Document:

REGISTRATION RIGHTS
AGREEMENT

     

    This
Registration Rights Agreement (this “Agreement”) is made and
entered into effective as of October 26, 2010 (the “Effective Date”) between
InVivo Therapeutics Holdings Corp. (f/k/a Design Source, Inc.), a Nevada
corporation (the “Company”), and the persons who
have executed the signature page(s) hereto (each, a “Purchaser” and collectively,
the “Purchasers”).

     

    RECITALS:

     

    WHEREAS,
the Company has entered into an Agreement and Plan of Merger and Reorganization
with InVivo Therapeutics Corporation, a Delaware corporation (“InVivo”), pursuant to which a
newly organized, wholly-owned subsidiary of the Company has merged with and into
InVivo, with InVivo remaining as the surviving entity and a wholly-owned
subsidiary of the Company (the “Merger”);

     

    WHEREAS,
prior to the Merger, InVivo issued (the “Notes Offering”) Convertible
Promissory Notes (the “Bridge
Notes”) and common stock purchase warrants (“Bridge
Warrants”).  Upon the closing of the Merger and the PPO (as
defined below), the Bridge Notes automatically converted into Units (as defined
below) and the Bridge Warrants automatically converted into common stock
purchase warrants (the “Exchange Warrants”) to
purchase shares of Common Stock;

     

    WHEREAS,
simultaneously with the Merger and to provide the capital required by the
Company for working capital and other purposes, the Company has offered in
compliance with Rule 506 of Regulation D and/or Regulation S of the Securities
Act (as defined herein), to investors in a private placement transaction (the
“PPO”), units (“Units”) of its securities,
each Unit consisting of one share of Common Stock (the “Investor Shares”) and a common
stock purchase warrant (the “Investor Warrants”) to
purchase one share of Common Stock;

     

    WHEREAS,
the initial closing of the PPO and the closing of the Merger have taken place on
the Effective Date; and

     

    WHEREAS,
in connection with the Merger, the Notes Offering and the PPO, the Company
agrees to provide certain registration rights related to the Investor Shares and
the shares of Common Stock issuable upon exercise of the Exchange Warrants and
the Investor Warrants, on the terms set forth herein;

     

    NOW,
THEREFORE, in consideration of the mutual promises, representations, warranties,
covenants, and conditions set forth herein, the parties mutually agree as
follows:

     

    1.           Certain
Definitions.  As used in this Agreement, the following terms
shall have the following respective meanings:

     

    “Approved Market”
means the Over-the-Counter Bulletin Board, the Nasdaq Stock Market, the New York
Stock Exchange or the American Stock Exchange.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    “Blackout Period”
means, with respect to a registration, a period, in each case commencing on the
day immediately after the Company notifies the Purchasers that they are
required, because of the occurrence of an event of the kind described in Section
4(f) hereof, to suspend offers and sales of Registrable Securities during which
the Company, in the good faith judgment of its board of directors, determines
(because of the existence of, or in anticipation of, any acquisition, financing
activity, or other transaction involving the Company, or the unavailability for
reasons beyond the Company’s control of any required financial statements,
disclosure of information which is in its best interest not to publicly
disclose, or any other event or condition of similar significance to the
Company) that the registration and distribution of the Registrable Securities to
be covered by such Registration Statement, if any, would be seriously
detrimental to the Company and its stockholders and ending on the earlier of (1)
the date upon which the material non-public information commencing the Blackout
Period is disclosed to the public or ceases to be material and (2) such time as
the Company notifies the selling Holders that the Company will no longer delay
such filing of the Registration Statement, recommence taking steps to make such
Registration Statement effective, or allow sales pursuant to such Registration
Statement to resume.

     

    “Bridge Notes” has the
meaning given it in the recitals of this Agreement.

     

    “Bridge Warrants” has
the meaning given it in the recitals of this Agreement.

     

    “Business Day” means
any day of the year, other than a Saturday, Sunday, or other day on which the
Commission is required or authorized to close.

     

    “Commission” means the
U. S. Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.

     

    “Common Stock” means
the common stock, par value $0.00001 per share, of the Company and any and all
shares of capital stock or other equity securities of: (i) the Company which are
added to or exchanged or substituted for the Common Stock by reason of the
declaration of any stock dividend or stock split, the issuance of any
distribution or the reclassification, readjustment, recapitalization or other
such modification of the capital structure of the Company; and (ii) any other
corporation, now or hereafter organized under the laws of any state or other
governmental authority, with which the Company is merged, which results from any
consolidation or reorganization to which the Company is a party, or to which is
sold all or substantially all of the shares or assets of the Company, if
immediately after such merger, consolidation, reorganization or sale, the
Company or the stockholders of the Company own equity securities having in the
aggregate more than 50% of the total voting power of such other
corporation.

     

    “Effective Date” means
the later of (i) the date set forth in the preamble to this Agreement and (ii)
the date of the final closing of the PPO.

     

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

     

    “Exchange Warrants”
has the meaning given it in the recitals of this Agreement.

     

    
      
         

      

      
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    “Family Member” means
(a) with respect to any individual, such individual’s spouse, any descendants
(whether natural or adopted), any trust all of the beneficial interests of which
are owned by any of such individuals or by any of such individuals together with
any organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, the estate of any such individual, and any corporation,
association, partnership or limited liability company all of the equity
interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.

     

    “Holder” means each
Purchaser or any of such Purchaser’s respective successors and Permitted
Assignees who acquire rights in accordance with this Agreement with respect to
any Registrable Securities directly or indirectly from a Purchaser or from any
Permitted Assignee.

     

    “Initial Registration
Statement” means the initial Registration Statement filed pursuant to
this Agreement.

     

    “Investor Shares” has
the meaning given it in the recitals of this Agreement.

     

    “Investor Warrants”
has the meaning given it in the recitals of this Agreement.

     

    “Majority Holders”
means at any time Holders representing a majority of the Registrable
Securities.

     

    “Permitted Assignee”
means (a) with respect to a partnership, its partners or former partners in
accordance with their partnership interests, (b) with respect to a corporation,
its stockholders in accordance with their interest in the corporation, (c) with
respect to a limited liability company, its members or former members in
accordance with their interest in the limited liability company, (d) with
respect to an individual party, any Family Member of such party, (e) an entity
that is controlled by, controls, or is under common control with a transferor,
or (f) a party to this Agreement.

     

    “Piggyback
Registration” means, in any registration of Common Stock as set forth in
Section 3(b), the ability of holders of Registrable Securities to include
Registrable Securities in such registration.

     

    The terms
“register,”
“registered,”
and “registration” refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

     

    “Registrable
Securities” means the Investor Shares and the Registrable Warrant Shares
but excluding (i) any Registrable Securities that have been publicly sold or may
be sold immediately without registration under the Securities Act either
pursuant to Rule 144(k) of the Securities Act or otherwise; (ii) any Registrable
Securities sold by a person in a transaction pursuant to a registration
statement filed under the Securities Act, or (iii) any Registrable Securities
that are at the time subject to an effective registration statement under the
Securities Act.

     

    “Registrable Warrant
Shares” means the shares of Common Stock issued or issuable to each
Purchaser upon exercise of the Exchange Warrants and the Investor
Warrants.

     

    
      
         

      

      
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    “Registration Default
Date” means the date that is 180 days after the date the Registration
Statement is actually filed with the Commission.

     

    “Registration Default
Period” means the period following the Registration Default Date during
which any Registration Event occurs and is continuing.

