the Sellers in proportion to the number of shares included on behalf of the Seller relative to the aggregate
number of shares included under such registration statement for all Sellers, or as all Sellers thereunder may agree.

 

7.6.          Indemnification
and Contribution.

 

(a)          In
the event of a registration of any Registrable Securities under the Securities Act pursuant to Section 7, the Company will, to
the extent permitted by law, indemnify and hold harmless the Seller and each of the officers, directors, agents, Affiliates, members,
managers, control persons, and principal shareholders of the Seller, each underwriter of such Registrable Securities thereunder
and each other person, if any, who controls such Seller or underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities to which such Seller or person may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement
of any material fact contained in any registration statement under which such Registrable Securities was registered under the Securities
Act pursuant to Section 7, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the circumstances when made, and will, subject to the provisions
of Section 7.6(c), reimburse such Seller for any reasonable legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall
not be liable to the Seller to the extent that any such damages arise out of or are based upon an untrue statement or omission
made in any preliminary prospectus if (i) the Seller failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of the sale by the Seller to the person asserting the
claim from which such damages arise, (ii) the final prospectus would have corrected such untrue statement or alleged untrue statement
or such omission or alleged omission, or (iii) to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information
furnished by any such Seller in writing specifically for use in such registration statement or prospectus.

 

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(b)          In
the event of a registration of any of the Registrable Securities under the Securities Act pursuant to Section 7, each Seller, severally
but not jointly, will, to the extent permitted by law, indemnify and hold harmless the Company, and each person, if any, who controls
the Company within the meaning of the Securities Act, each officer of the Company who signs the registration statement, each director
of the Company, each underwriter and each person who controls any underwriter within the meaning of the Securities Act, against
all losses, claims, damages or liabilities, joint or several, to which the Company or such officer, director, underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained
in the registration statement under which such Registrable Securities were registered under the Securities Act pursuant to Section
7, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter and controlling
person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Seller will be liable hereunder in any such case if and only to
the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such Seller, as
such, furnished in writing to the Company by such Seller specifically for use in such registration statement or prospectus, and
provided, further, however, that the liability of the Seller hereunder shall be limited to the net proceeds actually received
by the Seller from the sale of Registrable Securities pursuant to such registration statement.

 

(c)          Promptly
after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission to so notify the indemnifying party shall not relieve the indemnifying party from any liability which it may have
to such indemnified party other than under this Section 7.6(c), and shall only relieve it from any liability which it may have
to such indemnified party under this Section 7.6(c), except and only if and to the extent the indemnifying party is materially
prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish,
to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election to so assume and undertake the defense thereof, the indemnifying party shall not
be liable to such indemnified party under this Section 7.6(c) for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to indemnified party
which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified parties, as a group, shall have
the right to select one separate counsel, reasonably satisfactory to the indemnified and indemnifying party, and to assume such
legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred.

 

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(d)          In
order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which
either (i) a Seller, or any controlling person of a Seller, makes a claim for indemnification pursuant to this Section 7.6 but
it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding
the fact that this Section 7.6 provides for indemnification in such case, or (ii) contribution under the Securities Act may be
required on the part of the Seller or controlling person of the Seller in circumstances for which indemnification is not provided
under this Section 7.6, then, and in each such case, the Company and the Seller will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Seller is responsible
only for the portion represented by the percentage that the public offering price of its securities offered by the registration
statement bears to the public offering price of all securities offered by such registration statement, provided, however,
that, in any such case, (y) the Seller will not be required to contribute any amount in excess of the public offering price of
all such securities sold by it pursuant to such registration statement; and (z) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was
not guilty of such fraudulent misrepresentation; and provided, further, however, that the liability of the Seller hereunder
shall be limited to the net proceeds actually received by the Seller from the sale of Registrable Securities pursuant to such registration
statement.

 

7.7.          Unlegended
Shares and 144 Sales.

 

(a)          Delivery
of Unlegended Shares. Within five business (5) days (such fifth (5th) business day being the “Unlegended
Shares Delivery Date”) after the day on which the Company has received (i) a notice that Conversion Shares, Warrant Shares
or any other Common Stock held by Investor has been sold pursuant to a registration statement or Rule 144 under the Securities
Act, (ii) a representation that the prospectus delivery requirements, or the requirements of Rule 144, as applicable and if required,
have been satisfied, (iii) the original share certificates representing the shares of Common Stock that have been sold, and (iv)
in the case of sales under Rule 144, customary representation letters of Investor and, if required, Investor’s broker regarding
compliance with the requirements of Rule 144, the Company, at its expense, (y) shall deliver, and shall cause legal counsel selected
by the Company to deliver to its transfer agent (with copies to Investor) an appropriate instruction directing the delivery of
shares of Common Stock without any legends including the legend set forth in Section 3.10 above (the “Unlegended Shares”);
and (z) cause the transmission of the certificates representing the Unlegended Shares, together with a legended certificate representing
the balance of the submitted Common Stock certificate, if any, to Investor at the address specified in the notice of sale, via
express courier, by electronic transfer or otherwise on or before the Unlegended Shares Delivery Date.

 

(b)          DWAC.
In lieu of delivering physical certificates representing the Unlegended Shares, upon request of the Investors, so long as the certificates
therefor do not bear a legend, the Common Stock is eligible for electronic transfer through the Depository Trust Company, and the
Investor is not obligated to return such certificate for the placement of a legend thereon, the Company shall cause its transfer
agent to electronically transmit the Unlegended Shares by crediting the account of Investor’s prime broker with the Depository
Trust Company through its Deposit Withdrawal Agent Commission system. Such delivery must be made on or before the Unlegended Shares
Delivery Date.

 

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(c)          Late
Delivery of Unlegended Shares. The Company understands that a delay in the delivery of the Unlegended Shares pursuant to this
Section 7.7 hereof later than the Unlegended Shares Delivery Date could result in economic loss to an Investor. As compensation
to a Investor for such loss, the Company agrees to pay late payment fees (as liquidated damages and not as a penalty) to Investor
for late delivery of Unlegended Shares in the amount of $100 per business day after the Unlegended Shares Delivery Date for each
$10,000 of purchase price of the Unlegended Shares, subject to the delivery default; provided that such delay is not the
direct or indirect result of Investor’s actions or omissions. If during any three hundred sixty (360) day period, the Company
fails to deliver Unlegended Shares as required by this Section 7.7 for an aggregate of thirty (30) days, then each Investor or
assignee holding Securities subject to such default may, at its option, require the Company to redeem all or any portion of the
Unlegended Shares subject to such default at a price per share equal to the greater of (i) 120% of the Purchase Price paid by Investor
for the Unlegended Shares that were not timely delivered, or (ii) a fraction in which the numerator is the highest closing price
of the Common Stock during the aforedescribed thirty day period and the denominator of which is the lowest conversion price or
exercise price, as the case may be, during such thirty (30) day period, multiplied by the price paid by Investor for such
Common Stock (“Unlegended Redemption Amount”). The Company shall promptly pay any payments incurred under this
Section in immediately available funds upon demand.

 

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

 

    	22

    	 

    

 

(e)          144
Default. At any time commencing twelve (12) months after the Closing Date, in the event Investor is not permitted to sell any
of the Conversion Shares or Warrant Shares without any restrictive legend, or if such sales are permitted but subject to volume
limitations or further restrictions on resale as a result of the unavailability to Investor of Rule 144(b)(1)(i) under the Securities
Act or any successor rule (a “144 Default”), for any reason, including, but not limited to, failure by the Company
to file quarterly, annual or any other filings required to be made by the Company by the required filing dates (provided that any
filing made within the time for a valid extension shall be deemed to have been timely filed), or the Company’s failure to
make information publicly available which would allow Investor’s reliance on Rule 144 in connection with sales of Conversion
Shares or Warrant Shares, except due to a change in current applicable securities laws or because Investor is an Affiliate (as
defined under Rule 144) of the Company, then the Company shall pay such Investor as liquidated damages and not as a penalty for
each thirty (30) days (or such lesser pro-rata amount for any period less than thirty (30) days) an amount equal to one percent
(1.0%) of the purchase price of the Conversion Shares and Warrant Shares (which could be issued on a cashless basis pursuant to
Section 2 of the Warrant) which is subject to such 144 Default; provided, however, that the Company shall not be required to pay
any liquidated damages to any Investor pursuant to this Section 7.7(e) in excess of 4% of such Investor’s aggregate Purchase
Price hereunder. Liquidated damages shall not be payable pursuant to this Section 7.7(e) in connection with Conversion Shares or
Warrant Shares for such times as such shares may be sold by the holder thereof without any legend or volume or other restrictions
pursuant to Section 144(b)(1)(i) of the Securities Act or pursuant to an effective registration statement.

 

8Miscellaneous.

 

8.1           Appointment
of Collateral Agent. In the event an Event of Default (as described in the Notes) shall have occurred and be continuing, prior
to taking any actions to declare the Notes due and payable or to attempt to foreclose on any collateral securing the Notes, Investors
holding a majority of the outstanding indebtedness evidenced by the Notes (the “Requisite Holders”) will authorize
and appoint an agent (which may be an Investor or third party) to act as collateral agent on behalf of all of the Investors, and
in such capacity to exercise for the benefit of all of the Investors all rights, powers and remedies provided to them, under or
pursuant to the Security Agreement, including, without limitation, those available upon an Event of Default, subject always to
the terms, conditions, limitations and restrictions provided in the Security Agreement. The Investors have carefully reviewed the
Security Agreement and understand the information contained therein.

 

8.2           Survival
of Warranties. All of the representations and warranties made herein shall survive the execution and delivery of this Agreement
for a period of one year. The Investors are entitled to rely, and the parties hereby acknowledge that the Investors have so relied,
upon the truth, accuracy and completeness of each of the representations and warranties of the Company contained herein, irrespective
of any independent investigation made by Investors. The Company is entitled to rely, and the parties hereby acknowledge that the
Company has so relied, upon the truth, accuracy and completeness of each of the representations and warranties of the Investors
contained herein, irrespective of any independent investigation made by the Company.

 

    	23

    	 

    

 

8.3           Successors
and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties (including transferees of any Notes sold hereunder or
any Common Stock issued upon conversion thereof). Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this Agreement.

 

8.4           Governing
Law. This Agreement shall be governed by and construed under the laws of the State of New York as applied to agreements among
New York residents entered into and to be performed entirely within New York. The parties hereto (1) agree that any legal suit,
action or proceeding arising out of or relating to this Agreement shall be instituted exclusively in New York State Supreme Court,
County of New York, or in the United States District Court for the Southern District of New York, (2) waives any objection which
the Company may have now or hereafter to the venue of any such suit, action or proceeding, and (3) irrevocably consents to the
jurisdiction of the New York State Supreme Court, County of New York, and the United States District Court for the Southern District
of New York in any such suit, action or proceeding. The Company further agrees to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding in the New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York and agrees that service of process upon the Company mailed
by certified mail to the Company's address shall be deemed in every respect effective service of process upon the Company, in any
such suit, action or proceeding. THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.

 

8.5           Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. This Agreement may also be executed via facsimile or by
e-mail delivery of a “.pdf” format data file, either of which shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) this Agreement with the same force and effect as if such facsimile or
“.pdf” signature page were an original thereof.

 

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

 

8.7           Notices.
Unless otherwise provided, any notice, authorization, request or demand required or permitted to be given under this Agreement
shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or three (3)
days following deposit with the United States Post Office, by registered or certified mail, postage prepaid, or two days after
it is sent by an overnight delivery service, or when sent by facsimile with machine confirmation of delivery addressed as follows:

 

If to Company, to:

 

BeesFree,
Inc.         

2101 Vista
Parkway, Suite 122

West Palm
Beach, FL 33411

Attention: Chief
Executive Officer 

Fax: (561)
939-4861

 

    	24

    	 

    

 

With a copy
to:

 

Littman Krooks LLP

2655 Third Avenue, 20th Floor

New York, NY 10017

Attention: Steven D. Uslaner, Esq. 

Fax: (212) 490-2990

 

If to the Investors
to:

 

The addresses sent forth on the signature
pages attached.

 

Any party may change its address for such
communications by giving notice thereof to the other parties in conformity with this Section.

 

8.8           Transaction
Expenses; Enforcement of Transaction Documents. The Company and each Investor shall pay their respective costs and expenses
incurred with respect to the negotiation, execution, delivery and performance of this Agreement. If any action at law or in
equity is necessary to enforce or interpret the terms of the Transaction Documents, the prevailing party shall be entitled to reasonable
attorney’s fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled.

 

8.9           Amendments
and Waivers. This Agreement may be amended or terminated and the observance of any term of this Agreement may be waived with
respect to all parties to this Agreement (either generally or in a particular instance and either retroactively or prospectively),
with the written consent of the Company and the Note Requisite Holders (as defined below). Notwithstanding the foregoing, this
Agreement may not be amended or terminated and the observance of any term hereunder may not be waived with respect to any Investor
without the written consent of such Investor unless such amendment, termination or waiver applies to all Investors in the same
fashion. The Company shall give prompt written notice of any amendment or termination hereof or waiver hereunder to any party hereto
that did not consent in writing to such amendment, termination or waiver. Any amendment, termination or waiver effected in accordance
with this Section 8.9 shall be binding on all parties hereto, even if they do not execute such consent. No waivers of or exceptions
to any term, condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, condition or provision. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of all such securities, and the Company. For purposes
hereof, “Note Requisite Holder(s)” shall mean holders of Notes representing at least 66% of the aggregate amount of
principal then outstanding under such Notes.

 

8.10         Severability.
If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.

 

    	25

    	 

    

 

8.11         Entire
Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties and no party
shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically
set forth herein or therein.

 

8.12         Independent
Nature of Investors. The obligations of each Investor under this Agreement or other transaction document are several and not
joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations
of any other Investor under this Agreement or any other transaction document. Each Investor shall be responsible only for its own
representations, warranties, agreements and covenants hereunder. The decision of each Investor to purchase Notes and Warrants pursuant
to this Agreement has been made by such Investor independently of any other Investor and independently of any information, materials,
statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or given by any other Investor or by any agent or
employee of any other Investor, and no Investor or any of its agents or employees shall have any liability to any other Investor
(or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein
or in any other transaction document, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute
the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors
are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement.
Except as otherwise provided in this Agreement or any other transaction document, each Investor shall be entitled to independently
protect and enforce its rights arising out of this Agreement or out of the other transaction documents, and it shall not be necessary
for any other Investor to be joined as an additional party in any proceeding for such purpose. Each Investor represents and warrants
that it has been represented by its own separate legal counsel in connection with the transactions contemplated hereby and acknowledges
and understands that Littman Krooks, LLP has served as counsel to the Company only, and the Investors cannot rely upon Littman
Krooks, LLP in any manner with regard to their decision to participate in the transactions contemplated hereby.

 

    	26

    	 

    

 

IN WITNESS WHEREOF,
the parties have executed this Agreement as of the date first above written.

 

BEESFREE, INC. 

 

	By:	/S/ JOSEPH FASCIGLIONE	 
	 	Name:	Joseph Fasciglione	 
	 	Title:	Interim CEO/CFO	 

 

BEESFREE USA, INC. 

 

	By:	/S/ JOSEPH FASCIGLIONE	 
	 	Name:	Joseph Fasciglione	 
	 	Title:	Interim CEO/CFO	 

 

Investors:

 

[TO SIGN AND COMPLETE SIGNATURE PAGE ANNEXED HERETO]

 

    	27

    	 

    

 

OMNIBUS SIGNATURE PAGE TO SECURITIES
PURCHASE

 AGREEMENT AND SECURITY AGREEMENT

 

By execution and delivery of this signature
page, you are agreeing to become an Investor, as defined in that certain Securities Purchase Agreement (the “Purchase
Agreement”) by and among BeesFree, Inc., a Nevada corporation (the “Company”), BeesFree USA, Inc.
(“BeesFree USA”) and the Investors (as defined in the Purchase Agreement), dated as of ______ 5__,
2013, and acknowledges having read the representations in the Purchase Agreement section entitled “Representations and Warranties
of the Investors,” and hereby represents that the statements contained therein are complete and accurate with respect to
the undersigned as an Investor. The undersigned further hereby agrees that execution by the undersigned of this Omnibus Signature
Page to Securities Purchase Agreement and Security Agreement shall constitute an agreement to be bound by the terms and conditions
of each of the Purchase Agreement and the Security Agreement, with the same effect as if such separate, but related agreement,
was separately signed.

  

	INVESTOR:	PRINCIPAL AMOUNT OF NOTES
	 	PURCHASED: $___________________
	Print Name: ________________________	 
	 	Number of Warrants: ________________
	Signature:__________________________	 
	 	Date: __________________
	Print Name: ________________________	 
	 	Contact Person: ______________________
	Signature:__________________________	 
	 	Telephone No. _____________________
	Title (if entity)_______________________	 
	 	E-mail Address: ____________________
	__________________________________	 
	Street Address	Soc Sec # or Fed ID #________________
	 	 
	__________________________________	 
	Street Address – 2nd line	 
	 	 
	__________________________________	 
	City, State, Zip	 

 

 

5 To be completed to reflect date of initial closing.
Investors should not complete this.

 

    	28

    	 

    

 

APPENDIX A

 

Additional Definitions

 

For purposes of this
Agreement, the following additional capitalized terms shall have the respective definitions set forth below:

 

“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.

 

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

 

“Conversion
Shares” means the shares of Common Stock issuable upon conversion of all principal and accrued but unpaid interest under
the Notes.

 

“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.

 

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

 

“Material
Adverse Effect” means a material adverse effect on the financial condition, results of operations, prospects, properties
or business of the Company and its Subsidiaries taken as a whole.

 

“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.

 

“Principal
Market” means whichever of the following is at the time the principal trading exchange or market for the Common Stock;
NYSE Amex Equities, Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market, OTC Market, Bulletin Board, or New
York Stock Exchange.

 

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

 

    	 

    	 

    

 

“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 2.1 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 AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange, the OTC Bulletin Board, the OTCQX, OTCQB or OTC Pink (or any successors to any of the foregoing).