     

    “Registration Event”
means the occurrence of any of the following events:

     

    (a)           the
Company fails to file with the Commission the Registration Statement on or
before the Registration Filing Date;

     

    (b)           the
Registration Statement is not declared effective by the Commission on or before
the Registration Default Date;

     

    (c)           after
the SEC Effective Date, sales cannot be made pursuant to the Registration
Statement for any reason (including without limitation by reason of a stop
order, or the Company’s failure to update the Registration Statement) except as
excused pursuant to Section 3(e); or

     

    (d)           the
Common Stock generally or the Registrable Securities specifically are not listed
or included for quotation on an Approved Market, or trading of the Common Stock
is suspended or halted on the Approved Market, which at the time constitutes the
principal market for the Common Stock, for more than two full, consecutive
Trading Days; provided, however, a
Registration Event shall not be deemed to occur if all or substantially all
trading in equity securities (including the Common Stock) is suspended or halted
on the Approved Market for any length of time.

     

    “Registration Filing
Date” means the date that is 90 days after date of the final closing of
the PPO.

     

    “Registration
Statement” means the registration statement that the Company is required
to file pursuant to this Agreement to register the Registrable
Securities.

     

    “Rule 144” means Rule
144 promulgated by the Commission under the Securities Act.

     

    “Rule 145” means Rule
145 promulgated by the Commission under the Securities Act.

     

    “Rule 415” means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same purpose and effect as
such Rule.

     

    “Securities Act” means
the Securities Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.

     

    “SEC Effective Date”
means the date the Registration Statement is declared effective by the
Commission.

     

    
      
         

      

      
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    “Trading Day” means
(a) if the Common Stock is listed or quoted on an Approved Market, then any day
during which securities are generally eligible for trading on the Approved
Market, or (b) if the Common Stock is not then listed or quoted and traded on an
Approved Market, then any business day.

     

    2.           Term.  This
Agreement shall continue in full force and effect for a period of one year from
the SEC Effective Date, unless terminated sooner hereunder.

     

    3.           Registration.

     

    (a)           Registration on Form
S-1.  Not later than the Registration Filing Date, the Company
shall file with the Commission a Registration Statement on Form S-1, or other
applicable form, relating to the resale by the Holders of all of the Registrable
Securities, and the Company shall use its commercially reasonably efforts to
cause such Registration Statement to be declared effective prior to the
Registration Default Date.

     

    (b)           Piggyback
Registration.  In addition to the Coampny agreement pursuant to
Section 3(a) above, if the Company shall determine to register for sale for cash
any of its Common Stock, for its own account or for the account of others (other
than the Holders), other than (i) a registration relating solely to employee
benefit plans or securities issued or issuable to employees, consultants (to the
extent the securities owned or to be owned by such consultants could be
registered on Form S-8) or any of their Family Members (including a registration
on Form S-8) or (ii) a registration relating solely to a Securities Act Rule 145
transaction or a registration on Form S-4 in connection with a merger,
acquisition, divestiture, reorganization or similar event, the Company shall
promptly give to the Holders written notice thereof (and in no event shall such
notice be given less than 20 calendar days prior to the filing of such
registration statement), and shall, subject to Section 3(c), include as a
Piggyback Registration all of the Registrable Securities specified in a written
request delivered by the Holder thereof within 10 calendar days after receipt of
such written notice from the Company. However, the Company may, without the
consent of the Holders, withdraw such registration statement prior to its
becoming effective if the Company or such other stockholders have elected to
abandon the proposal to register the securities proposed to be registered
thereby.

     

    (c)           Underwriting.  If
a Piggyback Registration is for a registered public offering that is to be made
by an underwriting, the Company shall so advise the Holders of the Registrable
Securities eligible for inclusion in such Registration Statement pursuant to
Sections 3(b)(i) and (ii), respectively.  In that event, the right of
any Holder to Piggyback Registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to sell any of their Registrable Securities through such
underwriting shall (together with the Company and any other stockholders of the
Company selling their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter selected for such
underwriting by the Company or the selling stockholders, as
applicable.  Notwithstanding any other provision of this Section, if
the underwriter or the Company determines that marketing factors require a
limitation on the number of shares of Common Stock or the amount of other
securities to be underwritten, the underwriter may exclude some or all
Registrable Securities from such registration and underwriting.  The
Company shall so advise all Holders (except those Holders who failed to timely
elect to include their Registrable Securities through such underwriting or have
indicated to the Company their decision not to do so), and indicate to each such
Holder the number of shares of Registrable Securities that may be included in
the registration and underwriting, if any. The number of shares of Registrable
Securities to be included in such registration and underwriting shall be
allocated among such Holders as follows:

     

    
      
         

      

      
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    (i)           If
the Piggyback Registration was initiated by the Company, the number of shares
that may be included in the registration and underwriting shall be allocated
first to the Company and then, subject to obligations and commitments existing
as of the date hereof, to all selling stockholders, including the Holders, who
have requested to sell in the registration on a pro rata basis according to the
number of shares requested to be included therein; and

     

    (ii)           If
the Piggyback Registration was initiated by the exercise of demand registration
rights by a stockholder or stockholders of the Company (other than the Holders),
then the number of shares that may be included in the registration and
underwriting shall be allocated first to such selling stockholders who exercised
such demand and then, subject to obligations and commitments existing as of the
date hereof, to all other selling stockholders, including the Holders, who have
requested to sell in the registration on a pro rata basis according to the
number of shares requested to be included therein.

     

    No
Registrable Securities excluded from the underwriting by reason of the
underwriter’s marketing limitation shall be included in such registration. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw such Holder’s Registrable Securities therefrom by delivering a
written notice to the Company and the underwriter.  The Registrable
Securities so withdrawn from such underwriting shall also be withdrawn from such
registration; provided, however, that, if by
the withdrawal of such Registrable Securities, a greater number of Registrable
Securities held by other Holders may be included in such registration (up to the
maximum of any limitation imposed by the underwriters), then the Company shall
offer to all Holders who have included Registrable Securities in the
registration the right to include additional Registrable Securities pursuant to
the terms and limitations set forth herein in the same proportion used above in
determining the underwriter limitation.

     

    
      
         

      

      
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    (d)           Occurrence of Registration
Event.  If a Registration Event occurs, then the Company will
make payments to each Holder of Registrable Securities (a “Qualified Purchaser”), as
liquidated damages for the amount of damages to the Qualified Purchaser by
reason thereof, at a rate equal to 0.50% of the purchase price per Unit paid by
such Holder in the PPO (including, without limitation, Bridge Note conversion
amounts) for the Registrable Securities then held by each Qualified Purchaser
for each full period of 30 days of the Registration Default Period (which shall
be pro rated for any period less than 30 days); provided, however, if a
Registration Event occurs (or is continuing) on a date more than one-year after
the Company filed a Current Report on Form 8-K relating to the Merger and the
PPO and providing Form 10 information with respect thereto, liquidated damages
shall be paid only with respect to that portion of the Qualified Purchaser’s
Registrable Securities that cannot then be immediately resold in reliance on
Rule 144.  Notwithstanding the foregoing, the maximum amount of
liquidated damages that may be paid to any Qualified Purchaser pursuant to this
Section 3(d) shall be an amount equal to 9% of the purchase price per Unit paid
by such Holder in the PPO for the Registrable Securities held by such Qualified
Purchaser at the time of the first occurrence of a Registration
Event.  Each such payment shall be due and payable within five days
after the end of each full 30-day period of the Registration Default Period
until the termination of the Registration Default Period and within five days
after such termination.  Such payments shall constitute the Qualified
Purchaser’s exclusive remedy for such events.  If the Company fails to
pay any partial liquidated damages or refund pursuant to this Section in full
within seven days after the date payable, the Company will pay interest thereon
at a rate of 8% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the Holder, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full.  The Registration Default Period shall terminate
upon (i) the filing of the Registration Statement in the case of clause (a) of
the definition of Registration Event, (ii) the SEC Effective Date in the case of
clause (b) of the definition of Registration Event, (iii) the ability of the
Qualified Purchaser to effect sales pursuant to the Registration Statement in
the case of clause (c) of the definition of Registration Event, (iv) the listing
or inclusion and/or trading of the Common Stock on an Approved Market, as the
case may be, in the case of clause (d) of the definition of Registration Event,
and (v) in the case of the events described in clauses (b) and (c) of the
definition of Registration Event, the earlier termination of the Registration
Default Period.  The amounts payable as liquidated damages pursuant to
this Section 3(d) shall be payable in lawful money of the United
States.