 

“Transaction
Documents” means this Agreement, the Note, the Warrant, and the Security Agreement, together with all exhibits and schedules
thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

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

 

    	2

    	 

    

 

SCHEDULE 3.6

 

RISK FACTORS

 

An investment in the Securities
is speculative and illiquid and involves a high degree of risk, including the risk of a loss of your entire investment. You should
carefully consider the risks and uncertainties described below, the risks set forth in our filings with the SEC and the other information
contained in the Securities Purchase Agreement of which this Schedule is a part, before purchasing any Securities. The risks set
forth below are not the only ones facing our Company. Additional risks and uncertainties may exist that could also adversely affect
our business, operations and prospects. Based on the foregoing, our business, financial condition, prospects and/or operations
could suffer. In such event, the value of the securities you are purchasing could decline, and you could lose all or a substantial
portion of the money that you invest. No inference should be drawn as to the magnitude of any particular risk from its position
in the list of risk factors.  As used in these Risk Factors, “we” and “our” refers to the Company
and its subsidiaries.

 

RISKS RELATED TO OUR BUSINESS

 

We have a very limited operating
history; we have not yet generated revenue and incurred losses since inception; and we expect to continue to incur losses for the
near term. 

 

We have a very limited operating history.
Since our inception in August 2011, we have incurred net losses and as of December 31, 2012, we had an accumulated deficit of $2,953,622.
Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies
in their early stages of operations. We anticipate that our accumulated deficit has grown since December 31, 2012.

 

We continue to experience a severe,
continuing cash shortage and without sufficient additional financing we may not be able to execute our and may be required to cease
operations, and this demonstrates uncertainty as to our ability to continue as a going concern.

 

As of December 31, 2012, our cash and cash
equivalents amounted to $42,948. We generated no revenues in 2012, and we have been dependent upon proceeds from various fundraising
activities to fund our operations. If we do not raise sufficient capital to fund our operations until we can generate sufficient
internal cash flow, we may be required to discontinue or further substantially modify our business. We cannot be certain that
additional financing will be available to us on favorable terms when required, if at all. The failure to raise needed funds could
have a material adverse effect on our business, financial condition, operating results and prospects.  These factors raise
substantial doubt about our ability to continue as a going concern. The report of the independent registered public accounting
firm relating to the audit of our consolidated financial statements for the year ended December 31, 2012 contains an explanatory
paragraph expressing uncertainty regarding our ability to continue as a going concern because of our operating losses and our need
for additional capital. Such explanatory paragraph could make it more difficult for us to raise additional capital and may materially
and adversely affect the terms of any future financing that we may obtain. 

 

    	 

    	 

    

 

We have limited operating history
and as such an investor cannot assess our profitability or performance based on past results. 

 

We are a development stage company, with
limited operations that commenced upon our incorporation in August 2011. Our primary assets consist of our rights to the patent-pending
proprietary chemical compound (BeesVita PlusTM) and dispenser (the BeespenserTM). We have yet to commence
active operations to sell any products associated with the proprietary bee healthcare technologies that we intend to market. We
have no prior operating history from which to evaluate our likelihood of success in operating our business, generating any revenues
or achieving profitability. Accordingly, it is possible that the Securities and Exchange Commission, FINRA, a national exchange
or other regulatory authority may take the position that we are a “shell” company. This determination would restrict
our ability to remove restrictive legends from our securities pursuant to Rule 144.

 

Our operations to date have consisted primarily
of acquiring the patent-pending technology rights to our proprietary chemical compound and dispenser, securing office space, hiring
sales personnel, continuing research and development, hiring laboratory personnel, constructing an industrial model of the BeesFree
Dispenser, commencing the regulatory clearance process in Argentina and Europe, finding manufacturers in the US, Argentina and
Europe, and commencing trials in the US with large, commercial beekeepers. We will require significant additional capital to achieve
our business objectives, and the inability to obtain such financing on acceptable terms or at all could lead to closure of our
business.

 

Our revenue and income potential is uncertain.
Any evaluation of our business and prospects must be considered in light of these factors and the risks and uncertainties often
encountered by companies in the development stage.

 

We are a development stage company
that has a limited operating history, therefore, it is possible that the Securities and Exchange Commission, FINRA, a national
exchange, or other regulatory authority may take the position that we are a “shell” company which would limit the ability
of our shares to be sold under Rule 144. 

 

We are a development stage company, with
limited operations that commenced upon our incorporation in August 2011. Our primary assets consist of our rights to the patent-pending
proprietary chemical compound (BeesVita PlusTM) and dispenser (the BeespenserTM), and we have limited operating
history. We have yet to commence active operations to sell any products associated with the proprietary bee healthcare technologies
that we intend to market. We have no prior operating history from which to evaluate our likelihood of success in operating our
business, generating any revenues or achieving profitability. Accordingly, it is possible that the Securities and Exchange Commission,
FINRA, a national exchange or other regulatory authority may take the position that we are a “shell” company. This
determination would restrict our ability to remove restrictive legends from our securities pursuant to Rule 144.

 

    	 

    	 

    

 

We are developing and attempting to commercialize new
and unproven technologies.

 

We work with and intend to develop new
technologies for the beekeeping healthcare industry that have not yet been proven for commercial application. While we believe
that each of the component agents and compounds that comprise our patent-pending proprietary mix of compounds have proven effective
in promoting greater health in the bee population when being administered individually, we are not certain that our patent-pending
proprietary mix will be effective in combating the effects of CCD or even in improving the health of the bee population, especially
given that scientists have not come to a consensus as to the causes of CCD. In addition, while we have designed the BeespenserTM
using scientifically-proven theories concerning shapes and colors that attract bees, we cannot be sure that the BeespenserTM
will be efficacious in delivering our patent-pending proprietary mix of compounds to the bee population it is intended to serve.
Even if the mix of compounds and the BeespenserTM prove effective, there is no guarantee that these technologies will
be appropriate for commercial application without additional capital investment and a significant amount of work, if at all. It
is therefore possible that products developed by us may not achieve widespread market acceptance. We cannot be certain that any
such products will be able to be commercialized and sold successfully, or at all.

 

We may need additional financing
to fund our activities in the future. 

 

Assuming we raise at
least $1 million in net proceeds in this Offering, we anticipate we will not require additional funding for at least 12 months.
While we anticipate that we will generate revenues in 2013 and may generate sufficient cash flow to be self sufficient, as noted
above, we have limited operating history and an unproven technology. We may consume our available capital if revenues are delayed
or if we are not efficient in developing our products or if regulatory requirements change. We might
seek equity or debt financings in the future to fund our operations. However, in such event, there is no assurance that
we will be successful in raising the additional capital we need to fund our business plan on terms that are acceptable to us, or
at all. If we do not succeed in raising additional funds on acceptable terms, we could be forced to discontinue product development,
forego sales and marketing efforts, sacrifice attractive business opportunities, cease operations entirely and sell or otherwise
transfer all or substantially all of our remaining assets.

 

Our ability to compete successfully
and achieve future revenue will depend on our ability to protect our proprietary technology. 

 

It is possible that the technology for
our proprietary mix of chemical compounds and our (BeesVita PlusTM) and dispenser (the BeespenserTM) may
not provide any competitive advantage to us or will be successfully challenged, invalidated or circumvented in the future. In addition,
potential competitors may have substantial resources and could make significant investments in competing technologies, may seek
to apply for and obtain patents that will prevent, limit or interfere with our ability to make, use or sell our products either
in the U.S. or in international markets.

 

The degree of future protection for our
proprietary rights is uncertain, and we cannot ensure that:

 

		·	we were the first to make the inventions covered by our patent-pending technology;

		·	we were the first to seek a patent application for these inventions;

		·	others will not independently develop similar, or alternative technologies, or duplicate any of our technologies;

    	 

    	 

    

 

		·	our pending patent will be valid or enforceable;

		·	any potential patents issued to us will provide a basis for commercially viable products, will provide us with any competitive
advantages or will not be challenged by third parties;

		·	we will develop additional proprietary technologies or products that are patentable; or

		·	the patents of others will not have an adverse effect on our business.

 

In addition to our proprietary mix of chemical
compounds, we rely on trade secrets and proprietary know-how, which we seek to protect in part through confidentiality and proprietary
information agreements and limit access to and distribution of our proprietary information. Such measures may not provide adequate
protection for our trade secrets or other proprietary information. In addition, our trade secrets or proprietary technology may
become known or be independently developed by competitors. Our failure to protect our proprietary technology could have a material
adverse effect on our business, financial condition and results of operations.

 

Any future litigation over intellectual
property rights would likely involve significant expense on our part and distract our management. 

 

Our ability to compete successfully and
achieve future revenue will depend in part on our ability to operate without infringing on the rights of others and our ability
to enforce our own intellectual property rights. Litigation or claims could result in substantial costs and diversion of resources
and could have a material adverse effect on our business, financial condition, and results of operations. Although there are no
pending lawsuits against us regarding our technology or notices that we are infringing on the intellectual property rights of others,
litigation or infringement claims may arise in the future.

 

We are currently dependent on only
a few products. 

 

Our sole source of revenues for the foreseeable
future is expected to come from sales of the BeespenserTM and bottles of our proprietary mix of chemical compounds (BeesVita
PlusTM). Our operations may be adversely affected by economic, regulatory or similar problems or events that may apply
only to us, only to the beekeeping industry or only within a particular market area in which our products are sold. The adverse
effect of any such problems or events could be more easily absorbed in a more diversified business or one that operates in a variety
of different industries.

 

We may be unable to keep pace with
the technological changes in the beekeeping industry or with the changes facing bee populations worldwide and, as a result, our
technologies may become obsolete. 

 

Although the beekeeping industry is currently
a limited field, with few competitors, potential competitors, including chemical manufacturers, could have significantly greater
resources than us and could employ such resources to compete with our technology and products. Research and discoveries by others
may result in insights or breakthroughs, especially with respect to treatment of CCD, which may render our technologies obsolete
even before they generate any revenue. These factors could have a material adverse effect on our business.

 

    	 

    	 

    

 

We have limited manufacturing experience,
and will depend on third-party suppliers and manufacturers, and if they are unable to deliver, our business may suffer. 

 

To be successful, our products will need
to be manufactured in sufficient quantities, in compliance with regulatory requirements and at an acceptable cost. We have limited
manufacturing experience. We expect to purchase all of our components and supplies from third-party suppliers and to outsource
the manufacturing to contract manufacturers. Although we do not anticipate any difficulties in partnering with suppliers and manufacturers,
due to the generally wide availability of our component parts and the simplicity of the design of our products, we may still experience
significant difficulty in locating suppliers and manufacturers qualified to manufacture our products or components thereof. Further,
manufacturers generally have the right to manufacture similar products that may compete with our products, and to terminate their
agreements without significant penalty under certain conditions. In addition, disclosure of our proprietary technology to a third-party
for manufacturing purposes increases the risk of theft or loss of trade secrets. There can be no assurance that we will be successful
in locating manufacturers or suppliers on terms and conditions or with reputations and experience acceptable to us or that our
trade secrets will not be stolen.

 

Additionally, unanticipated increases in
the prices of our component parts could increase production costs and adversely affect our profitability. While we do not anticipate
significant difficulty fulfilling our supply purchase requirements, we cannot provide any assurances that we will not experience
such difficulties in the future

 

We intend to rely on third parties
whose operations are outside our control.

 

We intend to rely on arrangements with
third-party shippers and carriers such as independent shipping companies for timely delivery of our products to our customers.
As a result, we may be subject to carrier disruptions and increased costs due to factors that are beyond our control, including
labor strikes, inclement weather, natural disasters and rapidly increasing fuel costs. If the services of any of these third parties
become unsatisfactory, we may experience delays in meeting our customers’ product demands and we may not be able to find
a suitable replacement on a timely basis or on commercially reasonable terms. Any failure to deliver products to our customers
in a timely and accurate manner may damage our reputation and could cause us to lose customers.

 

    	 

    	 

    

 

The departure of key personnel could
disrupt our business. 

 

We depend on the continued efforts of our
chief executive officer, our chief scientist, and other senior management. We cannot be certain that any individual will continue
in such capacity for any particular period of time. The loss of key personnel, or the inability to hire and retain qualified employees,
could negatively impact our ability to manage our business.

 

Our revenue may be adversely affected
by fluctuations in currency exchange rates. 

 

Initially, we anticipate that a significant
portion of our revenues and expenses will occur in Argentina and Europe. However, we report our financial condition and results
of operations in U.S. dollars. As a result, fluctuations between the U.S. dollar, the Euro and the Argentine peso will impact the
amount of our revenues. For example, if either the Euro or the Argentine peso appreciates relative to the U.S. dollar, the fluctuation
will result in a positive impact on the revenues that we report. However, if either the Euro or the Argentine peso depreciates
relative to the U.S. dollar, there will be a negative impact on the revenues we report due to such fluctuation. It is possible
that the impact of currency fluctuations will result in a decrease in reported sales even though we have experienced an increase
in sales when reported in the Argentine peso. Conversely, the impact of currency fluctuations may result in an increase in reported
sales despite declining sales when reported in the Argentine peso. The exchange rate from the U.S. dollar to the Euro and the Argentine
peso has fluctuated substantially and may continue to do so in the future. Though we may choose to hedge our exposure to foreign
currency exchange rate changes in the future, there is no guarantee such hedging, if undertaken, will be successful.

 

If we are not successful in protecting
our intellectual property rights, our ability to compete or maintain market share may be harmed. 

 

In order to protect our proprietary technology,
we are dependent on the appropriate authorities granting our patents. However, despite our efforts to protect our intellectual
property, we cannot assure you that:

 

		·	any future patents will not be challenged, invalidated or circumvented;

		·	our pending patent applications or future applications will be approved;

		·	others will not independently develop similar products or processes to our, or design around our, patents; or

		·	Any of the measures described above will provide meaningful protection.

 

It may be possible for a third-party, including
our licensees, to misappropriate our copyrighted material or trademarks. It is possible that existing or future patents may be
challenged, invalidated or circumvented and effective patent, copyright, trademark and trade secret protection may be unavailable
or limited in foreign countries. It may be possible for a third-party to copy or otherwise obtain and use our products or technology
without authorization, develop similar technology independently or design around our pending patents. As a result, despite our
efforts and expenses, we may be unable to prevent others from infringing upon or misappropriating our intellectual property, which
could harm our business.

 

    	 

    	 

    

 

Risks Relating to Our Organization and Our Common Stock

 

Because we became public by means
of a “reverse merger,” we may not be able to attract the attention of major brokerage firms. 

 

There may be risks associated with us becoming
public through a “reverse merger” with a shell company. Although the shell company did not have recent or past operations
or assets and we performed a due diligence review of the shell company, there can be no assurance that we will not be exposed to
undisclosed liabilities resulting from the prior operations of the shell company. Securities analysts of major brokerage firms
and securities institutions may also not provide coverage of us because there were no broker-dealers who sold our stock in a public
offering that would be incentivized to follow or recommend the purchase of our common stock. The absence of such research coverage
could limit investor interest in our common stock, resulting in decreased liquidity. No assurance can be given that established
brokerage firms will, in the future, want to cover our securities or conduct any secondary offerings or other financings on our
behalf.

 

Our certificate of incorporation
allows for our board to create new series of preferred stock without further approval by holders of our Common Stock, which could
adversely affect the rights of the holders of our Common Stock. 

 

Our board of directors has the authority
to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue
preferred stock without further approval by holders of our Common Stock. As a result, our board of directors could authorize the
issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right
to receive dividend payments before dividends are distributed to the holders of Common Stock and the right to the redemption of
the shares, together with a premium, prior to the redemption of our Common Stock. In addition, our board of directors could authorize
the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our
common stock, which could decrease the relative voting power of our Common Stock or result in dilution to our existing stockholders.

 

The Securities are being offered
on “reasonable efforts, no minimum” basis.  

 

The Securities are
being offered on a “reasonable efforts, no minimum” basis.  In this type of offering where there is no minimum
amount necessary to consummate the offering, there is no assurance that the Offering Amount of $2,520,000 will be sold.  Accordingly,
persons purchasing the Securities do so without any assurance that sufficient funds can be raised to satisfy our working capital
needs and to otherwise allow the Company to effectuate its business plan.  The failure to raise the Offering Amount will also
increase the need of the Company to obtain additional financing, which may or may not be available at such time on terms satisfactory
to us, if at all. 

 

    	 

    	 

    

 

The Company may
not have available working capital to satisfy interest payments on the Notes or repay the Notes on maturity. 

 

In the event we do
not raise sufficient funds hereunder or begin generating revenues soon we may be unable to repay the Notes when due. If the Company
fails to timely meet its financial obligations as they come due, its operating results, balances sheet and future ability to raise
capital could be seriously harmed. Furthermore, Company security holders, including Investors in this Offering, may suffer a loss
of all or a substantial portion of their investment in the Company.

 

The Securities, Conversion
Shares and Warrant Shares will not be registered and cannot be sold for at least six months after the Securities are issued.

 

The ability to resell
such securities will depend upon the availability of an exemption to the requirements of Section 5 of the Securities Act. The most
commonly utilized exemption is Rule 144. Under Rule 144, the securities issuable upon conversion of the Notes and exercise of the
Warrants may become eligible for resale six (6) months after the Closing in which the applicable security is issued, so long as
the Company fulfills its current reporting requirements under the Exchange Act. After a year, the current information requirement
no longer applies for purchasers who are not Affiliates of the Company. Any purchasers which are Affiliates of the Company will
be subject to certain other requirements such as volume limitations, manner of share and filing requirements.

 

Our sale of a significant number
of shares of our Common Stock, convertible securities or warrants or the issuance or exercise of stock options could depress the
market price of our stock.

 

The market price of
our Common Stock could decline as a result of sales of substantial amounts of our common stock in the public market or the perception
that substantial sales could occur because of our sale of Common Stock, convertible securities or warrants, or the issuance or
exercise of stock options. These sales also might make it difficult for us to sell equity securities in the future at a time when,
and at a price which, we deem appropriate. As of December 31, 2012, we had stock options to purchase 2,000,000 shares of our
Common Stock outstanding, of which options to purchase 650,000 shares were exercisable. In addition, as of such date we had issued
and outstanding shares of Series A Preferred Stock, Series B Preferred Stock and warrants convertible or exercisable into an aggregate
for 5,139,800 shares of our Common Stock, a significant number of which contain full ratchet and antidilution protection provisions.
Exercise of any current or future outstanding stock options or warrants could harm the market price of our Common Stock.

 

    	 

    	 

    

 

We may be unable to list our
Common Stock, which currently trades on the QTC markets, on the NASDAQ or any other securities exchange, in which case an investor
may find it difficult to dispose of shares or obtain accurate quotations as to the market value of our Common Stock.

 

Although we may apply
to list our common stock on NASDAQ or the NYSE Amex Equities in the future when and if we have stabilized our liquidity concerns,
we may not be able to meet the initial listing standards, including the minimum per share price and minimum capitalization requirements,
of either of those or any other stock exchange, and we may not be able to maintain a listing of our Common Stock on either of those
or any other stock exchange. If we are unable to list our common stock on NASDAQ, the NYSE Amex Equities or another stock exchange,
or to maintain that listing, we expect that our Common Stock will continue to trade on the QTX markets, or possibly another over-the-counter
quotation system or on the "pink sheets," where an investor may find it difficult to dispose of shares or obtain accurate
quotations as to the market value of our Common Stock.  

 

Our Common Stock is considered
a “penny stock” and may be difficult to sell.

 

Our Common Stock is
considered to be a “penny stock” since it meets one or more of the definitions in Rule 3a51-1 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). These include but are not limited to the following: (i) the
stock trades at a price less than $5.00 per share; (ii) it is not traded on a “recognized” national exchange; (iii) it
is not quoted on the NASDAQ Stock Market, or even if so, has a price less than $5.00 per share; or (iv) is issued by a company
with net tangible assets less than $2.0 million, if in business more than a continuous three years, or with average revenues of
less than $6.0 million for the past three years. The principal result or effect of being designated a “penny stock”
is that securities broker-dealers cannot recommend the stock but must trade in it on an unsolicited basis.  Section 15(g)
of the Exchange Act and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to
provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written
receipt of the document before effecting any transaction in a penny stock for the investor’s account.

 

Potential investors
in our offering are urged to obtain and read such disclosure carefully before purchasing any Securities. Moreover, Rule 15g-9 may
be somewhat of an impediment to your sale of the shares of Common Stock underlying the Securities you may purchase, as it requires
broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny
stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or
her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as
to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and
dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation,
investment experience and investment objectives.  Compliance with these requirements may make it more difficult for holders
of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

 

We may not be able to attract
the attention of brokerage firms, which could have a material adverse impact on the market value of our Common Stock.

 

Security analysts of
brokerage firms have not provided, and may not provide in the future, coverage of our common stock since there is limited incentive
to brokerage firms to produce research reports and recommend the purchase of our Common Stock. To date, we have not been able to
attract the attention of brokerage firms and securities analysts. The absence of such attention limits the likelihood that an active
market will develop for our common stock. It also will likely make it more difficult to attract new investors at times when we
require additional capital.

 

    	 

    	 

    

 

The trading price of our Common
Stock is volatile, which could cause the value of an investment in the Company’s securities to decline.

 

The market price of
shares of our Common Stock has been volatile. The price of our Common Stock may continue to fluctuate in response to a number of
factors, such as:

 

		·	our cash resources and our ability to obtain additional funding;

 

		·	announcements by us or a competitor of business developments;

 

		·	our entry into or termination of strategic business relationships;

 

		·	changes in government regulations; and

 

		·	changes in our revenue or expense levels

 

The occurrence of any
of these events may cause the price of our Common Stock to fall. In addition, the stock market in general has experienced volatility
that often has been unrelated to the operating performance or financial condition of individual companies. Any broad market or
industry fluctuations may adversely affect the trading price of our Common Stock, regardless of operating performance or prospects.

 

An investment in the Securities
is speculative and there can be no assurance of any return on any such investment.

 

An investment in the
Securities is speculative and there is no assurance that investors will obtain any return on their investment. Investors will be
subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment.

 

We have broad discretion on
how we use any proceeds we receive from this Offering.

 

Our management has
broad discretion on how to use and spend any proceeds we receive from this Offering and may use the proceeds in ways that differ
from the proposed uses discussed in this Agreement. Our stockholders may not agree with our decision on how to use such proceeds.
If we fail to spend the proceeds effectively, our business and financial condition could be harmed and we may need to seek additional
financing sooner than expected.

 

The Securities may be purchased
by parties that are related to our Company.

 

Our
officers, directors, employees and related parties (including current shareholders and related parties of shareholders) may purchase
Securities in this Offering and such amounts will be included in determining whether the Offering Amount has been sold.
Because there may be substantial purchases by affiliates
of the Company, no potential investor should place any reliance on the sale of any amount of the Securities as an indication of
the merits of the Offering. Each investor must make his own investment decision as to the merits of the Offering.

 

    	 

    	 

    

 

The Note conversion price and
the Warrant exercise price were determined by the Company and may not be indicative of the Company’s actual value or the
value of the Common Stock underlying the Notes or Warrants.

 

The purchase price
of the Securities, the conversion price of the Notes and the exercise price of the Warrants were determined by the Company and
took into account, among other things, previous prices of our Common Stock, our business and growth plans, and other factors that
we deemed relevant. The purchase price of the Securities, the conversion price of the Notes and the Warrant exercise price are
not necessarily related to the asset value, net worth or any other established criteria of value of the Company.

 

Investors in this Offering
will experience immediate and substantial dilution.

 

The investors in this
Offering will experience an immediate and substantial dilution of their investment. Therefore, the investors in this Offering
will bear a substantial portion of the risk of loss, while control of our Company will remain in the hands of our Company’s
officers, directors and founders.

 

The Securities, Conversion
Shares and Warrant Shares will be subject to restrictions on transfer.

 

The Securities and
the securities issuable upon conversion and exercise thereof have not been registered under the Securities Act, or under the securities
laws of any state, but are being offered and sold in reliance upon exemptions from registration thereunder, including the exemptions
from federal registration contained in Rule 506 of Regulation D promulgated thereunder and applicable state laws. As a consequence
of the restrictions on subsequent transfer imposed by these exemptions, the Securities may not subsequently be sold, assigned,
conveyed, pledged, hypothecated or otherwise transferred by the holder thereof, whether or not for consideration, except upon registration
of such securities or the issuance to us of such evidence as may be satisfactory to counsel for us to the effect that any such
transfer will not be in violation of the Securities Act, and applicable state securities laws. Investors of the Securities must
be prepared to bear the economic risks of investment for an indefinite period of time since the Securities cannot be sold unless
they are subsequently registered or an exemption from registration is available, such as afforded pursuant to Rule 144 of the Securities
Act.

 

The Offering has not been reviewed
or approved by regulatory agencies.

 

The sale of the Notes
and Warrants offered hereby has not been approved or disapproved by the Commission or any state regulatory agencies, and no regulatory
body has passed upon or endorsed the accuracy, adequacy, or completeness of the information in this Agreement. Accordingly, prospective
investors must rely on their own examination of the Agreement, including, without limitation, the merits of, and risks involved
in, acquiring the Notes and Warrants.

 

    	 

    	 

    

 

RISKS RELATED TO THE COMPANY’S
PRIOR FINANCING ARRANGEMENTS

 

The purchase price protection
features of the Company’s securities issued in prior private placements could require the Company to issue a substantially
greater number of shares of Common Stock, which will cause dilution to the Company’s stockholders.

 

On
October 10, 2012 the Company completed a private offering of an aggregate of 3,099 shares of
the Company’s Series B Preferred Stock and warrants (“Series B Warrants”) to purchase up to 309,900 shares of
Common Stock (the “2012 Private Placement”). The Series B Preferred Stock is convertible
into shares of Common Stock at an initial conversion price of $1.75 per share (or initially 100 shares per share of Series B Preferred
Stock, or 309,900 shares of Common Stock in the aggregate). The warrants are exercisable at $2.26 per share. If we issue
shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock, for a consideration at a
price per share, or having a conversion, exchange or exercise price per share less than the conversion price of the Series B Preferred
Stock or the exercise price of the Series B Warrants in effect prior to such sale or issuance, then immediately prior to such sale
or issuance the conversion price of the conversion price of the Series B Preferred Stock and the exercise price of the Series B
Warrants shall be reduced to such other lower price. Based on the foregoing adjustment provision, upon
consummation of this Offering, investors in the 2012 Private Placement will be entitled to a
significant number of additional warrants and reduction of the exercise price of a significant number of outstanding warrants.

 

    	 

    	 

    

 

EXHIBIT A

 

FORM OF NOTE

 

    	 

    	 

    

 

EXHIBIT B

 

FORM OF WARRANT

 

    	 

    	 

    

 

EXHIBIT C

 

FORM OF SECURITY AGREEMENTExhibit 10.6

 

 

 

 

 

 

 

 

 

 

 

 

 

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

 

AND

 

ARCH THERAPEUTICS, INC.

 

AMENDED AND RESTATED EXCLUSIVE PATENT
LICENSE AGREEMENT

 

    	 

    	 

    

 

TABLE OF CONTENTS

 

	R E C I T A L S	3
	1.  DEFINITIONS.	5
	2.  GRANT OF RIGHTS.	10
	3.  COMPANY DILIGENCE OBLIGATIONS.	12
	4.  ROYALTIES AND PAYMENT TERMS.	14
	5.  REPORTS AND RECORDS.	19
	6.  PATENT PROSECUTION.	21
	7.  INFRINGEMENT.	22
	8.  INDEMNIFICATION AND INSURANCE	24
	9.  NO REPRESENTATIONS OR WARRANTIES	26
	10.  ASSIGNMENT.	26
	12.  GENERAL COMPLIANCE WITH LAWS	28
	13.  TERMINATION	29
	14.  DISPUTE RESOLUTION.	31
	15.  MISCELLANEOUS.	32
	APPENDIX A	36
	APPENDIX B	38
	EXHIBIT A	41
	EXHIBIT B	41

 

    	ii

    	 

    

  

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

AMENDED AND RESTATED EXCLUSIVE PATENT
LICENSE AGREEMENT

 

 

This Agreement, effective as of the date
set forth above the signatures of the parties below (the "EFFECTIVE DATE"), is between the Massachusetts Institute of
Technology ("M.I.T."), a Massachusetts corporation, with a principal office at 77 Massachusetts Avenue, Cambridge, MA
02139-4307 and Arch Therapeutics, Inc. (f/k/a Clear Nano Solutions, Inc.) ("COMPANY"), a Massachusetts corporation having
its principal office at 1 Chieftain Lane, Natick, MA 01760.

 

R E C I T A L
S

 

WHEREAS, M.I.T. is the owner of certain
PATENT RIGHTS A (as later defined herein) relating to M.I.T. Case No. 6008, "Self-Assembly Of An Oligopeptide To Form
A Robust Macroscopic Membranous Structure," by Todd Holmes, Curtis Lockshin, Alexander Rich and Shuguang Zhang, M.I.T.
Case No. 6692, "Oligopeptide-Based Biomaterials Which Support Cell Attachment And Cell Growth And Neurite Outgrowth,"
by C. Michael Dipersio, Todd Holmes, Curtis Lockshin, Alexander Rich and Shuguang Zhang, M.I.T. Case No. 8813, "Encapsulation
Of Chondrocytes In Self-Assembling Peptide Gel For Applications To Cartilage Tissue Engineering," by Alan J. Grodzinsky, John
Kisiday and Shuguang Zhang, M.I.T. Case No. 9344, "Liver Cellular Reprogramming In Peptide Scaffold And Uses Thereof,"
by Carlos E. Semino, Colette Shen, James L. Sherley and Shuguang Zhang, M.I.T. Case No. 9786, "Self-assembling Peptide
Scaffold Hydrogels Bridge Lesions in Central Nervous System," by Rutledge Ellis-Behnke, Gerald E. Schneider, Carlos E. Semino
and Shuguang Zhang and M.I.T. Case No. 10154, "Designed Peptide Scaffold with Biological Activities and Uses Thereof,"
by Elsa Genove, Carlos E. Semino and Shuguang Zhang and has the right to grant licenses under said PATENT RIGHTS A;

 

WHEREAS, M.I.T. has the right to grant a
license to Arch Therapeutics, Inc. in Field A under PATENT RIGHTS A in Appendix A;

 

WHEREAS, M.I.T. and Versitech Limited ("Versitech"),
the technology transfer company of The University of Hong Kong, are the owners of certain PATENT RIGHTS B (as later defined herein)
relating to M.I.T. Case No. 11366, "Instantaneous Hemostasis," by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald
E. Schneider, Kwok-Fai So, David K C. Tay and Shuguang Zhang; and M.I.T. Case No. 12061, “Compositions and Methods
for Promoting Hemostasis and other Physiological Activities.” by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider,
Kwok-Fai So and David K C. Tay;

 

    	3

    	 

    

 

WHEREAS, M.I.T. has the right to grant licenses
under said PATENT RIGHTS B subject to the M.I.T. - Versitech Joint Invention Agreement effective September 7, 2005 hereby incorporated
in its entirety as Appendix D;

 

WHEREAS, Rutledge Ellis-Behnke, an inventor
of the PATENT RIGHTS and current employee of M.I.T., has acquired equity in COMPANY, the Conflict Avoidance Statement of Rutledge
Ellis-Behnke is attached as Exhibit A hereto;

 

WHEREAS, Rutledge Ellis-Behnke, an
inventor of the PATENT RIGHTS, has acquired equity in COMPANY not resulting from this Agreement, the Inventor/Author Acknowledgment
of No Equity Distribution in M.I.T.'s institutional equity share of Rutledge Ellis-Behnke is attached as Exhibit B hereto;

 

WHEREAS, M.I.T.'s Vice President for Research
has approved that Rutledge Ellis-Behnke, an inventor of the PATENT RIGHTS, now holds equity in COMPANY and that M.I.T. is accepting
equity as partial consideration for the rights and licenses granted under this Agreement;

 

WHEREAS, M.I.T. desires to have the PATENT
RIGHTS developed and commercialized to benefit the public and is willing to grant a license thereunder;

 

WHEREAS, COMPANY has represented to M.I.T.,
to induce M.I.T. to enter into this Agreement, that COMPANY shall commit itself to a thorough, vigorous and diligent program of
exploiting the PATENT RIGHTS so that public utilization shall result therefrom; and

 

WHEREAS, M.I.T. and COMPANY are party that
certain Exclusive License Agreement dated December 5, 2007 (the “Prior Agreement”), pursuant to which the COMPANY obtained
a license under the PATENT RIGHTS upon the terms and conditions set forth therein;

 

WHEREAS, M.I.T. and COMPANY are party that
certain First Amendment to the Prior Agreement dated October 28, 2010 (the “First Amendment”), pursuant to which the
PATENT RIGHTS associated with M.I.T. Case No. 6008 were deleted from the PATENT RIGHTS A;

 

    	4

    	 

    

  

WHEREAS, M.I.T. subsequently granted to
3D Matrix Ltd. (“3DM”) an exclusive, world-wide license to certain patent rights associated with M.I.T. Case No. 6008
in the field of medical and life sciences applications and cosmetics;

 

WHEREAS, M.I.T., the COMPANY and 3DM are
party to that certain Non-Exclusive Patent Sublicense Agreement dated October 28, 2010, as amended by that certain First Letter
Agreement dated [January 3, 2011], pursuant to which 3DM granted to COMPANY a free, fully-paid up, royalty-free, non-exclusive,
world-wide sublicense under its in-licensed patent rights associated with M.I.T. Case No. 6008 in the STASIS FIELD OF USE;

 

WHEREAS, M.I.T. and the COMPANY now desire
to amend and restate the Prior Agreement, in order to revise, clarify and restate the respective benefits and obligations of the
parties as hereinafter set forth.

 

NOW, THEREFORE, M.I.T. and COMPANY, in
consideration of the premises and for other good and valuable consideration the sufficiency of which is hereby acknowledged, hereby
agree that the Prior Agreement shall be amended and restated as follows: 

 

1. DEFINITIONS.

 

1.1 "AFFILIATE" shall mean
any legal entity (such as a corporation, partnership, joint venture or limited liability company) that is directly or indirectly
controlled by COMPANY. For the purposes of this definition, the term "control" means (i) beneficial ownership of at least
fifty percent (50%) of the voting securities of a corporation or other business organization with voting securities or (ii) a fifty
percent (50%) or greater interest in the net assets or profits of a partnership or other business organization without voting securities.

 

"CELLULAR
DELIVERY" shall mean applications for the delivery of cells.

 

"CONFIDENTIAL
INFORMATION" shall mean any confidential or proprietary
information furnished by one party (the “Disclosing Party”) to the other party (the “Receiving Party”)
in connection with this Agreement, provided that such information is specifically designated as confidential. Such CONFIDENTIAL
INFORMATION shall include, without limitation, any diligence reports furnished to M.I.T. under Section 3.1, royalty reports furnished
to M.I.T. under Section 5.2 and copies of sublicenses furnished to M.I.T. under Section 2.4.

 

    	5

    	 

    

 

“COMMERCIAL
SALE” shall mean the final transfer or sale by COMPANY, an AFFILIATE
or SUBLICENSEE, whether at retail, wholesale or otherwise, of any LICENSED PRODUCT to a party that is not an AFFILIATE or SUBLICENSEE
hereunder. The following are not deemed to be COMMERCIAL SALE: a transfer to an AFFILIATE or SUBLICENSEE for purposes of clinical
trials, research and development or other testing, or provision of samples of LICENSED PRODUCT for research, development, manufacturing
or marketing purposes but not for resale. 

 

1.5“EXCLUSIVE PERIOD"
shall mean the TERM as defined in Section 1.18

 

1.6"FIELD
A" shall mean all Products, Methods of Manufacture
and Methods of Use Thereof for all
STASIS, ADHESION AND BARRIER APPLICATIONS, but specifically excluding CELLULAR DELIVERY.

 

1.7"FIELD B" shall
mean all fields.

 

1.8"LICENSED PRODUCT"
shall mean any product that, in whole or in part:

(a)absent the license granted hereunder,
would infringe one or more claims of the PATENT RIGHTS; or

(b)is manufactured by using a LICENSED
PROCESS or that, when used, practices a LICENSED PROCESS.

 

1.9"LICENSED PROCESS"
shall mean any process that, absent the license granted hereunder, would infringe one or more claims of the PATENT RIGHTS or which
uses a LICENSED PRODUCT.

 

1.10 "NET SALES" shall
mean the gross amount billed by COMPANY and its AFFILIATES and SUBLICENSEES for LICENSED PRODUCTS and LICENSED PROCESSES intended
for COMMERCIAL SALE, less the following:

(a) customary trade, quantity, or cash discounts,
chargebacks and rebates to the extent actually allowed and taken;

(b) amounts repaid or credited by reason of
rejection or return;

(c) to the extent separately stated on purchase
orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation,
delivery, or use of a LICENSED PRODUCT or LICENSED PROCESS which is paid by or on behalf of COMPANY; and

(d) outbound transportation costs prepaid
or allowed and costs of insurance in transit.