     

    (e)           Notwithstanding
the provisions of Section 3(d) above, (a) if the
Commission does not declare the Registration Statement effective on or before
the Registration Default Date, or (b) if the Commission allows the Registration
Statement to be declared effective at any time before or after the Registration
Default 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 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, the Holders understand and agree that in the case of
(b) the Company may reduce, on a pro rata basis, the total
number of Registrable Securities to be registered on behalf of each such Holder,
and, in the case of (a) or (b), and that a Holder shall not be entitled to any
liquidated damages 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 reduction, the number of
Registrable Securities to be registered on such Registration Statement will
first be reduced by the Registrable Securities represented by the Registrable
Warrant Shares (applied, in the case that some Registrable Warrant Shares may be
registered, to the Holders on a pro rata basis based on the total number of
unregistered Registrable Warrant Shares held by such Holders on a fully diluted
basis), and second by Registrable Securities represented by Investor Shares
(applied, in the case that some Investor Shares may be registered, to the
Holders on a pro rata basis based on the total number of unregistered Investor
Shares held by such Holders).  In addition, any
such affected Holder shall be entitled to Piggyback Registration rights after
the Registration Statement is declared effective by the Commission until such
time as: (AA) all Registrable Securities have been registered pursuant to an
effective Registration Statement, (BB) the Registrable Securities may be resold
without restriction pursuant to Rule 144 of the Securities Act, or (CC) the
Holder agrees to be named as an underwriter in any such registration statement.
The Holders acknowledge and agree the provisions of this paragraph may apply to
more than one Registration Statement.

     

    
      
         

      

      
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    4.           Registration Procedures for
Registrable Securities.  The Company will keep each Holder
reasonably advised as to the filing and effectiveness of the Registration
Statement. At its expense with respect to the Registration Statement, the
Company will:

     

    (a)           prepare
and file with the Commission with respect to the Registrable Securities, a
Registration Statement on Form S-1, or any other form for which the Company then
qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the sale of the Registrable Securities in accordance with
the intended methods of distribution thereof, and use its commercially
reasonable efforts to cause such Registration Statement to become effective and
shall remain effective for a period of one year or for such shorter period
ending on the earlier to occur of (i) the date as of which all of the Holders as
selling stockholders thereunder may sell all of the Registrable Securities
registered for resale thereon without restriction pursuant to Rule 144 (or any
successor rule thereto) promulgated under the Securities Act or (ii) the date
when all of the Registrable Securities registered thereunder shall have been
sold (the “Effectiveness
Period”).  Thereafter, the Company shall be entitled to
withdraw such Registration Statement and the Investors shall have no further
right to offer or sell any of the Registrable Securities registered for resale
thereon pursuant to the respective Registration Statement (or any prospectus
relating thereto);

     

    (b)           if
the Registration Statement is subject to review by the Commission, promptly
respond to all comments and diligently pursue resolution of any comments to the
satisfaction of the Commission;

     

    (c)           prepare
and file with the Commission such amendments and supplements to such
Registration Statement as may be necessary to keep such Registration Statement
effective during the Effectiveness Period;

     

    (d)           furnish,
without charge, to each Holder of Registrable Securities covered by such
Registration Statement (i) a reasonable number of copies of such Registration
Statement (including any exhibits thereto other than exhibits incorporated by
reference), each amendment and supplement thereto as such Holder may reasonably
request, (ii) such number of copies of the prospectus included in such
Registration Statement (including each preliminary prospectus and any other
prospectus filed under Rule 424 of the Securities Act) as such Holders may
reasonably request, in conformity with the requirements of the Securities Act,
and (iii) such other documents as such Holder may require to consummate the
disposition of the Registrable Securities owned by such Holder, but only during
the Effectiveness Period;

     

    (e)           use
its commercially reasonable efforts to register or qualify such registration
under such other applicable securities laws of such jurisdictions as any Holder
of Registrable Securities covered by such Registration Statement reasonably
requests and as may be necessary for the marketability of the Registrable
Securities (such request to be made by the time the applicable Registration
Statement is deemed effective by the Commission) and do any and all other acts
and things necessary to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder; provided, that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph, (ii) subject itself to taxation in any such jurisdiction, or (iii)
consent to general service of process in any such jurisdiction.

     

    
      
         

      

      
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    (f)           notify
each Holder of Registrable Securities, the disposition of which requires
delivery of a prospectus relating thereto under the Securities Act, of the
happening of any event (as promptly as practicable after becoming aware of such
event), which comes to the Company’s attention, that will after the occurrence
of such event cause the prospectus included in such Registration Statement, if
not amended or supplemented, to contain an untrue statement of a material fact
or an omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and the Company shall
promptly thereafter prepare and furnish to such Holder a supplement or amendment
to such prospectus (or prepare and file appropriate reports under the Exchange
Act) so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, unless suspension of
the use of such prospectus otherwise is authorized herein or in the event of a
Blackout Period, in which case no supplement or amendment need be furnished (or
Exchange Act filing made) until the termination of such suspension or Blackout
Period;

     

    (g)           comply,
and continue to comply during the Effectiveness Period, in all material respects
with the Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission with respect to the disposition of all securities
covered by such Registration Statement;

     

    (h)           as
promptly as practicable after becoming aware of such event, notify each Holder
of Registrable Securities being offered or sold pursuant to the Registration
Statement of the issuance by the Commission of any stop order or other
suspension of effectiveness of the Registration Statement;

     

    (i)           use
its commercially reasonable efforts to cause all the Registrable Securities
covered by the Registration Statement to be quoted on the OTC Bulletin Board or
such other principal securities market on which securities of the same class or
series issued by the Company are then listed or traded;

     

    (j)           provide
a transfer agent and registrar, which may be a single entity, for the shares of
Common Stock at all times;

     

    (k)           If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by applicable law, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may
request;

     

    
      
         

      

      
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    (l)           during
the Effectiveness Period, refrain from bidding for or purchasing any Common
Stock or any right to purchase Common Stock or attempting to induce any person
to purchase any such security or right if such bid, purchase or attempt would in
any way limit the right of the Holders to sell Registrable Securities by reason
of the limitations set forth in Regulation M of the Exchange Act;
and

     

    (m)           take
all other reasonable actions necessary to expedite and facilitate the
disposition by the Holders of the Registrable Securities pursuant to the
Registration Statement.

     

    5.           Suspension of Offers and
Sales.  Each Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
4(f) hereof or of the commencement of a Blackout Period, such Holder shall
discontinue the disposition of Registrable Securities included in the
Registration Statement until such Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4(f) hereof or notice
of the end of the Blackout Period, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company’s expense) all copies
(including, without limitation, any and all drafts), other than permanent file
copies, then in such Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such
notice.