 

    	6

    	 

    

 

If COMPANY or any of its AFFILIATES or SUBLICENSEES
sell any LICENSED PRODUCT or LICENSED PROCESS in a COMMERCIAL SALE as a component of a combination of elements, then the ADJUSTED
NET SALES shall be determined by multiplying NET SALES of such combination by the fraction A over A + B, in which “A”
is the gross amount billed for the LICENSED PRODUCT and/or LICENSED PROCESS portion of the combination when sold separately during
the REPORTING PERIOD in the country in which the sale was made, and “B” is the gross amount billed for the other elements
of the combination sold separately during said REPORTING PERIOD in said country. In the event that no separate sale of either such
LICENSED PRODUCT and/or LICENSED PROCESS or other elements of the combination is made during said REPORTING PERIOD in said country,
the ADJUSTED NET SALES shall be determined by multiplying the NET SALES of such combination by the fraction C over C + D, in which
“C” is the fully-absorbed cost of the LICENSED PRODUCT and/or LICENSED PROCESS portion of the combination, and “D”
is the sum of the fully-absorbed costs of the other elements of the combination , such costs being arrived at using the standard
accounting procedures of COMPANY which will be in accord with generally accepted accounting practices.

 

No deductions shall
be made for commissions paid to individuals whether they be with independent sales agencies or regularly employed by COMPANY and
on its payroll, or for cost of collections. NET SALES shall occur on the date of billing for a LICENSED PRODUCT or LICENSED
PROCESS. If a LICENSED PRODUCT or a LICENSED PROCESS is distributed for COMMERCIAL SALE at a discounted
price that is substantially lower than the customary price or market driven prices charged by COMPANY or distributed for COMMERCIAL
SALE for non-cash consideration (whether or not at a discount), NET SALES shall be calculated based on the non-discounted amount
of the LICENSED PRODUCT or LICENSED PROCESS charged to an independent third party during the same REPORTING PERIOD or, in the absence
of such sales, on the fair market value of the LICENSED PRODUCT or LICENSED PROCESS. Sales or other transfers between or
among COMPANY and any of its AFFILIATES for the purpose of subsequent resale to third parties shall not be included in the calculation
of NET SALES.

 

Non-monetary
consideration shall not be accepted by COMPANY, any AFFILIATE, or any SUBLICENSEE for any LICENSED PRODUCTS or LICENSED
PROCESSES intended for COMMERCIAL SALE without the prior written consent of M.I.T.

 

    	7

    	 

    

  

NET SALES will be calculated only once with
respect to each LICENSED PRODUCT or LICENSED PROCESS sold by COMPANY, any AFFILIATE and/or any SUBLICENSEE, even if such LICENSED
PRODUCT or LICENSED PROCESS is sold more than once in the course of its transfer to the ultimate end-user. The foregoing notwithstanding,
NET SALES will not include transfers among the COMPANY, any AFFILIATE and/or any SUBLICENSEE unless the recipient is the end-user.

 

1.11“PATENT CHALLENGE”
shall mean a challenge to the validity, patentability, enforceability and/or non-infringement of any of the PATENT RIGHTS (as defined
below) or otherwise opposing any of the PATENT RIGHTS.

 

1.12"PATENT RIGHTS "
shall mean PATENT RIGHTS A and PATENT RIGHTS B.

 

1.13"PATENT RIGHTS A"
shall mean:

(a)the United States and international
patents listed on Appendix A;

(b)the United States and international
patent applications and/or provisional applications listed on Appendix A and the resulting patents;

(c)any patent applications resulting from
the provisional applications listed on Appendix A, and any divisionals, continuations, continuation-in-part applications,
and continued prosecution applications (and their relevant international equivalents) of the patent applications listed on Appendix
A and of such patent applications that result from the provisional applications listed on Appendix A, to the extent
the claims are directed to subject matter specifically described in the patent applications listed on Appendix A, and the
resulting patents;

(d)any patents resulting from reissues,
reexaminations, or extensions (and their relevant international equivalents) of the patents described in (a), (b), and (c) above;
and

(e)international (non-United States) patent
applications and provisional applications filed after the EFFECTIVE DATE and the relevant international equivalents to divisionals,
continuations, continuation-in-part applications and continued prosecution applications of the patent applications to the extent
the claims are directed to subject matter specifically described in the patents or patent applications referred to in (a), (b),
(c), and (d) above, and the resulting patents.

 

1.14"PATENT RIGHTS B"
shall mean:

(a)the United States and international
patents listed on Appendix B;

(b)the United States and international
patent applications and/or provisional applications listed on Appendix B and the resulting patents;

 

    	8

    	 

    

  

(c)any patent applications resulting from
the provisional applications listed on Appendix B, and any divisionals, continuations, continuation-in-part applications,
and continued prosecution applications (and their relevant international equivalents) of the patent applications listed on Appendix
B and of such patent applications that result from the provisional applications listed on Appendix B, to the extent
the claims are directed to subject matter specifically described in the patent applications listed on Appendix B, and the
resulting patents;

(d)any patents resulting from reissues,
reexaminations, or extensions (and their relevant international equivalents) of the patents described in (a), (b), and (c) above;
and

(e)international (non-United States) patent
applications and provisional applications filed after the EFFECTIVE DATE and the relevant international equivalents to divisionals,
continuations, continuation-in-part applications and continued prosecution applications of the patent applications to the extent
the claims are directed to subject matter specifically described in the patents or patent applications referred to in (a), (b),
(c), and (d) above, and the resulting patents.

 

1.15"PRODUCT DEVELOPMENT
PAYMENTS" shall mean payments to COMPANY or an AFFILIATE from a SUBLICENSEE for the purposes of funding bona fide
research and development of LICENSED PRODUCTS or LICENSED PROCESSES and that are expressly intended only to fund or pay for:

(a) the purchase of equipment, supplies,
products or services

(b) the assignment of or hiring of employees
and/or consultants to achieve a research or development goal for the commercialization of LICENSED PRODUCTS AND LICENSED PROCESSES,
as indicated by their inclusion as specific line items in a written agreement between COMPANY or AFFILIATE and the SUBLICENSEE

(c) reasonable overhead charges related to
the direct expense described in (a) and (b) above

 

1.16“RAISE CAPITAL”
shall mean (i) receive funds or property from the issuance of securities, (ii) acquire an interest in a joint venture to the extent
of the proportionate share of such acquired joint venture interest in the funds or property, (iii) receive funds, services or property
by way of a research or development grant from governmental, non-governmental or private sources, either as reimbursement of previously
conducted research and development activities or for future research and development activities or (iv) receive funds, services
or property (including, without limitation, as upfront, royalty, milestone, license maintenance, option or exclusivity fees or
other payments or income) from consulting, feasibility studies, licenses, sublicenses (including from SUBLICENSEES), or contracts
with partners of COMPANY.

 

    	9

    	 

    

 

1.17"REPORTING PERIOD"
shall begin on the first day of each calendar quarter and end on the last day of such calendar quarter.

 

1.18"STASIS,
ADHESION AND BARRIER APPLICATIONS" shall mean applications
for the prevention or control of the movement or
leakage of solid, fluid or gaseous substances in or on the body (including, but not limited to, bleeding, blood and blood components,
cerebral spinal fluid, intestinal content or fluid, gas or air, bacteria), for hemostasis, for the prevention or control of surgical
or other types of adhesions, or which function as a barrier (including, but not limited to, reduction of contamination).

 

1.19"SUBLICENSE INCOME"
shall mean any payments that COMPANY or an AFFILIATE receives from a SUBLICENSEE in consideration of the sublicense of the rights
granted COMPANY and AFFILIATES under Sections 2.1 and 2.2, including
without limitation license fees, milestone payments, and license maintenance fees, but specifically excluding funds received
from the issuance of securities in COMPANY, funds received by way of a research or development grant from governmental, non-governmental
or private sources, PRODUCT DEVELOPMENT PAYMENTS, reimbursement of manufacturing expenses and royalties on NET SALES.

 

1.20 "SUBLICENSEE"
shall mean any non-AFFILIATE sublicensee of the rights granted COMPANY under Sections
2.1 and 2.2, that has been retained for COMMERCIAL SALE. 

 

1.21 "TERM" shall mean
the term of this Agreement, which shall commence on the EFFECTIVE DATE and shall remain in effect until the expiration or abandonment
of all issued patents and filed patent applications within the PATENT RIGHTS, unless earlier terminated in accordance with the
provisions of this Agreement.

 

1.22 "TERRITORY" shall
mean worldwide.

 

2. GRANT OF RIGHTS.

 

2.1 License Grants
under PATENT RIGHTS A. Subject to the terms of this Agreement,
M.I.T. hereby grants to COMPANY and its AFFILIATES for the TERM a non-exclusive royalty-bearing license under the PATENT RIGHTS
A to develop, make, have made, use, sell, offer to sell, lease, and import LICENSED PRODUCTS in the FIELD A in the TERRITORY and
to develop and perform LICENSED PROCESSES in the FIELD A in the TERRITORY.

 

    	10

    	 

    

 

2.2 License Grants
under PATENT RIGHTS B. Subject to the terms of this Agreement,
M.I.T. hereby grants to COMPANY and its AFFILIATES for the TERM a royalty-bearing exclusive license under the PATENT RIGHTS B to
develop, make, have made, use, sell, offer to sell, lease, and import LICENSED PRODUCTS in the FIELD B in the TERRITORY and to
develop and perform LICENSED PROCESSES in the FIELD B in the TERRITORY.

 

2.3
 Exclusivity under
PATENT RIGHTS B. In order to establish an exclusive period for COMPANY, M.I.T. agrees that it
shall not grant and has not granted any other license under the PATENT RIGHTS B to make, have made, use, sell, lease and import
LICENSED PRODUCTS in the FIELD B in the TERRITORY or to perform LICENSED PROCESSES in the FIELD B in the TERRITORY until the expiration
of the TERM.

 

2.4 Sublicenses COMPANY shall have
the right to grant sublicenses of its rights under Sections 2.1 and
2.2 Any exclusivity of such sublicenses
shall be limited to the PATENT RIGHTS B. The term of any sublicense
may extend past the expiration date of the EXCLUSIVE PERIOD, but any exclusivity of such sublicense shall expire upon the expiration
of the EXCLUSIVE PERIOD. COMPANY shall incorporate terms and conditions into its sublicense agreements sufficient to enable COMPANY
to comply with this Agreement. COMPANY shall also include provisions in all sublicenses to provide that in the event that SUBLICENSEE
brings a PATENT CHALLENGE against M.I.T. or assists another party in bringing a PATENT CHALLENGE against M.I.T. (except as required
under a court order or subpoena) then COMPANY may terminate the sublicense. COMPANY shall promptly furnish M.I.T. with a fully
signed photocopy of any sublicense agreement. Upon termination of this Agreement for any reason, any SUBLICENSEE not then in default
shall have the right to seek a license from M.I.T. M.I.T. agrees to negotiate such licenses in good faith under reasonable terms
and conditions.

 

2.5 Retained Rights.

 

(a) M.I.T. M.I.T. retains the right
to practice under the PATENT RIGHTS for research, teaching, and educational purposes.

 

(b) Federal Government. COMPANY
acknowledges that the U.S. federal government retains a royalty-free, non-exclusive, non-transferable license to practice any government-funded
invention claimed in any PATENT RIGHTS as set forth in 35 U.S.C. §§ 201-211, and the regulations promulgated thereunder,
as amended, or any successor statutes or regulations.

 

    	11

    	 

    

 

2.6 No Additional Rights. Nothing
in this Agreement shall be construed to confer any rights upon COMPANY by implication, estoppel, or otherwise as to any technology
or patent rights of M.I.T. or any other entity other than the PATENT RIGHTS, regardless of whether such technology or patent rights
shall be dominant or subordinate to any PATENT RIGHTS.

 

3. COMPANY DILIGENCE
OBLIGATIONS.

 

3.1 Diligence Requirements. COMPANY
shall use diligent efforts, or shall cause its AFFILIATES and SUBLICENSEES to use diligent efforts, to develop LICENSED PRODUCTS
or LICENSED PROCESSES and to introduce LICENSED PRODUCTS or LICENSED PROCESSES into the commercial market; thereafter, COMPANY
or its AFFILIATES or SUBLICENSEES shall make LICENSED PRODUCTS or LICENSED PROCESSES reasonably available to the public. Specifically,
COMPANY or AFFILIATE or SUBLICENSEE shall fulfill the following obligations:

 

(a)M.I.T. acknowledges that COMPANY has
previously furnished M.I.T. a written research and development plan describing the major tasks to be achieved in order to bring
to market a LICENSED PRODUCT or a LICENSED PROCESS, specifying the number of staff and other resources to be devoted to such commercialization
effort.

 

(b) Within ninety (90) days after the
end of each calendar year, COMPANY shall furnish M.I.T. with a written report on the progress of its efforts during the immediately
preceding calendar year to develop and commercialize LICENSED PRODUCTS or LICENSED PROCESSES. The report shall also contain a discussion
of intended efforts and sales projections for the year in which the report is submitted.

 

(c)COMPANY shall permit an in-plant inspection
by M.I.T. at regular intervals with at least six (6) months between each such inspection.

 

(d)M.I.T. acknowledges that COMPANY successfully
RAISED CAPITAL in the amount of at least One Million Dollars ($1,000,000) prior to January 1, 2009.

 

    	12

    	 

    

 

(e)In the aggregate, COMPANY shall RAISE
CAPITAL of at least Four Million Dollars ($4,000,000) by July 1, 2013.

 

(f)M.I.T. acknowledges that COMPANY successfully
funded the equivalent of no less than Three Hundred Thousand Dollars ($300,000) (it being agreed that such funding may take the
form of cash or cash equivalents, and/or equity grants and/or contributed/granted/donated services performed by third parties if
such services result data or other results which can be accessed by COMPANY) toward the development or commercialization of LICENSED
PRODUCTS and/or LICENSED PROCESSES in 2007 (pro-rated for partial year). M.I.T. acknowledges that COMPANY successfully funded the
equivalent of no less than Six Hundred Thousand Dollars ($600,000) (it being agreed that such funding may take the form of cash
or cash equivalents, and/or equity grants and/or contributed/granted/donated services performed by third parties if such services
result data or other results which can be accessed by COMPANY) toward the development or commercialization of LICENSED PRODUCTS
and/or LICENSED PROCESSES in 2008, 2009 and 2010.

 

(h)COMPANY shall fund the equivalent of
no less than Six Hundred Thousand Dollars ($600,000) (it being agreed that such funding may take the form of cash or cash equivalents,
and/or equity grants and/or contributed/granted/donated services performed by third parties if such services result data or other
results which can be accessed by COMPANY) toward the development or commercialization of LICENSED PRODUCTS and/or LICENSED PROCESSES
in each calendar year (pro-rated for partial years) beginning in 2011 and ending with the first commercial sale of a LICENSED PRODUCT
or a first commercial performance of a LICENSED PROCESS.

 

(i)M.I.T. acknowledges that on or before
July 1, 2009, COMPANY initiated an animal trial to collect data on the safety and effectiveness of a LICENSED PRODUCT.

 

(j)M.I.T. acknowledges that COMPANY has
entered into a commercially reasonable business arrangement with at least one manufacturing partner.

 

(k)COMPANY will initiate a pre-investigational
or comparable consultation with an appropriate center within a regulatory authority by 2014.

 

(l)COMPANY shall submit an investigational
new drug application, investigational device exemption or comparable application to an appropriate center within a regulatory agency
for sale of a LICENSED PRODUCT by January 1, 2018 or achieve NET SALES of a LICENSED PRODUCT and/or a first commercial performance
of a LICENSED PROCESS on or before January 1, 2019 in excess of $500,000.

 

    	13

    	 

    

 

In the event that COMPANY (or an AFFILIATE
or SUBLICENSEE) has failed to fulfill any of its obligations under this Section 3.1, then M.I.T. may treat such failure as a material
breach in accordance with Section 12.3(b).

 

4. ROYALTIES
AND PAYMENT TERMS.

 

4.1 Consideration for Grant of Rights.

 

(a) License Issue Fee and Patent Cost
Reimbursement. M.I.T. acknowledges that COMPANY paid to M.I.T. on the effective date of the Prior Agreement a license issue
fee of Twenty-five Thousand dollars ($25,000), and, in accordance with Section 6.3, reimbursed M.I.T. for its actual expenses incurred
as of the effective date of the Prior Agreement in connection with obtaining the PATENT RIGHTS. These payments are nonrefundable
and are pursuant to the schedule outlined in Section 6.3(c).

 

(b) License Maintenance Fees. M.I.T.
acknowledges that COMPANY previously paid M.I.T a license maintenance fee in the amount of $10,000 for the calendar year commencing
on January 1, 2009 and in the amount of $10,000 for the calendar year commencing on January 1, 2010. There shall be no license
maintenance fee for the calendar year commencing on January 1, 2011. COMPANY shall pay to M.I.T. the following license maintenance
fees within 30 (thirty) days of the dates set forth below:

 

	January 1, 2012	$25,000
	and each January 1 of 	 
	every year thereafter	$25,000

 

This annual license maintenance fee is nonrefundable;
however, the license maintenance fee shall be credited to running royalties subsequently due on NET SALES earned during the same
calendar year, if any. License maintenance fees paid in excess of running royalties due in such calendar year shall not be creditable
to amounts due for future years.

 

    	14

    	 

    

 

(c)
Running Royalties. COMPANY shall pay to M.I.T. a running royalty of three percent (3%) of NET SALES or ADJUSTED NET SALES,
as appropriate, by COMPANY, AFFILIATES and SUBLICENSEES. Running
royalties shall be payable for each REPORTING PERIOD and shall be due to M.I.T. within ninety (90) days of the end of each REPORTING
PERIOD. 

 

		(d)	Sharing of SUBLICENSE INCOME. COMPANY shall pay M.I.T. a total of

fifteen percent (15%) of all SUBLICENSE INCOME
received by COMPANY or AFFILIATES, excluding running royalties on NET SALES of SUBLICENSEES (which are payable pursuant to clause
(c) above).

 

Such amount shall be payable for each REPORTING
PERIOD and shall be due to M.I.T. within ninety (90) days of the end of each REPORTING PERIOD.

 

(e)Milestone Payment. COMPANY
shall pay to M.I.T. a one-time milestone payment of Fifty Thousand Dollars ($50,000) upon the first COMMERCIAL SALE of a LICENSED
PRODUCT by COMPANY, its AFFILIATE or SUBLICENSEE. This payment is nonrefundable and amounts due pursuant to this Section will be
paid to M.I.T. over the subsequent 12 months in approximately equal quarterly installments within thirty (30) days of invoicing.