     

    6.           Registration
Expenses.  The Company shall pay all expenses in connection
with any registration obligation provided herein, including, without limitation,
all registration, filing, stock exchange fees, printing expenses, all fees and
expenses of complying with applicable securities laws, and the fees and
disbursements of counsel for the Company and of its independent accountants;
provided, that,
in any registration, each party shall pay for its own underwriting discounts and
commissions and transfer taxes. Except as provided in this Section and Section
9, the Company shall not be responsible for the expenses of any attorney or
other advisor employed by a Holder.

     

    7.           Assignment of
Rights.  No Holder may assign its rights under this Agreement
to any party without the prior written consent of the Company; provided, however, that any
Holder may assign its rights under this Agreement without such consent to a
Permitted Assignee as long as (a) such transfer or assignment is effected in
accordance with applicable securities laws; (b) such transferee or assignee
agrees in writing to become subject to the terms of this Agreement; and (c) such
Holder notifies the Company in writing of such transfer or assignment, stating
the name and address of the transferee or assignee and identifying the
Registrable Securities with respect to which such rights are being transferred
or assigned.

     

    8.           Information by
Holder.  A Holder with Registrable Securities included in any
registration shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required in order to comply with any applicable law
or regulation in connection with the registration of such Holder’s Registrable
Securities or any qualification or compliance with respect to such Holder’s
Registrable Securities and referred to in this Agreement.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    9.           Indemnification.

     

    (a)           In
the event of the offer and sale of Registrable Securities under the Securities
Act, the Company shall, and hereby does, indemnify and hold harmless, to the
fullest extent permitted by law, each Holder, its directors, officers, partners,
each other person who participates as an underwriter in the offering or sale of
such securities, and each other person, if any, who controls or is under common
control with such Holder or any such underwriter within the meaning of Section
15 of the Securities Act, against any losses, claims, damages or liabilities,
joint or several, and expenses to which the Holder or any such director,
officer, partner or underwriter or controlling person may become subject under
the Securities Act, the Exchange Act, or any other federal or state law, insofar
as such losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement of any material fact contained in any
registration statement prepared and filed by the Company under which Registrable
Securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission to state therein a material fact required to
be stated or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, or any violation or
alleged violation of the Securities Act, the Exchange Act, any state securities
law or any rule or regulation promulgated under the Securities Act, the Exchange
Act or any state securities law in connection with this Agreement; and the
Company shall reimburse the Holder, and each such director, officer, partner,
underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating, defending or
settling any such loss, claim, damage, liability, action or proceeding; provided, that such
indemnity agreement found in this Section 9(a) shall in no event exceed the net
proceeds from the Notes Offering or the PPO, as applicable, received by the
Company; and provided
further, that the Company shall not be liable in any such case (i) to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue statement
in or omission from such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Holder specifically for use in the preparation thereof or (ii) if
the person asserting any such loss, claim, damage, liability (or action or
proceeding in respect thereof) who purchased the Registrable Securities that are
the subject thereof did not receive a copy of an amended preliminary prospectus
or the final prospectus (or the final prospectus as amended or supplemented) at
or prior to the written confirmation of the sale of such Registrable Securities
to such person because of the failure of such Holder or underwriter to so
provide such amended preliminary or final prospectus and the untrue statement or
omission of a material fact made in such preliminary prospectus was corrected in
the amended preliminary or final prospectus (or the final prospectus as amended
or supplemented). Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Holders, or any such
director, officer, partner, underwriter or controlling person and shall survive
the transfer of such shares by the Holder.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (b)           As
a condition to including Registrable Securities in any registration statement
filed pursuant to this Agreement, each Holder agrees to be bound by the terms of
this Section 9 and to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors and officers, and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or controlling
person may become subject under the Securities Act, the Exchange Act, or any
other federal or state law, to the extent arising out of or based solely upon:
(x) such Holder’s failure to comply with the prospectus delivery requirements of
the Securities Act or (y) any untrue or alleged untrue statement of a material
fact contained in any registration statement, any prospectus, or any form of
prospectus, or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading (i) to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for inclusion in
the registration statement or such prospectus or (ii) to the extent that (1)
such untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such prospectus or such form of prospectus or in any
amendment or supplement thereto or (2) in the case of an occurrence of an event
of the type specified in Section 4(f) hereof, the use by such Holder of an
outdated or defective prospectus after the Company has notified such Holder in
writing that the prospectus is outdated or defective and prior to the receipt by
such Holder of the advice contemplated in Section 4(f).  In no event
shall the liability of any selling Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification
obligation.

     

    (c)           Promptly
after receipt by an indemnified party of notice of the commencement of any
action or proceeding involving a claim referred to in this Section (including
any governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
indemnifying party of the commencement of such action; provided, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Section, except to
the extent that the indemnifying party is actually prejudiced by such failure to
give notice.  In case any such action is brought against an
indemnified party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses not
available to the indemnifying party in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of
investigation.  Neither an indemnified nor an indemnifying party shall
be liable for any settlement of any action or proceeding effected without its
consent.  No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement, which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.  Notwithstanding
anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any party shall have the right to retain,
at its own expense, counsel with respect to the defense of a claim.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (d)           If
an indemnifying party does or is not permitted to assume the defense of an
action pursuant to Sections 9(c) or in the case of the expense reimbursement
obligation set forth in Sections 9(a) and (b), the indemnification required by
Sections 9(a) and 9(b) shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills received or
expenses, losses, damages, or liabilities are incurred.

     

    (e)           If
the indemnification provided for in Section 9(a) or 9(b) is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall (i) contribute to the amount paid or payable by such indemnified party as
a result of such loss, liability, claim, damage or expense as is appropriate to
reflect the proportionate relative fault of the indemnifying party on the one
hand and the indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission relates to information supplied by the indemnifying party or the
indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, not only the proportionate relative
fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent
misrepresentation.

     

    (f)           Other
Indemnification.  Indemnification similar to that specified in
this Section (with appropriate modifications) shall be given by the Company and
each Holder of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation or governmental authority other than the Securities Act.

     

    10.           Rule
144.  With a view to making available to the Holders the
benefits of Rule 144 and any other rule or regulation of the Commission that may
at any time permit the Holders to sell the Registrable Securities to the public
without registration, the Company agrees: (i) to make and keep public
information available as those terms are understood in Rule 144, (ii) to file
with the Commission in a timely manner all reports and other documents required
to be filed by an issuer of securities registered under the Securities Act or
the Exchange Act pursuant to Rule 144, (iii) as long as any Holder owns any
Registrable Securities, to furnish in writing upon such Holder’s request a
written statement by the Company that it has complied with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act, and to
furnish to such Holder a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents so filed by the Company as may
be reasonably requested in availing such Holder of any rule or regulation of the
Commission permitting the selling of any such Registrable Securities without
registration and (iv) undertake any additional actions commercially reasonably
necessary to maintain the availability of the use of Rule 144.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    11.           Corporate
Existence.  So long as any Holder owns any Registrable
Securities, the Company shall not directly or indirectly consummate any merger,
reorganization, restructuring, reverse stock split, consolidation, sale of all
or substantially all of the Company’s assets or any similar transaction or
related transactions (each such transaction, an “Organizational Change”),
unless, prior to the consummation of an Organizational Change, the Company
obtains the written consent of the Majority Holders.

     

    12.           Independent Nature of Each
Purchaser’s Obligations and Rights.  The obligations of each
Purchaser under this Agreement are several and not joint with the obligations of
any other Purchaser, and each Purchaser shall not be responsible in any way for
the performance of the obligations of any other Purchaser under this Agreement.
Nothing contained herein and no action taken by any Purchaser pursuant hereto,
shall be deemed to constitute such Purchasers as a partnership, an association,
a joint venture, or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement. Each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

     

    13.           Other Registration
Rights.  The Company shall not grant any registration rights
without the Consent of the Majority Holders prior to the effectiveness of the
Registration Statement.

     

    14.           Miscellaneous.

     

    (a)           Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
United States of America and the State of New York, both substantive and
remedial, without regard to New York conflicts of law principles. Any judicial
proceeding brought against either of the parties to this Agreement or any
dispute arising out of this Agreement or any matter related hereto shall be
brought in the courts of the State of New York, New York County, or in the
United States District Court for the Southern District of New York and, by its
execution and delivery of this Agreement, each party to this Agreement accepts
the jurisdiction of such courts. The foregoing consent to jurisdiction shall not
be deemed to confer rights on any person other than the parties to this
Agreement.

     

    (b)           Remedies.  In
the event of a breach by the Company or by a Holder of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, shall be entitled to
specific performance of its rights under this Agreement.  The Company
and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall not assert
or shall waive the defense that a remedy at law would be adequate.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (c)           Successors and
Assigns.  Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
Permitted Assignees, executors and administrators of the parties
hereto.

     

    (d)           No Inconsistent
Agreements.  The Company has not entered, as of the date
hereof, and shall not enter, on or after the date of this Agreement, into any
agreement with respect to its securities that would have the effect of impairing
the rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof.

     

    (e)           Entire
Agreement.  This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.

     

    (f)           Notices, etc. All
notices or other communications which are required or permitted under this
Agreement shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, by electronic
mail, or by courier or overnight carrier, to the persons at the addresses set
forth below (or at such other address as may be provided hereunder), and shall
be deemed to have been delivered as of the date so delivered:

     

    If to the
Company to:

    

    InVivo
Therapeutics Holdings Corp.

    One
Broadway, 14th
Floor

    Cambridge,
MA  02142

    Attention:  Frank
M. Reynolds, Chief Executive Officer

    Facsimile:  (617)
225-4430

    

    with copy to:

    

    Meister
Seelig & Fein LLP

    Two Grand
Central Tower, 19th
Floor

    140 East
45th
Street

    New York,
NY 10017

    Attention:  Mitchell
L. Lampert, Esq.

    Facsimile:  (212)
655-3535

    

    If to the
Purchasers:

    

    To each
Purchaser at the address set forth on the signature page hereto

    

    or at
such other address as any party shall have furnished to the other parties in
writing.

     

    (g)           Delays or
Omissions.  No delay or omission to exercise any right, power
or remedy accruing to any Holder, upon any breach or default of the Company
under this Agreement, shall impair any such right, power or remedy of such
Holder nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of any similar breach or default thereunder
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
Holder of any breach or default under this Agreement, or any waiver on the part
of any Holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    (h)           Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.  In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.

     

    (i)           Severability. In the
case any provision of this Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

     

    (j)           Amendments. The
provisions of this Agreement may be amended at any time and from time to time,
and particular provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and the Majority Holders.
The Purchasers acknowledge that by the operation of this Section, the Majority
Holders may have the right and power to diminish or eliminate all rights of the
Purchasers under this Agreement.

     

    (k)           Limitation on Subsequent
Registration Rights.  After the date of this Agreement, the
Company shall not, without the prior written consent of the Majority Holders,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would grant such holder registration rights senior or equal
to those granted to the Holders hereunder.

     

    [SIGNATURE
PAGES FOLLOW]

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    This
Registration Rights Agreement is hereby executed as of the date first above
written.

     

    
      
        
          	 
      	
                  COMPANY:

                
	 
      	 
      
	 
      	
                  INVIVO
      THERAPEUTICS HOLDINGS CORP.

                
	 
      	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	
                  Name:

                	
                  Frank
      M. Reynolds

                
	 
      	
                  Title:

                	
                  Chief
      Executive Officer

                

        

      

    

     

    THE
PURCHASER’S SIGNATURE TO THE SUBSCRIPTION AGREEMENT DATED OF EVEN DATE HEREWITH
SHALL CONSTITUTE THE PURCHASER’S SIGNATURE TO THIS REGISTRATION RIGHTS
AGREEMENT.

     

    
      
         

      

      
        17SPLIT-OFF
AGREEMENT

      

      This SPLIT-OFF AGREEMENT, dated as
of October __, 2010 (this “Agreement”), is entered into by and among InVivo
Therapeutics Holding Corp. (f/k/a Design Source, Inc.), a Nevada corporation
(“Seller”), DSource Split Corp., a Delaware corporation (“Split-Off Subsidiary”)
and Peter Reichard, Peter Coker and Lawrence Reichard (“Buyers”).

       

      RECITALS:

      

      WHEREAS, Seller is the owner of
all of the issued and outstanding capital stock of Split-Off Subsidiary;
Split-Off Subsidiary is a wholly-owned subsidiary of Seller which will acquire
the business assets and liabilities previously held by Seller; and Seller has no
other businesses or operations prior to the Merger (as defined
herein);

      

      WHEREAS, contemporaneously
with the execution of this Agreement, Seller, InVivo Therapeutics Corporation, a
Delaware corporation (“InVivo”), and a newly-formed wholly-owned Nevada
subsidiary of Seller, InVivo Therapeutics Acquisition Corp. (“Acquisition
Subsidiary”), will enter into an Agreement and Plan of Merger and Reorganization
(the “Merger Agreement”) pursuant to which Acquisition Subsidiary will merge
with and into InVivo with InVivo remaining as the surviving entity (the
“Merger”); and the equity holders of InVivo will receive securities of Seller in
exchange for their equity interests in InVivo;

      

      WHEREAS, the execution and
delivery of this Agreement is required by InVivo as a condition to its execution
of the Merger Agreement and the consummation of the assignment, assumption,
purchase and sale transactions contemplated by this Agreement is also a
condition to the completion of the Merger pursuant to the Merger Agreement, and
Seller has represented to InVivo in the Merger Agreement that the transactions
contemplated by this Agreement will be consummated in conjunction with the
closing of the Merger, and InVivo relied on such representation in entering into
the Merger Agreement;

      

      WHEREAS, Buyers desire to
purchase the Shares (as defined in Section 2.1) from
Seller, and to assume, as between Seller and Buyers, all responsibility for any
debts, obligations and liabilities of Seller (prior to the Merger) and Split-Off
Subsidiary, on the terms and subject to the conditions specified in this
Agreement; and

      

      WHEREAS, Seller desires to
sell and transfer the Shares to Buyers, on the terms and subject to the
conditions specified in this Agreement;

      

      NOW, THEREFORE, in
consideration of the premises and the covenants, promises and agreements herein
set forth and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, agree as follows:

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      I.    
       ASSIGNMENT
AND ASSUMPTION OF SELLER’S ASSETS AND LIABILITIES.