 

(f)Third
Party Royalty Offset. If COMPANY or an AFFILIATE or SUBLICENSEE is required to pay royalties to one or more third parties to
obtain a patent license in the absence of which it could not legally make, import, use, sell, or offer for sale LICENSED PRODUCTS
or LICENSED PROCESSES in any country, and COMPANY provides M.I.T. with reasonably satisfactory evidence of such third-party royalty
payment requirements, including a signed copy of any such license agreements, then COMPANY may offset a total of fifty percent
(50%) of such third-party payments against running royalties owed to M.I.T. as defined in Section 4.1
(c) above, hereunder, provided that COMPANY requires such third parties to offset its royalties as a result of royalties
paid to M.I.T. by at least the same amount and provided that in no one year shall the aggregate of all
such expenses be credited against more than fifty percent (50%) of royalty payments that would otherwise be due to M.I.T. 

 

(g)Consequences of a PATENT CHALLENGE.
In the event that (i) COMPANY or any of its AFFILIATES brings a PATENT CHALLENGE against M.I.T., or (ii) COMPANY or any of its
AFFILIATES assists another party in bringing a PATENT CHALLENGE against M.I.T. (except as required under a court order or subpoena),
and (iii) M.I.T. does not choose to exercise its rights to terminate this Agreement pursuant to Section 12.4, then in the event
that such a PATENT CHALLENGE is successful, COMPANY will have no right to recoup any royalties paid during the period of challenge.
In the event that a PATENT CHALLENGE is unsuccessful, COMPANY shall reimburse M.I.T. for all reasonable legal fees and expenses
incurred in its defense against the PATENT CHALLENGE.

 

    	15

    	 

    

 

(h)No Multiple Royalties. If
the manufacture, use, lease, or sale of any LICENSED PRODUCT or the performance of any LICENSED PROCESS is covered by more than
one of the PATENT RIGHTS, multiple royalties shall not be due.

 

(i)Equity.

 

(i)Initial Grant. COMPANY shall
issue a total of FORTY SIX THOUSAND SEVEN HUNDRED (46,700) shares of Common Stock of COMPANY, no par value per share,
(the "Shares") in the name of M.I.T. and of such persons as M.I.T. shall direct ("M.I.T. Holder"), and each
M.I.T. Holder shall receive such number of shares as M.I.T. shall direct. Such issuance shall be recorded on the Stock Transfer
Ledger of COMPANY on the EFFECTIVE DATE and the Shares shall be delivered to M.I.T. and M.I.T. Holders, if any, within thirty (30)
days of the EFFECTIVE DATE.

 

COMPANY represents to M.I.T. that, as of
the Effective Date, the aggregate number of Shares equals Four Percent (4%) of the COMPANY's issued and outstanding Common Stock
calculated on a "Fully Diluted Basis." For purposes of this Section 4.1(i), "Fully Diluted Basis" shall mean
that the total number of issued and outstanding shares of the COMPANY's Common Stock shall be calculated to include conversion
of all issued and outstanding securities then convertible into common stock, the exercise of all then outstanding options and warrants
to purchase shares of common stock, whether or not then exercisable, and shall assume the issuance or grant of all securities reserved
for issuance pursuant to any COMPANY stock or stock option plan in effect on the date of the calculation.

 

(ii)Anti-Dilution Protection.
COMPANY shall issue additional shares of Common Stock to M.I.T. as it pertains to the equity grant in Section 4.1(i) of this License
Agreement signed by the Technology Licensing Office on behalf of M.I.T. and each M.I.T. Holder pro rata, such that M.I.T. 's and
each M.I.T. Holders' aggregate ownership of the outstanding Common Stock shall not fall below Four Percent (4%) on a Fully Diluted
Basis, as calculated after giving effect to the anti-dilutive issuance. Such issuances shall continue until a total of Four Million
Dollars ($4,000,000) in cash in exchange for COMPANY's capital stock (the "Funding Threshold") shall be received by COMPANY.
Thereafter, no additional shares shall be due to M.I.T. or any M.I.T. Holder pursuant to this section. For purposes of clarity,
this anti-dilution provision does not provide anti-dilution protection to the Deshpande Center for Technological Innovation at
M.I.T., which holds shares in the COMPANY under a separate Agreement.

 

    	16

    	 

    

 

(iii)Participation in Future Private
Equity Offerings. After the date of the Funding Threshold, M.I.T. (specifically not including M.I.T. Holders) shall have the
right to purchase additional shares of the COMPANY's Common Stock in any private offering by the COMPANY of its equity securities
in exchange for cash, to maintain its pro rata ownership as calculated immediately prior to such offering on a Fully Diluted Basis,
pursuant to the terms and conditions at least as favorable as those granted to the other offerees. All rights granted to M.I.T.
pursuant to this Section 4.1(i) (iii) shall terminate immediately after the COMPANY RAISES CAPITAL in excess of $6.0 million.

 

(iv)Adjustments for Punitive Round
Financings. After the date of the Funding Threshold (the "Funding Threshold Date"), if COMPANY issues Common Stock,
or any equity security exercisable for or convertible into Common Stock, such that the price per share of COMPANY's Common Stock
is less than the M.I.T. Share Price (as defined below) (a "Dilutive Issuance"), then immediately following such Dilutive
Issuance, COMPANY shall issue to M.I.T. shares of Common Stock such that the M.I.T. Share Number (as defined below) equals the
product obtained by multiplying the M.I.T. Share Number in effect immediately before the Dilutive Issuance by the Adjustment Fraction
defined below. The M.I.T. Share Price in effect immediately after the Dilutive Issuance shall be adjusted to equal the result obtained
by dividing the M.I.T. Share Price in effect immediately before the Dilutive Issuance by the Adjustment Fraction defined below.

 

	The Adjustment Fraction equals:	(A + C)
	 	(A + B)

 

where:

A = the number of shares of Common Stock
issued and outstanding on a Fully Diluted Basis immediately prior to the Dilutive Issuance.

B = the number of shares of Common Stock
that could be purchased at the M.I.T. Share Price immediately prior to the Dilutive Issuance using the net aggregate consideration
received by COMPANY in connection with the Dilutive Issuance.

C = the number of shares of Common Stock
or of a security exercisable for or convertible into Common Stock issued, on a Fully Diluted Basis, pursuant to the Dilutive Issuance.

 

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In addition, the following definitions shall
apply to this Section 4.1(i) (iv):

 

"Fair Market Value"
of a share of Common Stock shall be the

highest price per share that the COMPANY could
obtain from a willing buyer (not a current employee or director) for shares of Common Stock sold by the COMPANY, from authorized
but unissued shares, as determined in good faith by the Board of Directors of the COMPANY, unless the COMPANY shall become subject
to a merger, acquisition or other consolidation pursuant to which the COMPANY is not the surviving party, in which case the current
fair market value of a share of Common Stock shall be deemed to be the value received by the holders of the COMPANY's Common Stock
for each share of Common Stock pursuant to the COMPANY's acquisition.

"M.I.T. Share Number"
shall mean the number of shares of

COMPANY's Common Stock that M.I.T. owns on
the date of the Dilutive Issuance, as adjusted from time to time pursuant to this section. Notwithstanding the foregoing, any shares
of Common Stock acquired by M.I.T. pursuant to Section 4.1(i) (iii) shall not be included in the M.I.T. Share Number.

"M.I.T. Share Price" shall mean
the value per share of the shares of Common Stock included in the M.I.T. Share Number, as adjusted from time to time pursuant to
this section. For purposes of this section, the initial M.I.T. Share Price to be used in an adjustment resulting from the first
Dilutive Issuance to occur after the Funding Threshold Date shall be the Fair Market Value per share of the Common Stock of the
COMPANY effective on the Funding Threshold Date.

 

All rights granted to M.I.T. pursuant to
this Section 4.1(i) (iv) shall terminate immediately after the COMPANY RAISES CAPITAL in excess of $6.0 million.

 

4.2 Royalty
Buy-out. At any time prior to thirty (30) days following the earlier of (i) all or substantially all of the COMPANY
being acquired by a third party, or (ii) COMPANY’s initial public offering of securities, COMPANY
or its successor entity may eliminate its future obligation to pay License Maintenance Fees as set forth in Section 4.1 (b), Running
Royalties as set forth in Section 4.1(c) and sharing of SUBLICENSE INCOME as set forth in Section 4.1(d) for a one-time and non-refundable
payment to M.I.T. of Seven and One Half Million Dollars ($7,500,000). All other responsibilities under this Agreement will remain
in force for the life of the agreement. 

 

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4.3 Payments.

 

(a) Method of Payment. All payments
under this Agreement should be made payable to "Massachusetts Institute of Technology" and sent to the address identified
in Section 14.1. Each payment should reference this Agreement and identify the obligation under this Agreement that the payment
satisfies.

 

(b) Payments in U.S. Dollars. All
payments due under this Agreement shall be drawn on a United States bank and shall be payable in United States dollars. Conversion
of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the Wall
Street Journal) on the last working day of the calendar quarter of the applicable REPORTING PERIOD. Such payments shall be
without deduction of exchange, collection, or other charges, and, specifically, without deduction of withholding or similar taxes
or other government imposed fees or taxes, except as permitted in the definition of NET SALES.

 

(c) Late Payments. Any payments
by COMPANY that are not paid on or before the date such payments are due under this Agreement shall bear interest, to the extent
permitted by law, at two percentage points above the Prime Rate of interest as reported in the Wall Street Journal on the
date payment is due.

 

5. REPORTS AND
RECORDS.

 

5.1 Frequency of Reports.

 

(a)Upon First COMMERCIAL SALE of a
LICENSED PRODUCT or Commercial Performance of a LICENSED PROCESS. COMPANY shall report to M.I.T. the date of first COMMERCIAL
SALE of a LICENSED PRODUCT and the date of first commercial performance of a LICENSED PROCESS within ninety (90) days of occurrence
in each country.

 

(b)After First COMMERCIAL SALE.
After the first COMMERCIAL SALE of a LICENSED PRODUCT or first commercial performance of a LICENSED PROCESS, COMPANY shall deliver
reports to M.I.T. within ninety (90) days of the end of each REPORTING PERIOD, containing information concerning the immediately
preceding REPORTING PERIOD, as further described in Section 5.2.

 

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5.2 Content of Reports and Payments.
Each report delivered by COMPANY to M.I.T. shall contain at least the following information for the immediately preceding REPORTING
PERIOD:

(i) the number of LICENSED PRODUCTS sold,
leased or distributed by COMPANY, its AFFILIATES and SUBLICENSEES to independent third parties in each country, and, if applicable,
the number of LICENSED PRODUCTS used by COMPANY, its AFFILIATES and SUBLICENSEES in the provision of services in each country;

 

(ii) a description of LICENSED PROCESSES performed
by COMPANY, its AFFILIATES and SUBLICENSEES in each country as may be pertinent to a royalty accounting hereunder;

 

(iii) the gross price charged by COMPANY,
its AFFILIATES and SUBLICENSEES for each LICENSED PRODUCT and, if applicable, the gross price charged for each LICENSED PRODUCT
used to provide services in each country; and the gross price charged for each LICENSED PROCESS performed by COMPANY, its AFFILIATES
and SUBLICENSEES in each country;

 

(iv) calculation of NET SALES for the applicable
REPORTING PERIOD in each country, including a listing of applicable deductions;

 

(v) total royalty payable on NET SALES, or
ADJUSTED NET SALES, as appropriate, in U.S. dollars, together with the exchange rates used for conversion;

 

(vi) the amount of SUBLICENSE INCOME received
by COMPANY from each SUBLICENSEE and the amount due to M.I.T. from such SUBLICENSE INCOME, including an itemized breakdown of the
sources of income comprising the SUBLICENSE INCOME; and

 

(vii) the number of sublicenses entered into
for the PATENT RIGHTS, LICENSED PRODUCTS and/or LICENSED PROCESSES.

 

If no amounts are due to M.I.T. for any
REPORTING PERIOD, the report shall so state.

 

5.3 Financial Statements. On or before
the ninetieth (90th) day following the close of COMPANY's fiscal year, COMPANY shall provide M.I.T. with COMPANY's financial statements
for the preceding fiscal year including, at a minimum, a balance sheet and an income statement, reviewed by COMPANY's treasurer
or chief financial officer or by an independent auditor.

 

    	20

    	 

    

 

5.4 Records. COMPANY shall maintain,
and shall cause its AFFILIATES and SUBLICENSEES to maintain, complete and accurate records relating to the rights and obligations
under this Agreement and any amounts payable to M.I.T. in relation to this Agreement, which records shall contain sufficient information
to permit M.I.T. to confirm the accuracy of any reports delivered to M.I.T. and compliance in other respects with this Agreement.
The relevant party shall retain such records for at least five (5) years following the end of the calendar year to which they pertain,
during which time M.I.T., or M.I.T.'s appointed agents, shall have the right, at M.I.T.'s expense, to inspect such records during
normal business hours to verify any reports and payments made or compliance in other respects under this Agreement. In the event
that any audit performed under this Section reveals an underpayment in excess of five percent (5%), COMPANY shall bear the full
cost of such audit and shall remit any amounts due to M.I.T. within thirty (30) days of receiving notice thereof from M.I.T.

 

6. PATENT PROSECUTION.

 

6.1 Responsibility for PATENT RIGHTS.
M.I.T. shall prepare, file, prosecute, and maintain all of the PATENT RIGHTS. COMPANY shall have reasonable opportunities to advise
M.I.T. and shall cooperate with M.I.T. in such filing, prosecution and maintenance.

 

6.2 International (non-United States)
Filings. Appendix C is a list of countries in which patent applications corresponding to the United States patent applications
listed in Appendix B shall be filed, prosecuted, and maintained. Appendix C may be amended by mutual agreement of
COMPANY and M.I.T.

 

6.3 Payment of Expenses.

 

(a)PATENT RIGHTS A. COMPANY
shall be responsible for payment of twenty percent (20%) of all fees and costs, including attorneys’ fees, relating to the
filing, prosecution and maintenance of the PATENT RIGHTS A incurred after the EFFECTIVE DATE. Notwithstanding the foregoing, COMPANY
shall not be required to reimburse M.I.T. for any such expenses associated with PATENT RIGHTS A accrued through February
28, 2011 (approximately $[______]) until March 1, 2012.

 

    	21

    	 

    

  

(b) PATENT RIGHTS B. Payment
of all fees and costs, including attorneys’ fees, relating to the filing, prosecution and maintenance of the PATENT RIGHTS
B shall be the responsibility of COMPANY, whether such amounts were incurred before or after the EFFECTIVE DATE. Notwithstanding
the foregoing, COMPANY shall not be required to reimburse M.I.T. for any such expenses associated with PATENT RIGHTS B accrued
through February 28, 2011 (approximately $[45,000]) until March 1, 2012. For clarity, COMPANY shall be responsible for payment
of ongoing patent expenses as they are incurred for the period beginning March 1, 2011.

 

(c)M.I.T shall provide COMPANY with
a non-binding good faith estimate of the above-described expenses for the subsequent twelve (12) month period every twelve (12)
months, on July 1 of each year.

 

(d)In all instances, M.I.T. shall
pay the fees prescribed for large entities to the United States Patent and Trademark Office provided that COMPANY submits appropriate
certification to M.I.T.

 

7. INFRINGEMENT.

 

7.1 Notification of Infringement.
Each party agrees to provide written notice to the other party promptly after becoming aware of any infringement of the PATENT
RIGHTS.

 

 

 

7.2 Right to Prosecute Infringements.

 

(a)COMPANY Right to Prosecute PATENT
RIGHTS B. So long as COMPANY remains the exclusive licensee of the PATENT RIGHTS B in the FIELD B in the TERRITORY, COMPANY,
to the extent permitted by law, shall have the right, under its own control and at its own expense, to prosecute any third party
infringement of the PATENT RIGHTS B in the FIELD B in the TERRITORY, subject to Sections 7.4 and 7.5. If required by law, M.I.T.
shall permit any action under this Section to be brought in its name, including being joined as a party-plaintiff, provided that
COMPANY shall hold M.I.T. harmless from, and indemnify M.I.T. against, any costs, expenses, or liability that M.I.T. incurs in
connection with such action. 

Prior to commencing any such action, COMPANY
shall consult with M.I.T. and shall consider the views of M.I.T. regarding the advisability of the proposed action and its effect
on the public interest. COMPANY shall not enter into any settlement, consent judgment, or other voluntary final disposition of
any infringement action under this Section without the prior written consent of M.I.T.

 

    	22

    	 

    

 

(b)M.I.T. Right to Prosecute PATENT
RIGHTS B. In the event that COMPANY is unsuccessful in persuading the alleged infringer to desist or fails to have initiated
an infringement action within a reasonable time after COMPANY first becomes aware of the basis for such action, M.I.T. shall have
the right, at its sole discretion, to prosecute such infringement under its sole control and at its sole expense, and any recovery
obtained shall belong to M.I.T.

 

(c)
M.I.T. Right to Prosecute PATENT RIGHTS A : M.I.T. shall have the right, but shall not be obligated, to prosecute
at its own expense all infringements of the PATENT RIGHTS A and, in furtherance of such right, COMPANY hereby agrees that M.I.T.
may include COMPANY as a party plaintiff in any such suit, without expense to COMPANY. M.I.T. shall consult with COMPANY and shall
consider its views. The total cost of any such infringement action commenced or defended solely by M.I.T. shall be borne by M.I.T.,
and M.I.T. shall keep any recovery or damages derived therefrom, whether compensatory for past infringement or punitive.

 

M.I.T. shall not enter into any settlement,
consent judgment, or other voluntary final disposition of any infringement action under this Section without the prior notification
of COMPANY. Should M.I.T. decide not to pursue its right to prosecute, M.I.T will notify COMPANY, and will request from 3DM-Japan
that COMPANY be granted standing to enforce the PATENT RIGHTS A.

 

7.3 Declaratory Judgment Actions.
In the event that a PATENT CHALLENGE TO PATENT RIGHTS B is brought against M.I.T. or COMPANY by a third party, COMPANY, at its
option, shall have the right within twenty (20) days after commencement of such action to take over the sole defense of the action
at its own expense, subject to Sections 7.4 and 7.5. If COMPANY does not exercise this right, M.I.T. may take over the sole defense
of the action at M.I.T.'s sole expense.

 

7.4 Offsets. COMPANY may offset a
total of fifty percent (50%) of any expenses incurred under Sections 7.2 and 7.3 against any payments due to M.I.T. under Article
4, provided that in no event shall such payments under Article 4, when aggregated with any other offsets and credits allowed under
this Agreement, be reduced by more than fifty percent (50%) in any REPORTING PERIOD.