       

      Subject
to the terms and conditions provided below:

       

      1.1          Assignment
of Assets.  Seller hereby contributes, assigns, conveys and
transfers to Split-Off Subsidiary, and Split-Off Subsidiary hereby receives,
acquires and accepts, all assets and properties of Seller as of the Effective
Time, including but not limited to the following, but excluding in all
cases (i) the right, title and assets of Seller in, to and under the Transaction
Documentation and (ii) the capital stock of InVivo, Acquisition Subsidiary and
Split-Off Subsidiary:

       

      
        	
                 
      

              	
                (a)

              	
                all
      cash and cash equivalents;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                all
      accounts receivable;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                all
      inventories of raw materials, work in process, parts, supplies and
      finished products;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                all
      of Seller’s rights, title and interests in, to and under all contracts,
      agreements, leases, licenses (including software licenses), supply
      agreements, consulting agreements, commitments, purchase orders, customer
      orders and work orders, and including all of Seller’s rights thereunder to
      use and possess equipment provided by third parties, and all
      representations, warranties, covenants and guarantees related to the
      foregoing (provided that to the extent any of the foregoing or any claim
      or right or benefit arising thereunder or resulting therefrom is not
      assignable by its terms, or the assignment thereof shall require the
      consent or approval of another party thereto, this Agreement shall not
      constitute an assignment thereof if an attempted assignment would be in
      violation of the terms thereof or if such consent is not obtained prior to
      the Effective Time, and in lieu thereof Seller shall reasonably cooperate
      with Split-Off Subsidiary in any reasonable arrangement designed to
      provide Split-Off Subsidiary the benefits thereunder or any claim or right
      arising thereunder);

              

      

       

      
        	
                 
      

              	
                (e)

              	
                all
      intellectual property, including but not limited to issued patents, patent
      applications (whether or not patents are issued thereon and whether
      modified, withdrawn or resubmitted), unpatented inventions, product
      designs, copyrights (whether registered or unregistered), know-how,
      technology, trade secrets, technical information, notebooks, drawings,
      software, computer coding (both object and source) and all documentation,
      manuals and drawings related thereto, trademarks or service marks and
      applications therefor, unregistered trademarks or service marks, trade
      names, logos and icons and all rights to sue or recover for the
      infringement or misappropriation
thereof;

              

      

       

      
        	
                 
      

              	
                (f)

              	
                all
      fixed assets, including but not limited to the machinery, equipment,
      furniture, vehicles, office equipment and other tangible personal property
      owned or leased by Seller;

              

      

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                (g)

              	
                all
      customer lists, business records, customer records and files, customer
      financial records, and all other files and information related to
      customers, all customer proposals, all open service agreements with
      customers and all uncompleted customer contracts and agreements;
      and

              

      

       

      
        	
                 
      

              	
                (h)

              	
                to
      the extent legally assignable, all licenses, permits, certificates,
      approvals and authorizations issued by Governmental Entities and necessary
      to own, lease or operate the assets and properties of Seller and to
      conduct Seller’s business as it is presently
  conducted;

              

      

       

      all of
the foregoing being referred to herein as the “Assigned Assets.”

       

      1.2           Assignment
and Assumption of Liabilities. Seller hereby assigns to
Split-Off Subsidiary, and Split-Off Subsidiary hereby assumes and agrees to pay,
honor and discharge all debts, adverse claims, liabilities, judgments and
obligations of Seller as of the Effective Time, whether accrued, contingent or
otherwise and whether known or unknown, including those arising under any law
(including the common law) or any rule or regulation of any Governmental Entity
or imposed by any court or any arbitrator in a binding arbitration resulting
from, arising out of or relating to the assets, activities, operations, actions
or omissions of Seller, or products manufactured or sold thereby or services
provided thereby, or under contracts, agreements (whether written or oral),
leases, commitments or undertakings thereof, but excluding in all
cases the obligations of Seller under the Transaction Documentation (all of the
foregoing being referred to herein as the “Assigned Liabilities”).

       

      The
assignment and assumption of Seller’s assets and liabilities provided for in
this Article I
is referred to as the “Assignment.”

      

      II.  
       PURCHASE
AND SALE OF STOCK.

       

      2.1          Purchased
Shares.  Subject to the terms and conditions provided below,
Seller shall sell and transfer to Buyers and Buyers shall purchase from Seller,
on the Closing Date (as defined in Section 3.1), all of
the issued and outstanding shares of capital stock of Split-Off Subsidiary (the
“Shares”).

       

      2.2          Purchase
Price.  The purchase price for the Shares shall be the transfer
and delivery by Buyers to Seller of the type and number of shares of common
stock and other securities of Seller that Buyers own (the “Purchase Price
Securities”), as set forth in Exhibit A attached hereto, deliverable as provided
in Section
3.3.

       

      III.   
     CLOSING.

       

      3.1          Closing.  The
closing of the transactions contemplated in this Agreement (the “Closing”) shall
take place as soon as practicable following the execution of this Agreement;
provided, however, that
the Closing must occur simultaneously with the closing of the
Merger.  The date on which the Closing occurs shall be referred to
herein as the “Closing Date.”

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      3.2          Transfer
of Shares.  At the Closing, Seller shall deliver to Buyers
certificates representing the Shares purchased by Buyers, duly endorsed to
Buyers or as directed by Buyers, which delivery shall vest Buyers with good and
marketable title to such Shares, free and clear of all liens and
encumbrances.

       

      3.3          Payment
of Purchase Price.  At the Closing, Buyers shall deliver to
Seller a certificate or certificates representing Buyers’ Purchase Price
Securities duly endorsed to Seller, which delivery shall vest Seller with good
and marketable title to the Purchase Price Securities, free and clear of all
liens and encumbrances.

       

      3.4          Transfer
of Records.  On or before the Closing, Seller shall transfer to
Split-Off Subsidiary all existing corporate books and records in Seller’s
possession relating to Split-Off Subsidiary and its business, including but not
limited to all agreements, litigation files, real estate files, personnel files
and filings with governmental agencies; provided, however, when any such
documents relate to both Seller and Split-Off Subsidiary, only copies of such
documents need be furnished. On or before the Closing, Buyers and Split-Off
Subsidiary shall transfer to Seller all existing corporate books and records in
the possession of Buyers or Split-Off Subsidiary relating to Seller, including
but not limited to all corporate minute books, stock ledgers, certificates and
corporate seals of Seller and all agreements, litigation files, real property
files, personnel files and filings with governmental agencies; provided, however, when any such
documents relate to both Seller and Split-Off Subsidiary or its business, only
copies of such documents need be furnished.

       

      3.5          Instruments
of Assignment. At the Closing, Seller and Split-Off Subsidiary shall
deliver to each other such instruments providing for the Assignment as the other
may reasonably request (the “Instruments of Assignment”).

       

      IV.    
    BUYERS’
REPRESENTATIONS AND WARRANTIES.  Buyers represent and warrant
that:

       

      4.1          Capacity
and Enforceability.  Buyers have the legal capacity to execute
and deliver this Agreement and the documents to be executed and delivered by
Buyers at the Closing pursuant to the transactions contemplated hereby. This
Agreement and all such documents constitute valid and binding agreements of
Buyers, enforceable in accordance with their terms.

       

      4.2          Compliance.  Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby by Buyers will result in the breach of any term
or provision of, or constitute a default under, or violate any agreement,
indenture, instrument, order, law or regulation to which Buyers are a party or
by which Buyers are bound.

      
        
           

        

        
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      4.3          Purchase
for Investment.  Buyers are financially able to bear the
economic risks of acquiring the Shares and the other transactions contemplated
hereby, and have no need for liquidity in their investment in the Shares. Buyers
have such knowledge and experience in financial and business matters in general,
and with respect to businesses of a nature similar to the business of Split-Off
Subsidiary (after giving effect to the Assignment), so as to be capable of
evaluating the merits and risks of, and making an informed business decision
with regard to, the acquisition of the Shares and the other transactions
contemplated hereby. Buyers are “accredited investors” within the meaning of
Rule 501 of Regulation D under the Securities Act. Buyers are acquiring the
Shares solely for their own account and not with a view to or for resale in
connection with any distribution or public offering thereof, within the meaning
of any applicable securities laws and regulations, unless such distribution or
offering is registered under the Securities Act of 1933, as amended (the
“Securities Act”), or an exemption from such registration is available. Buyers
have (i) received all the information they have deemed necessary to make an
informed decision with respect to the acquisition of the Shares and the other
transactions contemplated hereby; (ii) had an opportunity to make such
investigation as they have desired pertaining to Split-Off Subsidiary (after
giving effect to the Assignment) and the acquisition of an interest therein and
the other transactions contemplated hereby, and to verify the information which
is, and has been, made available to them; and (iii) had the opportunity to
ask questions of Seller concerning Split-Off Subsidiary (after giving effect to
the Assignment). Buyers acknowledge that due to their affiliation with Seller
and Split-Off Subsidiary that they have actual knowledge of the business,
operations and financial affairs of Split-Off Subsidiary (after giving effect to
the Assignment). Buyers have received no public solicitation or advertisement
with respect to the offer or sale of the Shares. Buyers realize that the Shares
are “restricted securities” as that term is defined in Rule 144 promulgated by
the Securities and Exchange Commission under the Securities Act, the resale of
the Shares is restricted by federal and state securities laws and, accordingly,
the Shares must be held indefinitely unless their resale is subsequently
registered under the Securities Act or an exemption from such registration is
available for their resale. Buyers understand that any resale of the Shares by
them must be registered under the Securities Act (and any applicable state
securities law) or be effected in circumstances that, in the opinion of counsel
for Split-Off Subsidiary at the time, create an exemption or otherwise do not
require registration under the Securities Act (or applicable state securities
laws). Buyers acknowledge and consent that certificates now or hereafter issued
for the Shares will bear a legend substantially as follows:

       

      THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER
ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH
REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE
SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT
AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF
THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE
AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR SUCH
OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT
VIOLATE THE SECURITIES LAWS.

      
        
           

        

        
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      Buyers
understand that the Shares are being sold to them pursuant to the exemption from
registration contained in Section 4(1) of the Securities Act and that Seller is
relying upon the representations made herein as one of the bases for claiming
the Section 4(1) exemption.

       

      4.4          Liabilities.  Following
the Closing, Seller will have no liability for any debts, liabilities or
obligations of Split-Off Subsidiary or its business or activities, and there are
no outstanding guaranties, performance or payment bonds, letters of credit or
other contingent contractual obligations that have been undertaken by Seller
directly or indirectly in relation to Split-Off Subsidiary or its business and
that may survive the Closing.

       

      4.5          Title to
Purchase Price Securities.  Buyers are the sole record and
beneficial owner of their respective Purchase Price Securities. At Closing,
Buyers will have good and marketable title to their respective Purchase Price
Securities, which Purchase Price Securities are, and at the Closing will be,
free and clear of all options, warrants, pledges, claims, liens and
encumbrances, and any restrictions or limitations prohibiting or restricting
transfer to Seller, except for restrictions on transfer as contemplated by
applicable securities laws.

       

      V.     
    SELLER’S
AND SUBSIDIARY’S REPRESENTATIONS AND WARRANTIES.  Seller and
Split-Off Subsidiary, jointly and severally, represent and warrant to Buyers
that:

       

      5.1          Organization
and Good Standing.  Each of Seller and Split-Off Subsidiary is
a corporation duly incorporated, validly existing, and in good standing under
the laws of their respective states of incorporation.

       

      5.2          Authority
and Enforceability.  The execution and delivery of this
Agreement and the documents to be executed and delivered at the Closing pursuant
to the transactions contemplated hereby, and performance in accordance with the
terms hereof and thereof, have been duly authorized by Seller and all such
documents constitute valid and binding agreements of Seller enforceable in
accordance with their terms.

       

      5.3          Title to
Shares.  Seller is the sole record and beneficial owner of the
Shares.  At Closing, Seller will have good and marketable title to the
Shares, which Shares are, and at the Closing will be, free and clear of all
options, warrants, pledges, claims, liens and encumbrances, and any restrictions
or limitations prohibiting or restricting transfer to Buyers, except for
restrictions on transfer as contemplated by Section 4.3
above.  The Shares constitute all of the issued and outstanding shares
of capital stock of Split-Off Subsidiary.

       

      5.4          WARN
Act.  Split-Off Subsidiary does not have a sufficient number of
employees to make it subject to the Worker Adjustment and Retraining
Notification Act.

       

      5.5          Representations
in Merger Agreement.  Split-Off Subsidiary represents and
warrants that all of the representations and warranties by Seller, insofar as
they relate to Split-Off Subsidiary, contained in the Merger Agreement are true
and correct.

      
        
           

        

        
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      VI.    
    OBLIGATIONS
OF BUYERS PENDING CLOSING.  Buyers covenant and agree that
between the date hereof and the Closing:

       

      6.1          Not
Impair Performance.  Buyers shall not take any intentional
action that would cause the conditions upon the obligations of the parties
hereto to effect the transactions contemplated hereby not to be fulfilled,
including, without limitation, taking or causing to be taken any action that
would cause the representations and warranties made by any party herein not to
be true, correct and accurate as of the Closing, or in any way impairing the
ability of Seller to satisfy its obligations as provided in Article
VII.

       

      6.2          Assist
Performance.  Buyers shall exercise their reasonable best
efforts to cause to be fulfilled those conditions precedent to Seller’s
obligations to consummate the transactions contemplated hereby which are
dependent upon actions of Buyers and to make and/or obtain any necessary filings
and consents in order to consummate the sale transaction contemplated by this
Agreement.

       

      VII.    
   OBLIGATIONS
OF SELLER PENDING CLOSING.  Seller covenants and agrees that
between the date hereof and the Closing:

       

      7.1          Business
as Usual.  Split-Off Subsidiary shall operate and Seller shall
cause Split-Off Subsidiary to operate in accordance with past practices and
shall use best efforts to preserve its goodwill and the goodwill of its
employees, customers and others having business dealings with Split-Off
Subsidiary. Without limiting the generality of the foregoing, from the date of
this Agreement until the Closing Date, Split-Off Subsidiary shall preserve and
maintain Split-Off Subsidiary’s assets in their current operating condition and
repair, ordinary wear and tear excepted. From the date of this Agreement until
the Closing Date, Split-Off Subsidiary shall not (i) amend, terminate or
surrender any material franchise, license, contract or real property interest,
or (ii) sell or dispose of any of its assets except in the ordinary course
of business. Neither Split-Off Subsidiary nor Buyers shall take or omit to take
any action that results in Seller incurring any liability or obligation prior to
or in connection with the Closing.

       

      7.2          Not
Impair Performance.  Seller shall not take any intentional
action that would cause the conditions upon the obligations of the parties
hereto to effect the transactions contemplated hereby not to be fulfilled,
including, without limitation, taking or causing to be taken any action which
would cause the representations and warranties made by any party herein not to
be materially true, correct and accurate as of the Closing, or in any way
impairing the ability of Buyers to satisfy her obligations as provided in Article
VI.

       

      7.3          Assist
Performance.  Seller shall exercise its reasonable best efforts
to cause to be fulfilled those conditions precedent to Buyers’ obligations to
consummate the transactions contemplated hereby which are dependent upon the
actions of Seller and to work with Buyers to make and/or obtain any necessary
filings and consents. Seller shall cause Split-Off Subsidiary to comply with its
obligations under this Agreement.

      
        
           

        

        
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      VIII.  
    SELLER’S
AND SPLIT-OFF SUBSIDIARY’S CONDITIONS PRECEDENT TO
CLOSING.  The obligations of Seller and Split-Off Subsidiary to
close the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing of each of the following conditions
precedent (any or all of which may be waived by Seller and InVivo in
writing):

       

      8.1          Representations
and Warranties; Performance.  All representations and
warranties of Buyers contained in this Agreement shall have been true and
correct, in all material respects, when made and shall be true and correct, in
all material respects, at and as of the Closing, with the same effect as though
such representations and warranties were made at and as of the Closing. Buyers
shall have performed and complied with all covenants and agreements and
satisfied all conditions, in all material respects, required by this Agreement
to be performed or complied with or satisfied by Buyers at or prior to the
Closing.