 

    	23

    	 

    

 

7.5 Recovery. Any recovery obtained
in an action brought by COMPANY under Sections 7.2 or 7.3 shall be distributed as follows: (i) each party shall be reimbursed for
any expenses incurred in the action (including the amount of any royalty or other payments withheld from M.I.T. as described in
Section 7.4), (ii) as to ordinary damages, COMPANY shall receive an amount equal to its lost profits or a reasonable royalty on
the infringing sales, or whichever measure of damages the court shall have applied, and COMPANY shall pay to M.I.T. based upon
such amount a reasonable approximation of the royalties and other amounts that COMPANY would have paid to M.I.T. if COMPANY had
sold the infringing products, processes and services rather than the infringer, and (iii) as to special or punitive damages, the
parties shall share equally in any award.

 

7.6 Cooperation. Each party agrees
to cooperate in any action under this Article which is controlled by the other party, provided that the controlling party reimburses
the cooperating party promptly for any costs and expenses incurred by the cooperating party in connection with providing such assistance.

 

7.7 Right to Sublicense. So long
as COMPANY remains the exclusive licensee of the PATENT RIGHTS B in the FIELD B in the TERRITORY, COMPANY shall have the sole right
to sublicense any alleged infringer in the FIELD B in the TERRITORY for future use of the PATENT RIGHTS B in accordance with the
terms and conditions of this Agreement relating to sublicenses. Any upfront fees as part of such sublicense shall be shared equally
between COMPANY and M.I.T.; other revenues to COMPANY pursuant to such sublicense shall be treated as set forth in Article 4.

 

8. INDEMNIFICATION
AND INSURANCE

 

8.1 Indemnification.

 

(a) Indemnity of M.I.T. COMPANY shall
indemnify, defend, and hold harmless M.I.T., Versitech and their trustees, officers, faculty, students, employees, and agents and
their respective successors, heirs and assigns (the "Indemnitees"), against any liability, damage, loss, or expense (including
reasonable attorneys’ fees and expenses) incurred by or imposed upon any of the Indemnitees in connection with any claims,
suits, investigations, actions, demands or judgments arising out of or related to the exercise of any rights granted to COMPANY
under this Agreement. For purposes of clarity, COMPANY shall not be required to indemnify M.I.T. for any claims by third party
licensees or sublicensees of PATENT RIGHTS A claiming that M.I.T. improperly granted COMPANY any rights under this Agreement.

 

    	24

    	 

    

 

(b)
Indemnity of COMPANY. M.I.T. warrants that it has the right to enter into this license agreement.

 

(c)Procedures. The Indemnitees
agree to provide COMPANY with prompt written notice of any claim, suit, action, demand, or judgment for which indemnification is
sought under this Agreement. COMPANY agrees, at its own expense, to provide attorneys reasonably acceptable to M.I.T. to defend
against any such claim. The Indemnitees shall cooperate fully with COMPANY in such defense and will permit COMPANY to conduct and
control such defense and the disposition of such claim, suit, or action (including all decisions relative to litigation, appeal,
and settlement); provided, however, that any Indemnitee shall have the right to retain its own counsel, at the expense of COMPANY,
if representation of such Indemnitee by the counsel retained by COMPANY would be inappropriate because of actual or potential differences
in the interests of such Indemnitee and any other party represented by such counsel. COMPANY agrees to keep M.I.T. informed of
the progress in the defense and disposition of such claim and to consult with M.I.T. with regard to any proposed settlement.

 

8.2 Insurance. COMPANY shall obtain
and carry in full force and effect commercial general liability insurance including product liability, and errors and omissions
insurance which shall protect COMPANY and Indemnitees with respect to events covered by Section 8.1(a) above. Such insurance (i)
shall be issued by an insurer licensed to practice in the Commonwealth of Massachusetts or an insurer pre-approved by M.I.T., such
approval not to be unreasonably withheld, (ii) shall list M.I.T. as an additional insured thereunder, (iii) shall be endorsed to
include product liability coverage, and (iv) shall endeavor to require thirty (30) days written notice to be given to M.I.T. prior
to any cancellation or material change thereof. Product liability insurance shall be in place thirty (30) days prior to the initiation
of a human clinical trial. Errors and Omissions insurance will be in place thirty (30) days prior to initiation of any professional
Consulting services. The limits of such insurance shall not be less than One Million Dollars ($1,000,0000) per occurrence with
an aggregate of Two Million Dollars ($2,000,000) for general liability; and One Million Dollars ($1,000,000) per occurrence with
an aggregate of Two Million Dollars ($2,000,000) for errors and omissions. In the alternate, COMPANY may self-insure subject to
prior approval of M.I.T.  COMPANY shall provide M.I.T. with Certificates of Insurance evidencing compliance with this Section.
COMPANY shall continue to maintain such insurance or self-insurance after the expiration or termination of this Agreement during
any period in which COMPANY or any AFFILIATE or SUBLICENSEE continues (i) to make, use, or sell a product that was a LICENSED PRODUCT
under this Agreement or (ii) to perform a service that was a LICENSED PROCESS under this Agreement, and thereafter for a period
of five (5) years.

 

    	25

    	 

    

 

9. NO REPRESENTATIONS
OR WARRANTIES

 

EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET
FORTH IN THIS AGREEMENT, M.I.T. AND VERSITECH MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE PATENT RIGHTS, EXPRESS
OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY
OF PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. Specifically,
and not to limit the foregoing, M.I.T. and Versitech make no warranty or representation (i) regarding the validity or scope of
the PATENT RIGHTS, and (ii) that the exploitation of the PATENT RIGHTS or any LICENSED PRODUCT or LICENSED PROCESS will not infringe
any patents or other intellectual property rights of M.I.T. or Versitech or of a third party.

 

IN NO EVENT SHALL M.I.T., VERSITECH, THEIR
TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING
ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER M.I.T. OR VERSITECH SHALL BE ADVISED, SHALL HAVE
OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

 

M.I.T. WARRANTS THAT, TO THE BEST OF ITS
KNOWLEDGE, IT HAS THE RIGHT TO ENTER INTO THIS AGREEMENT WITH COMPANY.

 

10. ASSIGNMENT.

 

This Agreement is personal to COMPANY and
no rights or obligations may be assigned by COMPANY without the prior written consent of M.I.T. except as otherwise provided in
this Agreement. Notwithstanding the foregoing, COMPANY may assign this Agreement in connection with the sale or transfer of all
or substantially all of COMPANY's equity or assets, by merger, consolidation or otherwise provided that (a) the assignee shall
agree in writing to be bound by the terms and conditions hereof prior to such assignment, and (b) the total valuation of the COMPANY
is at least seven million five hundred thousand dollars ($7,500,000). In the event that the total valuation of the COMPANY is less
than $7.5 million, then the assignment may be made only with M.I.T.'s written permission, such permission not to be unreasonably
withheld. Failure of such assignee to agree to be bound by the terms and conditions of this Agreement shall be grounds for termination
by M.I.T. under Section 13.3.

 

    	26

    	 

    

 

11. CONFIDENTIAL INFORMATION

 

(a) Designation. CONFIDENTIAL INFORMATION that is disclosed
in writing shall be marked with a legend indicating its confidential status (such as "Confidential" or "Proprietary").
CONFIDENTIAL INFORMATION that is disclosed orally or visually shall be considered confidential if designated as such prior to,
during or immediately after disclosure.

 

(b) Obligations. The Receiving Party
shall (i) maintain such CONFIDENTIAL INFORMATION in strict confidence and shall not disclose, without the consent of the Disclosing
Party, CONFIDENTIAL INFORMATION to third parties, except that the Receiving Party may disclose or permit the disclosure of any
CONFIDENTIAL INFORMATION to its directors, officers, employees, consultants, and advisors who are obligated to maintain the confidential
nature of such CONFIDENTIAL INFORMATION and who need to know such Confidential Information for the purposes of this Agreement;
(ii) use such CONFIDENTIAL INFORMATION solely for the purposes of this Agreement; and (iii) allow its trustees or directors, officers,
employees, consultants, and advisors to reproduce the CONFIDENTIAL INFORMATION only to the extent necessary for the purposes of
this Agreement, with all such reproductions being considered CONFIDENTIAL INFORMATION. The Receiving Party shall be responsible
for any unauthorized disclosure or use of CONFIDENTIAL INFORMATION by its trustees or directors, officers, employees, consultants,
and advisors. The obligations set forth in this Article 11 shall survive for a period of five (5) years after disclosure of any
portion of CONFIDENTIAL INFORMATION, provided that, with respect to any portion of such CONFIDENTIAL INFORMATION that is a trade
secret, such obligations shall survive for so long as such CONFIDENTIAL INFORMATION remains a trade secret.

 

(c) Exceptions. The obligations of
the Receiving Party under Subsection 11(b) above shall not apply to the extent that the Receiving Party can demonstrate that certain
CONFIDENTIAL INFORMATION (i) was in the public domain prior to the time of its disclosure under this Agreement; (ii) entered the
public domain after the time of its disclosure under this Agreement through means other than an unauthorized disclosure resulting
from an act or omission by the Receiving Party; (iii) was independently developed or discovered by the Receiving Party without
use of the CONFIDENTIAL INFORMATION; (iv) is or was disclosed to the Receiving Party at any time, whether prior to or after the
time of its disclosure under this Agreement, by a third party having no fiduciary relationship with the Disclosing Party and having
no obligation of confidentiality with respect to such CONFIDENTIAL INFORMATION; or (v) is required to be disclosed to comply with
applicable laws or regulations, or with a court or administrative order, provided that the Disclosing Party receives reasonable
prior written notice of such disclosure.

 

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(d) Ownership and Return. The Receiving
Party acknowledges that the Disclosing Party (or any third party entrusting its own information to the Disclosing Party) claims
ownership of its CONFIDENTIAL INFORMATION in the possession of the Receiving Party. Upon the expiration or termination of this
Agreement, and at the request of the Disclosing Party, the Receiving Party shall return to the Disclosing Party all originals,
copies, and summaries of documents, materials, and other tangible manifestations of CONFIDENTIAL INFORMATION in the possession
or control of the Receiving Party, except that the Receiving Party may retain one copy of the CONFIDENTIAL INFORMATION in the possession
of its legal counsel solely for the purpose of monitoring its obligations under this Agreement.

 

12. GENERAL COMPLIANCE
WITH LAWS

 

12.1 Compliance with Laws. COMPANY
shall use reasonable commercial efforts to comply with all commercially material local, state, federal, and international laws
and regulations relating to the development, manufacture, use, and sale of LICENSED PRODUCTS and LICENSED PROCESSES.

 

12.2 Export Control. COMPANY and
its AFFILIATES and SUBLICENSEES shall comply with all United States laws and regulations controlling the export of certain commodities
and technical data, including without limitation all Export Administration Regulations of the United States Department of Commerce.
Among other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and
technical data to specified countries. COMPANY hereby gives written assurance that it will comply with, and will cause its AFFILIATES
and SUBLICENSEES to comply with, all United States export control laws and regulations, that it bears sole responsibility for any
violation of such laws and regulations by itself or its AFFILIATES or SUBLICENSEES, and that it will indemnify, defend, and hold
M.I.T and Versitech harmless (in accordance with Section 8.1) for the consequences of any such violation.

 

    	28

    	 

    

 

12.3 Non-Use of M.I.T. Name. COMPANY
and its AFFILIATES and SUBLICENSEES shall not use the name of "Massachusetts Institute of Technology," "Versitech,"
"The University of Hong Kong" or any variation, adaptation, or abbreviation thereof, or of any of their trustees, officers,
faculty, students, employees, or agents, or any trademark or logo owned by M.I.T., "Versitech," or "The University
of Hong Kong" or any terms of this Agreement in any promotional material or other public announcement or disclosure without
the prior written consent of M.I.T. The foregoing notwithstanding, without the consent of M.I.T., COMPANY may make factual statements
during the term of this Agreement that COMPANY has a license from M.I.T. under one or more of the patents and/or patent applications
comprising the PATENT RIGHTS, , and may make disclosures or statements required by law or regulation.

 

12.4 Marking of LICENSED PRODUCTS.
To the extent commercially feasible and consistent with prevailing business practices, COMPANY shall mark, and shall cause its
AFFILIATES and SUBLICENSEES to mark, all LICENSED PRODUCTS that are manufactured or sold under this Agreement with the number of
each issued patent under the PATENT RIGHTS that applies to such LICENSED PRODUCT.

 

13. TERMINATION

 

13.1 Voluntary Termination by COMPANY.
COMPANY shall have the right to terminate this Agreement, for any reason, (i) upon at least six (6) months prior written notice
to M.I.T., such notice to state the date at least six (6) months in the future upon which termination is to be effective, and (ii)
upon payment of all amounts due to M.I.T. through such termination effective date.

 

13.2 Cessation of Business. If COMPANY
ceases to carry on its business related to this Agreement M.I.T. shall have the right to terminate this Agreement immediately upon
written notice to COMPANY.

 

13.3 Termination for Default.

 

(a)Nonpayment. In the event COMPANY
fails to pay any amounts due and payable to M.I.T. hereunder, and fails to make such payments within thirty (30) days after receiving
written notice of such failure, M.I.T. may terminate this Agreement immediately upon written notice to COMPANY.

 

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(b)Material Breach. In the event
COMPANY commits a material breach of its obligations under this Agreement, except for breach as described in Section 12.3(a), and
fails to cure that breach within sixty (60) days after receiving written notice thereof, M.I.T. may terminate this Agreement immediately
upon written notice to COMPANY.

 

13.4 Termination as a Consequence of Patent
Challenge.

 

(a)By COMPANY. If COMPANY
or any of its AFFILIATES brings a PATENT CHALLENGE against M.I.T., or assists others in bringing a PATENT CHALLENGE against M.I.T.
(except as required under a court order or subpoena), then M.I.T. may immediately terminate this Agreement and/or the license granted
hereunder.

 

(b)By SUBLICENSEE. If a SUBLICENSEE
brings a PATENT CHALLENGE or assists another party in bringing a PATENT CHALLENGE (except as required under a court order or subpoena),
then M.I.T. may send a written demand to COMPANY to terminate such sublicense. If COMPANY fails to so terminate such sublicense
within thirty (30) days after M.I.T.’s demand, M.I.T. may immediately terminate this Agreement and/or the license granted
hereunder.

 

13.5 Effect of Termination.

 

(a)Survival. The following provisions
shall survive the expiration or termination of this Agreement: Articles 1, 8, 9, 11, 14 and 15, and Sections 4.1(i), 5.2 (obligation
to provide final report and payment), 5.4, 12.1, 12.2 and 13.5.

 

(b)Inventory. Upon the early termination
of this Agreement, COMPANY and its AFFILIATES and SUBLICENSEES may complete and sell any work-in-progress and inventory of LICENSED
PRODUCTS that exist as of the effective date of termination, provided that (i) COMPANY pays M.I.T. the applicable running royalty
or other amounts due on such sales of LICENSED PRODUCTS in accordance with the terms and conditions of this Agreement, and (ii)
COMPANY and its AFFILIATES and SUBLICENSEES shall complete and sell all work-in-progress and inventory of LICENSED PRODUCTS within
six (6) months after the effective date of termination.

 

(c)Pre-termination Obligations.
In no event shall termination of this Agreement release COMPANY, AFFILIATES, or SUBLICENSEES from the obligation to pay any amounts
that became due on or before the effective date of termination.

 

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14. DISPUTE RESOLUTION.

 

14.1 Mandatory Procedures. The parties
agree that any dispute arising out of or relating to this Agreement shall be resolved solely by means of the procedures set forth
in this Article, and that such procedures constitute legally binding obligations that are an essential provision of this Agreement.
If either party fails to observe the procedures of this Article, as may be modified by their written agreement, the other party
may bring an action for specific performance of these procedures in any court of competent jurisdiction.

 

14.2 Equitable Remedies. Although
the procedures specified in this Article are the sole and exclusive procedures for the resolution of disputes arising out of or
relating to this Agreement, either party may seek a preliminary injunction or other provisional equitable relief if, in its reasonable
judgment, such action is necessary to avoid irreparable harm to itself or to preserve its rights under this Agreement.

 

14.3 Dispute Resolution Procedures.

 

(a) Mediation. In the event any
dispute arising out of or relating to this Agreement remains unresolved within sixty (60) days from the date the affected party
informed the other party of such dispute, either party may initiate mediation upon written notice to the other party ("Notice
Date"), whereupon both parties shall be obligated to engage in a mediation proceeding under the then current Center for Public
Resources ("CPR") Model Procedure for Mediation of Business Disputes (http://www.cpradr.org), except that specific provisions
of this Article shall override inconsistent provisions of the CPR Model Procedure. The mediator will be selected from the CPR Panels
of Neutrals. If the parties cannot agree upon the selection of a mediator within fifteen (15) business days after the Notice Date,
then upon the request of either party, the CPR shall appoint the mediator. The parties shall attempt to resolve the dispute through
mediation until the first of the following occurs: (i) the parties reach a written settlement; (ii) the mediator notifies the parties
in writing that they have reached an impasse; (iii) the parties agree in writing that they have reached an impasse; or (iv) the
parties have not reached a settlement within sixty (60) days after the Notice Date.

 

(b) Trial Without Jury. If the
parties fail to resolve the dispute through mediation, or if neither party elects to initiate mediation, each party shall have
the right to pursue any other remedies legally available to resolve the dispute, provided, however, that the parties expressly
waive any right to a jury trial in any legal proceeding under this Article.

 

    	31

    	 

    

 

14.4 Performance to Continue. Each
party shall continue to perform its undisputed obligations under this Agreement pending final resolution of any dispute arising
out of or relating to this Agreement; provided, however, that a party may suspend performance of its undisputed obligations during
any period in which the other party fails or refuses to perform its undisputed obligations. Nothing in this Article is intended
to relieve COMPANY from its obligation to make undisputed payments pursuant to Articles 4 and 6 of this Agreement.

 

14.5 Statute of Limitations. The
parties agree that all applicable statutes of limitation and time-based defenses (such as estoppel and laches) shall be tolled
while the procedures set forth in Sections 14.3(a) are pending. The parties shall cooperate in taking any actions necessary to
achieve this result.

 

15. MISCELLANEOUS.

 

15.1 Notice. Any notices required
or permitted under this Agreement shall be in writing, shall specifically refer to this Agreement, and shall be sent by hand, recognized
national overnight courier, confirmed facsimile transmission, confirmed electronic mail, or registered or certified mail, postage
prepaid, return receipt requested, to the following addresses or facsimile numbers of the parties:

 

If to M.I.T., all matters relating to the
license:

 

	Massachusetts Institute of Technology
	Technology Licensing Office, Rms NE25-230 and NE18-501
	One Cambridge Center, Kendall Square
	Cambridge, MA  02142-1601
	Attention:  Director
	Tel:  617-253-6966
	Fax:  617-258-6790

 

If
to M.I.T., relating to any equity action after the initial issuance of shares:

 

	Massachusetts Institute of Technology
	Treasurer's Office
	238 Main Street
	Cambridge, MA  02142
	Attention:  Phillips B. Moore
	Tel:  617-253-5422
	Fax:  617-258-6676

 

    	32

    	 

    

 

	If to COMPANY:	Arch Therapeutics, Inc
	 	1 Chieftain Lane
	 	Natick, MA 01760
	 	Attention:  Terrence W. Norchi, President and CEO
	 	Tel:    ________________
	 	Fax:    ________________

 

All notices under this Agreement shall be
deemed effective upon receipt. A party may change its contact information immediately upon written notice to the other party in
the manner provided in this Section.

 

15.2 Governing Law. This Agreement
and all disputes arising out of or related to this Agreement, or the performance, enforcement, breach or termination hereof, and
any remedies relating thereto, shall be construed, governed, interpreted and applied in accordance with the laws of the Commonwealth
of Massachusetts, U.S.A., without regard to conflict of laws principles, except that questions affecting the construction and effect
of any patent shall be determined by the law of the country in which the patent shall have been granted. The state and federal
courts having jurisdiction over Cambridge, MA, USA, provide the exclusive forum for any PATENT CHALLENGE and/or any court action
between the parties relating to this Agreement. COMPANY submits to the jurisdiction of such courts and waives any claim that such
court lacks jurisdiction over COMPANY or its AFFILIATES or constitutes an inconvenient or improper forum.

 

15.3 Force Majeure. Neither party
will be responsible for delays resulting from causes beyond the reasonable control of such party, including without limitation
fire, explosion, flood, war, strike, or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid
or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes
are removed.

 

15.4 Amendment and Waiver. This Agreement
may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties. Any waiver of
any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement
to waive any rights or fail to act in any other instance, whether or not similar.

 

    	33

    	 

    

 

15.5 Severability. In the event that
any provision of this Agreement shall be held invalid or unenforceable for any reason, such invalidity or unenforceability shall
not affect any other provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement to preserve
(to the extent possible) their original intent. If the parties fail to reach a modified agreement within thirty (30) days after
the relevant provision is held invalid or unenforceable, then the dispute shall be resolved in accordance with the procedures set
forth in Article 14. While the dispute is pending resolution, this Agreement shall be construed as if such provision were deleted
by agreement of the parties.

 

15.6 Binding Effect. This Agreement
shall be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns.

 

15.7 Headings. All headings are for
convenience only and shall not affect the meaning of any provision of this Agreement.

 

15.8 Entire Agreement. This Agreement
constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements or
understandings between the parties relating to its subject matter.

 

IN WITNESS WHEREOF, the parties have caused
this Agreement to be executed by their duly authorized representatives.

 

The EFFECTIVE DATE of this Agreement is May 23, 2011.

 

    	34

    	 

    

 

	MASSACHUSETTS INSTITUTE OF TECHNOLOGY	 	ARCH THERAPEUTICS, INC.
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	By:	 /s/ Lita Nelson	 	By:	/s/ Terrence W. Norchi, M.D
	Name:	Lita Nelson	 	Name:	Terrence_W. Norchi, MD
	Title:	Director, Technology Licensing Office	 	Title:	President and CEO

 

    	35

    	 

    

 

APPENDIX A

List of Patent Applications and Patents

 

 

I.United States Patents and Applications

 

M.I.T. Case No. 6692

United States of America Patent No. 5955343, Issued September
21, 1999

United States of America Patent No. 6800481, Issued October
5, 2004

United States of America Patent No. 7098028, Issued August 29,
2006

United States of America Serial No. 11/512753, Filed August
29, 2006

"Stable Macroscopic Membranes Formed By Self-Assembly Of
Amphiphilic Peptides And Uses Therefor"

by C. Michael Dipersio, Todd Holmes, Curtis Lockshin, Alexander
Rich and Shuguang Zhang

 

M.I.T. Case No. 8813

United States of America Serial No. 09/778200, Filed February
6, 2001

"Peptide Scaffold Encapsulation Of Tissue Cells And Uses
Therof"

by Alan J. Grodzinsky, John Kisiday and Shuguang Zhang

 

M.I.T. Case No. 9344

United States of America Serial No. 10/193942, Filed July 15,
2002

"Cellular Reprogramming In Peptide Hydrogel And Uses Thereof"

By Carlos E. Semino, Colette Shen, James
L. Sherley and Shuguang Zhang

 

M.I.T. Case No. 9786

United States of America Serial No. 10/968790, Filed October
18, 2004

"Self-Assembling Peptides For Regeneration And Repair Of
Neural Tissue"

by Rutledge Ellis-Behnke, Gerald E. Schneider, Carlos E. Semino
and Shuguang Zhang

 

M.I.T. Case No. 10154

United States of America Serial No. 10/877068, Filed June 25,
2004

"Self-Assembling Peptides Incorporating Modifications And
Methods Of Use Thereof"

by Elsa Genove, Carlos E. Semino and Shuguang Zhang

 

    	36

    	 

    

 

II.International (non-U.S.) Patents and Applications

 

M.I.T. Case No. 8813

Australia Serial No. 2002-248406, Filed February 6, 2002

Canada Serial No. 2344954, Filed April 25, 2001

European Patent Convention Serial No. 02717398.8, Filed February
6, 2002

Japan Serial No. 2002-563298, Filed February 6, 2002

Patent Cooperation Treaty Serial No. US02/03482, Filed February
6, 2002

"Peptide Scaffold Encapsulation Of Tissue Cells And Uses
Thereof"

by Alan J. Grodzinsky, John Kisiday and Shuguang Zhang

 

M.I.T. Case No. 9344

Patent Cooperation Treaty Serial No. US02/03607, Filed February
6, 2002

"Liver Cellular Reprogramming In Peptide Hydrogel And Uses
Thereof"

by Carlos E. Semino, Colette Shen, James L. Sherley and Shuguang
Zhang

 

M.I.T. Case No. 10154

Canada Serial No. 2530482, Filed June 25, 2004

European Patent Convention Serial No. 04785965.7, Filed June
25, 2004

Japan Serial No. 2006-517694, Filed June 25, 2004

Patent Cooperation Treaty Serial No. US04/020549, Filed June
25, 2004

"Self-Assembling Peptides Incorporating Modifications And
Methods Of Use Thereof"

by Elsa Genove, Carlos E. Semino and Shuguang Zhang

 

    	37

    	 

    

 

APPENDIX
B

List of Patent Applications and Patents

 

 

I.United States Patents and Applications

 

M.I.T. Case No. 11366

United States of America Serial No. 60/758827, Filed January
13, 2006

"Compositions And Methods For Inhibiting Movement Or Leakage
Of A Body Substance And Promoting Tissue Repair"

 

United States of America Serial No. 11/411745, Filed April 25,
2006

"Compositions And Methods For Promoting Hemostasis And
Other Physiological Activities"

by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider,
Kwok-Fai So, David K C. Tay and Shuguang Zhang

 

M.I.T. Case No. 12061

United States of America Serial No. 11/796132, Filed April 25,
2007

"Compositions And Methods For Affecting Movement Of Contaminants,
Bodily Fluids Or Other Entities, And/Or Affecting Other Physiological Conditions"

 

United States of America Serial No. 60/745601, Filed April 25,
2006

"Compositions And Methods For Promoting Hemostasis And
Other Physiological Activities"

by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider,
Kwok-Fai So and David K C. Tay

 

 

 

 

 

 

II.International (non-U.S.) Patents and Applications

 

M.I.T. Case No. 11366

Patent Cooperation Treaty Serial No. US06/015850, Filed April
25, 2006

"Compositions And Methods For Promoting Hemostasis And
Other Physiological Activities"

by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider,
Kwok-Fai So, David K C. Tay and Shuguang Zhang

 

M.I.T. Case No. 12061

Patent Cooperation Treaty Serial No. US07/010041, Filed April
25, 2007

"Compositions And Methods For Promoting Hemostasis And
And Other Physiological Activites"

by Rutledge Ellis-Behnke, Yu Xiang Liang, Gerald E. Schneider,
Kwok-Fai So and David K C. Tay

 

    	38

    	 

    

  

APPENDIX
C

 

List of Countries (excluding United States)
for which

PATENT RIGHTS B . Applications Will Be
Filed, Prosecuted and Maintained

 

 

 

MIT case No. 11366

 

Australia

Canada

China

Europe

India

Israel

Japan

Korea

 

    	39

    	 

    

 

APPENDIX
D

 

M.I.T.-Versitech Joint Invention Agreement

 

    	40

    	 

    

 

EXHIBIT A

 

CONFLICT
AVOIDANCE STATEMENT

 

	Name:	Rutledge Ellis-Behnke, PhD
	 	 
	Dept. or Lab.: 	Brain and Cognitive Sciences     
	 	 
	Company: 	Clear Nano Solutions
	 	 
	Address:   	355 Summer Street
	 	 
		Manchester, MA 01944
	 	 
	Licensed Technology: 	Cases: See Appendix A and B
	 	 
	 	 
	 	 
	 	 

  

Because of the M.I.T. license granted to the above company and
my equity* position and continuing relationship with this company, I acknowledge the potential for a possible conflict of
interest between the performance of research at M.I.T. and my contractual or other obligations to this company. Therefore, I will
not:

		1)	use students at M.I.T. for research and development projects for the company;

		2)	restrict or delay access to information from my M.I.T. research;

		3)	take direct or indirect research support from the company in order to support my activities at M.I.T.;
or

		4)	employ students at the company, except in accordance with Section 4.5.2, “Faculty and Students,”
in the Policies and Procedures Guide.

 

In addition, in order to avoid the appearance of a conflict,
I will attempt to differentiate clearly between the intellectual directions of my M.I.T. research and my contributions to the company.
To that end, I will expressly inform my department head/laboratory director annually of the general nature of my activities on
behalf of the company.

 

 

	Signed: 	/s/
    Rutledge Ellis-Behnke, PhD
	Date:	1/22/08

 

 

Approved by: /s/ Mriganka Sur

 

Name (print): Mriganka Sur

(Dept. Head or Lab Dir)

 

* "Equity" includes stock, options, warrants
or other financial instruments convertible into stock, which are directly or indirectly controlled by the inventor.

 

    	41

    	 

    

 

Conf Avoid Stmnt 990915

 

EXHIBIT B

 

INVENTOR/AUTHOR ACKNOWLEDGMENT

OF
NO EQUITY DISTRIBUTION

Form Version 8/22/01

 

In partial reliance on the undersigned’s execution
of this Acknowledgment, M.I.T. has entered into the license agreement to which this Acknowledgment is attached (the “LICENSE”)
in which COMPANY received certain licenses to the technology listed below, on some or all of which the undersigned is a listed
inventor or author. The undersigned, independently of the LICENSE, has received or will soon acquire equity in 
(“COMPANY”), and, in accordance with M.I.T.’s licensing policies contained in M.I.T.'s Guide to the Ownership,
Distribution and Commercial Development of M.I.T. Technology, as that policy may be amended from time to time (specifically
§4.2.5 as of this Form Version date), the undersigned, on his/her own behalf and on behalf of his/her heirs and assigns, acknowledges
and agrees that he/she has no right to receive any share of equity income received by M.I.T. in consideration for the LICENSE.

 

Technology Licensed as of the EFFECTIVE
DATE of the LICENSE:

	 
	 
	 
	 
	 

 

See Appendix A & B

 

	Witness: 	Juliet Ellis-Behnke:	Signed	Rutledge Ellis-Behnke
	 	 	Print Name:	  /s/
    Rutledge Ellis-Behnke
	 	 	Date:	12/12/07

 

    	42

    	 

    

 

First Amendment to the Amended and Restated
Exclusive Patent License Agreement

 

 

This First Amendment, effective as of the
date set forth above the signatures of the parties below, amends the Amended and Restated Exclusive Patent License Agreement dated
May 23, 2011(the “LICENSE AGREEMENT”) by and between the Massachusetts Institute of Technology, a Massachusetts corporation
having its principal office at 77 Massachusetts Avenue, Cambridge, Massachusetts 02139 ("M.I.T.") and Arch Therapeutics,
Inc. ("COMPANY"), a Massachusetts corporation having its principal office at 1 Chieftain Lane, Natick, MA 01760.

 

WHEREAS, M.I.T. and COMPANY wish to modify
the provisions of the LICENSE AGREEMENT to account for certain unmet financial obligations by COMPANY;

 

NOW, THEREFORE, in consideration of the
promises and mutual covenants contained herein, the parties hereto agree as follows:

 

1.                
Sections 3.1(e) and 3.1(k) of the LICENSE AGREEMENT are hereby deleted in their entirety and replaced with the following:

 

3.1 Diligence Requirements.

 

(e)(i) In addition
to Section 3.1(d), COMPANY shall RAISE CAPITAL of at least Two Million dollars ($2,000,000) solely from the sale of the
COMPANY’s equity securities for its own account by December 31, 2012.

(ii) In addition to Section 3.1(e)(i), COMPANY
shall RAISE CAPITAL of at least Three Million dollars ($3,000,000) by July 1, 2014.

 

(k)COMPANY shall conduct a pre-investigational
meeting or comparable consultation with the U.S. Food and Drug Administration (or equivalent European regulatory authority) to
review a clinical testing strategy for a LICENSED PRODUCT by January 1, 2014.

 

2.                
Sections 4.1(b) and 4.1(e) of the LICENSE AGREEMENT are hereby deleted in their entirety and replaced with the following:

 

    	43

    	 

    

 

4.1 Consideration for Grant of Rights.

 

(b) License Maintenance Fees. M.I.T.
acknowledges that COMPANY previously paid M.I.T. a license maintenance fee in the amount of $10,000 for the calendar year commencing
on January 1, 2009 and in the amount of $10,000 for the calendar year commencing on January 1, 2010. There shall be no license
maintenance fee for the calendar year commencing on January 1, 2011 and January 1, 2012. COMPANY shall pay to M.I.T. the following
license maintenance fees within 30 (thirty) days of the dates set forth below:

 

	January 1, 2013	$25,000
	January 1, 2014	$35,000
	January 1, 2015	$45,000
	January 1, 2016 and each January 1 of every year thereafter	$50,000

 

This annual license maintenance fee is nonrefundable;
however, the license maintenance fee may be credited to running royalties subsequently due on NET SALES earned during the same
calendar year, if any. License maintenance fees paid in excess of running royalties due in such calendar year shall not be creditable
to amounts due for future years.

 

(e)Milestone Payments. COMPANY
shall pay to M.I.T. the amounts set forth below upon the first achievement by COMPANY or any of its AFFILIATES or SUBLICENSEES
of certain milestone events as described below.

 

	Milestone Event	Payment
	Initiation of human clinical studies, including evaluation of proof of concept, proof of mechanism and/or efficacy, of a LICENSED PRODUCT	
        Ten Thousand dollars

        ($10,000)

         

	Filing of a submission/application for regulatory/marketing approval of a LICENSED PRODUCT	
        Twenty Five Thousand dollars

        ($25,000)

         

	First COMMERCIAL SALE of a LICENSED PRODUCT	
        Fifty Thousand dollars

        ($50,000)

         

	Cumulative NET SALES of Ten Million dollars ($10,000,000) in either or both FIELD A and FIELD B in the TERRITORY	
        One Hundred Thousand dollars

        ($100,000)

         

 

    	44

    	 

    

 

COMPANY shall notify M.I.T. within ten (10)
days of the achievement of any of the above milestones by COMPANY or any of its AFFILIATES or SUBLICENSEES. COMPANY shall make
such non-refundable, non-creditable milestone payments within sixty (60) days after achievement of each of the milestones.

 

3.                
Section 6.3 of the LICENSE AGREEMENT is hereby deleted in its entirety and replaced with the following:

 

6.3 Payment of Expenses.

 

Payment of all reasonable out-of-pocket
fees and costs, including attorneys’ fees, relating to the filing, prosecution and maintenance of the PATENT RIGHTS shall
be the responsibility of COMPANY and other commercial licensees of the PATENT RIGHTS as they exist from time to time (as used herein
a “commercial licensee” shall mean a for-profit entity that has been granted a license under the PATENT RIGHTS to develop
and sell products).

 

(a)PATENT RIGHTS A. COMPANY
shall be responsible for a pro-rata share of all patent related fees and costs relating to the filing, prosecution and maintenance
of the PATENT RIGHTS A incurred after the EFFECTIVE DATE. As of the EFFECTIVE DATE, COMPANY’s pro rata share for the PATENT
RIGHTS A is twenty five percent (25%). Notwithstanding the foregoing, COMPANY shall not be required to reimburse M.I.T. for any
such expenses associated with PATENT RIGHTS A incurred through February 28, 2011 (approximately $9,456.28) until December 31, 2012.

 

(b) PATENT RIGHTS B. Payment
of all patent related fees and costs relating to the filing, prosecution and maintenance of the PATENT RIGHTS B shall be the responsibility
of COMPANY, whether such amounts were incurred before or after the EFFECTIVE DATE. Notwithstanding the foregoing, COMPANY shall
not be required to reimburse M.I.T. for any such expenses associated with PATENT RIGHTS B incurred through February 28, 2011 (approximately
$71,586.67) until December 31, 2012.

(c)For clarity, COMPANY shall be
responsible for ongoing payment of all ongoing patent expenses in accordance with this Section 6.3 as they are incurred for the
period beginning March 1, 2011.

 

(d)COMPANY shall reimburse all amounts
due pursuant to this Section 6.3 within thirty (30) days of invoicing; late payments shall accrue interest pursuant to Section
4.2(c). In all instances, M.I.T. shall pay the fees prescribed for large entities to the United States Patent and Trademark Office.

 

    	45

    	 

    

 

4.For the period beginning April 1, 2012
and ending December 31, 2012, M.I.T. and COMPANY agree that COMPANY shall reimburse M.I.T. for all patent expenses associated with
PATENT RIGHTS A and PATENT RIGHTS B incurred after February 28, 2011, pursuant to Section 6.3(c) of the LICENSE AGREEMENT (as amended
herein), according to the following schedule:

 

	April 1, 2012	$1,000
	May 1, 2012	$1,000
	June 1, 2012	$2,000
	July 1, 2012	$2,000
	August 1, 2012	$3,000
	September 1, 2012	$3,000
	October 1, 2012	$4,000
	November 1, 2012	$4,000
	December 1, 2012	$5,000

 

This reimbursement schedule shall be effective
only until December 31, 2012. Notwithstanding the foregoing: (i) at any time that COMPANY has RAISED CAPITAL from the sale of the
COMPANY’s equity securities for its own account of at least Two Hundred Fifty Thousand dollars ($250,000), from that date
forward, COMPANY shall reimburse M.I.T. at a rate of Five Thousand dollars ($5,000) a month until December 31, 2012; and (ii) all
outstanding patent expenses due in accordance with Section 6.3 shall be reimbursed in full by January 1, 2013.

 

5.Notwithstanding anything to the contrary
in the LICENSE AGREEMENT, M.I.T. and COMPANY agree that in the event COMPANY fails to fulfill any of its obligations under either
of (1) Sections 3.1(e)(i) and 6.3 of the LICENSE AGREEMENT, as amended by this First Amendment, or (2) Section 4 of this First
Amendment, then M.I.T. may treat such failure as a material breach and shall have the right to immediately terminate the LICENSE
AGREEMENT upon written notice to COMPANY, without an opportunity to cure.

 

6.Except as specifically modified or amended hereby, all
other terms and conditions of the LICENSE AGREEMENT shall remain unchanged and in full force and effect. Capitalized
terms used herein and not defined shall have the meanings set forth in the LICENSE AGREEMENT.

 

    	46

    	 

    

  

IN WITNESS WHEREOF, the parties have caused
this First Amendment to be executed under seal by their duly authorized representatives.

 

 

The Effective Date of this First Amendment is May 15, 2012.

 

	MASSACHUSETTS INSTITUTE OF TECHNOLOGY	 	ARCH THERAPEUTICS, INC.
	 	 	 	 	 
	 	 	 	 	 
	By:	 /s/ Lita Nelson	 	By:	/s/ Terrence W. Norchi, M.D
	 	 	 	 	 
	Name:	Lita Nelson	 	Name:	Terrence W.
    Norchi, MD
	 	 	 	 	 
	Title:	Director, Technology Licensing Office	 	Title:	President and CEO

 

    	47

    	 

    

 

SECOND AMENDMENT

 

This Second Amendment, effective as of the
date set forth above the signatures of the parties below, amends the Amended and Restated Exclusive Patent License Agreement dated
May 23, 2011, as amended by the First Amendment on May 15, 2012 (the “LICENSE AGREEMENT”) between the Massachusetts
Institute of Technology, a Massachusetts corporation having its principal office at 77 Massachusetts Avenue, Cambridge, Massachusetts,
02139 ("M.I.T.") and Arch Therapeutics, Inc., a Massachusetts corporation, with a principal place of business at 1 Chieftain
Lane, Natick, MA 01760 (“COMPANY”).

 

WHEREAS, M.I.T. and COMPANY wish to modify
the provisions of the LICENSE AGREEMENT to account for certain unmet financial obligations and diligence requirements by COMPANY;

 

NOW, THEREFORE, in consideration of the
promises and mutual covenants contained herein, the parties hereby agree as follows:

 

1.COMPANY currently owes M.I.T. approximately
$120,003 in patent costs incurred prior to December 31, 2012. For the period beginning February 28, 2013 and ending April 30, 2013,
M.I.T. and COMPANY agree that COMPANY shall reimburse M.I.T. for these expenses according to the following schedule:

 

a.Payment of $12,000, which is approximately
equal to ten percent (10%) of the outstanding patent costs, by February 28, 2013.

 

b.Payment of $24,000, which is approximately
equal to twenty percent (20%) of the outstanding patent costs, by March 31, 2013.

 

c.Payment of the remaining outstanding
patent costs incurred prior to December 31, 2012, which approximately equals $84,003 by April 30, 2013.

 

2.COMPANY currently owes M.I.T. the
$25,000 license maintenance fee due January 1, 2013, as set forth in Section 4.1(b) of the LICENSE AGREEMENT. M.I.T. and COMPANY
agree that COMPANY shall pay such fee by April 30, 2013.

 

    	48

    	 

    

 

3.Effective January 1, 2013, COMPANY
shall provide M.I.T. with advance payment of all newly incurred patent costs, as evidenced by M.I.T.’s receipt of such amounts
either (a) at least ten (10) business days after COMPANY has requested that M.I.T. proceed with the patent action, or (b) at least
fifteen (15) business days prior to the expected date of filing of the relevant material with the applicable patent office, as
shall be determined at M.I.T.’s sole discretion. Such practice shall continue until (i) all outstanding costs due under the
LICENSE AGREEMENT have been fully paid, as set forth in Sections 1and 2 above, and (ii) COMPANY has been fully compliant with the
advance payment of patent expenses in accordance with this Section 2 for a period of six (6) months after the effective date of
this Second Amendment.

 

4.Section 6.3(d) of the LICENSE AGREEMENT
is hereby deleted in its entirety and replaced with the following:

 

(d)COMPANY shall reimburse all amounts
due pursuant to this Section 6.3 within thirty (30) days of invoicing; late payments shall accrue interest pursuant to Section
4.3(c). In all instances, M.I.T. shall pay the fees prescribed for large entities to the United States Patent and Trademark Office.

 

5.Section 3.1(e) of the LICENSE AGREEMENT
is hereby deleted in its entirety and replaced with the following:

 

(e) (i) Notwithstanding Section 3.1(d)
and any funds raised prior to May 15, 2012, COMPANY shall raise additional capital of at least Two Million Dollars ($2,000,000)
of cash proceeds by April 30, 2013, provided that at least forty percent (40%) of such cash proceeds are able to be used for general
and administrative costs.

 

(e) (ii) Notwithstanding Section 3.1(d)
and any amounts raised prior to May 15, 2012, COMPANY shall raise additional capital of at least Five Million Dollars ($5,000,000)
of cash proceeds by September 30, 2014, provided that at least forty percent (40%) of such cash proceeds are able to be used for
general and administrative costs.

 

For clarity, the parties acknowledge and
agree that the funding amount indicated in the diligence requirement set forth in Section 3.1(e)(i) is not intended to reflect
aggregate capital raised; for example, the Two Million Dollars that shall be raised by April 30, 2013 pursuant to Section 3.1(e)(i)
shall not include any amounts that were raised prior to May 15, 2012.

 

    	49

    	 

    

 

6. During the month of February 2013,
COMPANY shall introduce M.I.T. to potential investors in COMPANY in connection with the fundraising described in Section 3.1(e)(i)
of the LICENSE AGREEMENT, as amended herein, and shall facilitate scheduling meetings between M.I.T. and such investors, as requested
by M.I.T.

 

7.Pursuant to Section 4.1(i), 46,700
shares of Common Stock of COMPANY were due to M.I.T. on the Effective Date of the LICENSE AGREEMENT. COMPANY shall issue these
shares, as well as any additional equity due to M.I.T., by March 31, 2013.

 

8.Failure of COMPANY to meet any of
the obligations set forth in this Second Amendment will result in termination of the LICENSE AGREEMENT, effective immediately,
with no opportunity to cure.

 

9.Except as specifically modified or
amended hereby, all other terms and conditions of the LICENSE AGREEMENT shall remain unchanged and in full force and effect. Capitalized
terms used herein and not defined shall have the meanings set forth in the LICENSE AGREEMENT.

 

IN WITNESS WHEREOF, the parties have caused
this Second Amendment to be executed under seal by their duly authorized representatives.

 

The Effective Date of this Second Amendment is February 1,
2013.

 

	MASSACHUSETTS INSTITUTE OF TECHNOLOGY	 	ARCH THERAPEUTICS, INC.
	 	 	 	 	 
	 	 	 	 	 
	By:	 /s/ Lita Nelson	 	By:	/s/ Terrence W. Norchi, M.D
	 	 	 	 	 
	Name:	Lita Nelson	 	Name:	Terrence W.
    Norchi, MD
	 	 	 	 	 
	Title:	Director, Technology Licensing Office	 	Title:	President and CEO

 

    	50

    	 

    

 

THIRD AMENDMENT

 

This Third Amendment, effective as of the
date set forth above the signatures of the parties below, amends the Amended and Restated Exclusive Patent License Agreement dated
May 23, 2011, as amended by the First Amendment dated May 15, 2012 and the Second Amendment dated February 1, 2013 (the “LICENSE
AGREEMENT”) between the Massachusetts Institute of Technology, a Massachusetts corporation having its principal office at
77 Massachusetts Avenue, Cambridge, Massachusetts, 02139 (“M.I.T.”) and Arch Therapeutics, Inc., a Massachusetts corporation,
with a principal place of business at 1 Chieftain Lane, Natick MA 01760 (“COMPANY”).

 

WHEREAS, COMPANY has represented to M.I.T.
that COMPANY has made substantial progress towards raising capital in order to meet certain obligations set forth in the LICENSE
AGREEMENT, including the financial obligations and diligence requirements set forth in the Second Amendment to the LICENSE AGREEMENT;

 

NOW, THEREFORE, in consideration of the
promises and mutual covenants contained herein, the parties hereby agree as follows:

 

		1.	COMPANY represents and warrants to M.I.T. that:

 

		a.	In December 2012, COMPANY was awarded a loan from the Massachusetts Life Sciences Center (the “Center”) Accelerator
Loan Program in the amount of One Million dollars ($1,000,000) (the “MLSC FUNDS”), receivable by COMPANY, subject to
the following conditions:

 

                                                 
i.      COMPANY must raise an additional
One Million Five Hundred Thousand dollars ($1,500,000) of new debt or equity by April 30, 2013, not including any debt or equity
existing prior to December 1, 2012; and

 

                                               
ii.      An additional round of diligence
satisfactory to the Center in its sole discretion.

 

		b.	COMPANY has Raised One Million Five Hundred Thousand dollars ($1,500,000) of cash proceeds from debt or equity, inclusive of
convertible debt, (the “INVESTOR FUNDS”) between December 1, 2012 and April 30, 2013 which funds are in COMPANY’s
own accounts.

 

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		c.	At least forty percent (40%) of the total of the MLSC FUNDS and the INVESTOR FUNDS are able to be used for general and administrative
costs.

 

		d.	COMPANY has signed a binding letter of intent with an investor (“COLDSTREAM”), who shall invest One Million Two
Hundred Thousand dollars ($1,200,000) by April 30, 2013 followed by an additional Eight Hundred Thousand dollars ($800,000) by
approximately April 30, 2014. COLDSTREAM has funded $1,200,000 to COMPANY as of April 29, 2013 which funds are included in the
INVESTOR FUNDS described in Section 1.b. above.

 

2.In view of COMPANY’s representations set forth in
Section 1 above, M.I.T. hereby agrees to extend the April 30, 2013 deadline set forth in Section 3.1(e)(i) of the LICENSE AGREEMENT
until June 30, 2013 to allow COMPANY to execute the Massachusetts Life Sciences Center Life Sciences Accelerator Funding Agreement.

 

3.Concurrent with the signing of this Third Amendment, on
April 30, 2013 COMPANY shall pay to M.I.T. the following amount:

 

		a.	The $25,000 license maintenance fee (and associated interest of $109.38) due January 1, 2013, as set forth in Section 4.1(b)
of the LICENSE AGREEMENT.

 

4.On or before May 6, 2013, COMPANY shall
pay to M.I.T. the following amounts:

 

		a.	Outstanding patent costs (and associated interest) incurred prior to December 31, 2012 in the amount of $84,303.22.

 

		b.	Outstanding patent costs incurred as of December 31, 2012 (and associated interest) in the amount of $29,879.71.

 

		c.	Pre-payment of patent expenses associated with South Korean patent application number 10-2010-7019627 in the amount of $12,000.

 

5.COMPANY acknowledges and agrees that it shall continue
to comply with the advanced payment of patent costs as described in Section 3 of the Second Amendment to the LICENSE AGREEMENT.

 

6.Pursuant to Section 4.1(i), COMPANY shall issue any additional
shares of COMPANY’s Common Stock owed to M.I.T. by June 30, 2013.

 

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7.Failure of COMPANY to meet any of the obligations set
forth in this Third Amendment will result in termination of the LICENSE AGREEMENT, effective immediately, with no opportunity to
cure.

 

8.Except as specifically modified or amended hereby, all
other terms and conditions of the LICENESE AGREEMENT shall remain unchanged and in full force and effect. Capitalized terms used
herein and not defined shall have the meanings set forth in the LICENSE AGREEMENT.

 

IN WITNESS WHEREOF, the parties have caused this Third Amendment
to be executed under seal by their duly authorized representatives.

 

The Effective Date of this Third Amendment is April 30, 2013.

 

	MASSACHUSETTS INSTITUTE OF TECHNOLOGY	 	ARCH THERAPEUTICS, INC.
	 	 	 	 	 
	 	 	 	 	 
	By:	/s/ John H. Turner, Jr.	 	By:	/s/ Terrence W. Norchi, M.D
	 	 	 	 	 
	Name: 	John H. Turner, Jr.	 	Name:	Terrence W.
    Norchi, MD
	 	 	 	 	 
	Title:	Associate Director, Technology Licensing Office	 	Title:	President and CEO

 

    	53

    	 

    

 

LETTER AGREEMENT

 

This Letter Agreement, effective as of the
date set forth above the signatures of the parties below, confirms the understanding between the Massachusetts Institute of Technology,
a Massachusetts corporation having its principal office at 77 Massachusetts Avenue, Cambridge, Massachusetts, 02139 (“M.I.T.”)
and Arch Therapeutics, Inc., a Massachusetts corporation, with a principal place of business at 1 Chieftain Lane, Natick MA 01760
(“COMPANY”), with respect to the Amended and Restated Exclusive Patent License Agreement between M.I.T. and COMPANY
dated May 23, 2011, as amended by the First Amendment dated May 15, 2012, the Second Amendment dated February 1, 2013 and the Third
Amendment dated April 30, 2013 (the “LICENSE AGREEMENT”). Capitalized terms used herein and not defined shall have
the meanings set forth in the LICENSE AGREEMENT.

 

WHEREAS, COMPANY has represented to
M.I.T. that COMPANY plans to undergo a reverse triangular merger with Arch Therapeutics, Inc., a Nevada corporation (formerly known
as Almah, Inc.) (“Parent”), which is a publicly traded “shell company,” as that term is defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended (the “Merger”);

 

NOW, THEREFORE, in consideration of the
promises and mutual covenants contained herein, the parties hereby agree as follows:

 

		1.	COMPANY represents and warrants to M.I.T. that the current and pro forma capitalization table attached as Exhibit 1 hereto
accurately reflects issuances included in the Funding Threshold through the date hereof and is true and correct on a Fully Diluted
Basis as of the date hereof (with respect to the current capitalization table) and as of immediately following the closing of the
Merger (with respect to the pro forma capitalization table).

 

		2.	COMPANY and M.I.T. hereby agree that, subject to and upon the closing of the Merger, M.I.T. shall be entitled to receive, and
COMPANY shall cause to be issued to M.I.T., an aggregate number of shares equal to Four Percent (4%), or Two Million Seven Hundred
and Twenty Thousand (2,720,000) shares, of the common stock of Parent on a Fully Diluted Basis as of immediately following the
closing of the Merger.

 

		3.	COMPANY shall deliver the shares due under Section 2 above to M.I.T. within fifteen (15) days of the closing of the Merger.

 

		4.	Upon the delivery of the shares to M.I.T. pursuant to Section 3 above, M.I.T. agrees that COMPANY has fulfilled in entirety
the obligations under Section 4.1(i) of the LICENSE AGREEMENT, and that COMPANY has no further obligations to M.I.T. thereunder.

 

		5.	As of the Effective Date of this Letter Agreement, M.I.T. acknowledges that COMPANY has complied with Sections 1a, 1b, 3, 6
and 7 of the Second Amendment to the LICENSE AGREEMENT, and Sections 3, 4 and 5 of the Third Amendment to the LICENSE AGREEMENT.

 

    	54

    	 

    

 

		6.	As of the Effective Date of this Letter Agreement, solely with respect to immediate termination with no opportunity to cure
in the event of COMPANY failing to meet the obligations set forth in the Second Amendment to the LICENSE AGREEMENT and the Third
Amendment to the LICENSE AGREEMENT, respectively, M.I.T. agrees that Section 8 of the Second Amendment to the LICENSE AGREEMENT
and Section 7 of the Third Amendment to the LICENSE AGREEMENT, respectively, shall no longer apply. The Parties acknowledge and
agree that any issues regarding termination, including for default, shall be governed as set forth in the relevant provisions of
the LICENSE AGREEMENT.

 

		7.	M.I.T. hereby agrees (a) to attend, in person or by proxy, the special meeting of the shareholders of Arch to be held
on or about June 14, 2013 for the purpose of voting on the Merger (the “Meeting”), and (b) to vote in favor of
the Merger at the Meeting.

 

		8.	No amendment or modification of or supplement to the terms of this Letter Agreement shall be binding on a party unless reduced
to writing and signed by both parties. Any waiver of any rights or failure to act in a specific instance shall not operate or be
construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

 

		9.	This Letter Agreement, together with the LICENSE AGREEMENT, sets forth the entire agreement among
the Parties as to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations
and discussions, whether oral or written, between the Parties as to the subject matter hereof. This Letter Agreement and all disputes
arising out of or related to this Letter Agreement, or the performance, enforcement, breach or termination hereof, and any remedies
relating thereto, shall be construed, governed, interpreted and applied in accordance with the laws of the Commonwealth of Massachusetts,
U.S.A., without regard to conflict of laws principles. Except as expressly set forth in this Letter Agreement, all of the terms
and provisions of the LICENSE AGREEMENT shall remain unchanged and unmodified, and the LICENSE AGREEMENT as amended hereby shall
remain in full force and effect and be read together and construed with this Letter Agreement.

 

{Signature Page Follows}

 

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IN WITNESS WHEREOF, the parties have caused this Letter Agreement
to be executed under seal by their duly authorized representatives.

 

The Effective Date of this Letter Agreement is June 10, 2013.

 

	MASSACHUSETTS INSTITUTE OF TECHNOLOGY	 	ARCH THERAPEUTICS, INC.
	 	 	 	 	 
	 	 	 	 	 
	By:	 /s/ Lita Nelson	 	By:	/s/ Terrence W. Norchi, M.D
	 	 	 	 	 
	Name:	Lita Nelson	 	Name:	Terrence W.
    Norchi, MD
	 	 	 	 	 
	Title:	Director, Technology Licensing Office	 	Title:	President and CEO

 

    	56

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