       

      8.2          Additional
Documents.  Buyers shall deliver or cause to be delivered such
additional documents as may be necessary in connection with the consummation of
the transactions contemplated by this Agreement and the performance of their
obligations hereunder.

       

      8.3          Release
by Buyers and Split-Off Subsidiary.  At the Closing, Buyers and
Split-Off Subsidiary shall execute and deliver to Seller a general release which
in substance and effect releases Seller and InVivo from any and all liabilities
and obligations that Seller and InVivo may owe to Buyers or Split-Off Subsidiary
in any capacity, and from any and all claims that Buyers or Split-Off Subsidiary
may have against Seller, InVivo or their respective managers, members, officers,
directors, stockholders, employees and agents (other than those arising pursuant
to this Agreement or any document delivered in connection with this
Agreement).

       

      IX.   
     BUYERS’
CONDITIONS PRECEDENT TO CLOSING.  The obligation of Buyers to
close the transactions contemplated by this Agreement is subject to the
satisfaction at or prior to the Closing of each of the following conditions
precedent (any and all of which may be waived by Buyers in
writing):

       

      9.1          Representations
and Warranties; Performance.  All representations and
warranties of Seller and Split-Off Subsidiary contained in this Agreement shall
have been true and correct, in all material respects, when made and shall be
true and correct, in all material respects, at and as of the Closing with the
same effect as though such representations and warranties were made at and as of
the Closing. Seller and Split-Off Subsidiary shall have performed and complied
with all covenants and agreements and satisfied all conditions, in all material
respects, required by this Agreement to be performed or complied with or
satisfied by them at or prior to the Closing.

       

      X.      
   OTHER
AGREEMENTS.

       

      10.1        Expenses.  Each
party hereto shall bear its expenses separately incurred in connection with this
Agreement and with the performance of its obligations
hereunder.

      
        
           

        

        
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      10.2        Confidentiality.  Buyers
shall not make any public announcements concerning this transaction without the
prior written agreement of InVivo, other than as may be required by applicable
law or judicial process. If for any reason the transactions contemplated hereby
are not consummated, then Buyers shall return any information received by Buyers
from Seller or Split-Off Subsidiary, and Buyers shall cause all confidential
information obtained by Buyers concerning Split-Off Subsidiary and its business
to be treated as such.

       

      10.3        Brokers’
Fees.  In connection with the transaction specifically
contemplated by this Agreement, no party to this Agreement has employed the
services of a broker and each agrees to indemnify the other against all claims
of any third parties for fees and commissions of any brokers claiming a fee or
commission related to the transactions contemplated hereby.

       

      10.4        Access
to Information Post-Closing; Cooperation.

       

      (a)           Following
the Closing, Buyers and Split-Off Subsidiary shall afford to Seller and its
authorized accountants, counsel and other designated representatives, reasonable
access (and including using reasonable efforts to give access to persons or
firms possessing information) and duplicating rights during normal business
hours to allow records, books, contracts, instruments, computer data and other
data and information (collectively, “Information”) within the possession or
control of Buyers or Split-Off Subsidiary insofar as such access is reasonably
required by Seller. Information may be requested under this Section 10.4(a) for,
without limitation, audit, accounting, claims, litigation and tax purposes, as
well as for purposes of fulfilling disclosure and reporting obligations and
performing this Agreement and the transactions contemplated hereby. No files,
books or records of Split-Off Subsidiary existing at the Closing Date shall be
destroyed by Buyers or Split-Off Subsidiary after Closing but prior to the
expiration of any period during which such files, books or records are required
to be maintained and preserved by applicable law without giving Seller at least
30 days’ prior written notice, during which time Seller shall have the right to
examine and to remove any such files, books and records prior to their
destruction.

       

      (b)           Following
the Closing, Seller shall afford to Split-Off Subsidiary and its authorized
accountants, counsel and other designated representatives reasonable access
(including using reasonable efforts to give access to persons or firms
possessing information) duplicating rights during normal business hours to
Information within Seller’s possession or control relating to the business of
Split-Off Subsidiary. Information may be requested under this Section 10.4(b) for,
without limitation, audit, accounting, claims, litigation and tax purposes as
well as for purposes of fulfilling disclosure and reporting obligations and for
performing this Agreement and the transactions contemplated hereby. No files,
books or records of Split-Off Subsidiary existing at the Closing Date shall be
destroyed by Seller after Closing but prior to the expiration of any period
during which such files, books or records are required to be maintained and
preserved by applicable law without giving Buyers at least 30 days prior written
notice, during which time Buyers shall have the right to examine and to remove
any such files, books and records prior to their destruction.

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

      (c)           At
all times following the Closing, Seller, Buyers and Split-Off Subsidiary shall
use their reasonable efforts to make available to the other party on written
request, the current and former officers, directors, employees and agents of
Seller or Split-Off Subsidiary for any of the purposes set forth in Section 10.4(a) or
(b) above or as witnesses to the extent that such persons may reasonably
be required in connection with any legal, administrative or other proceedings in
which Seller or Split-Off Subsidiary may from time to be involved.

       

      (d)           The
party to whom any Information or witnesses are provided under this Section 10.4 shall
reimburse the provider thereof for all out-of-pocket expenses actually and
reasonably incurred in providing such Information or witnesses.

       

      (e)           Seller,
Buyers, Split-Off Subsidiary and their respective employees and agents shall
each hold in strict confidence all Information concerning the other party in
their possession or furnished by the other or the other’s representative
pursuant to this Agreement with the same degree of care as such party utilizes
as to such party’s own confidential information (except to the extent that such
Information is (i) in the public domain through no fault of such party or
(ii) later lawfully acquired from any other source by such party), and each
party shall not release or disclose such Information to any other person, except
such party’s auditors, attorneys, financial advisors, bankers, other consultants
and advisors or persons with whom such party has a valid obligation to disclose
such Information, unless compelled to disclose such Information by judicial or
administrative process or, as advised by its counsel, by other requirements of
law.

       

      (f)           Seller,
Buyers and Split-Off Subsidiary shall each use their best efforts to forward
promptly to the other party all notices, claims, correspondence and other
materials which are received and determined to pertain to the other
party.

       

      10.5           Guarantees,
Surety Bonds and Letter of Credit Obligations.  In the event
that Seller is obligated for any debts, obligations or liabilities of Split-Off
Subsidiary by virtue of any outstanding guarantee, performance or surety bond or
letter of credit provided or arranged by Seller on or prior to the Closing Date,
Buyers and Split-Off Subsidiary shall use their best efforts to cause to be
issued replacements of such bonds, letters of credit and guarantees and to
obtain any amendments, novations, releases and approvals necessary to release
and discharge fully Seller from any liability thereunder following the Closing.
Buyers and Split-Off Subsidiary, jointly and severally, shall be responsible
for, and shall indemnify, hold harmless and defend Seller from and against, any
costs or losses incurred by Seller arising from such bonds, letters of credits
and guarantees and any liabilities arising therefrom and shall reimburse Seller
for any payments that Seller may be required to pay pursuant to enforcement of
its obligations relating to such bonds, letters of credit and
guarantees.

       

      10.6           Filings
and Consents.  Buyers, at their risk, shall determine what, if
any, filings and consents must be made and/or obtained prior to Closing to
consummate the purchase and sale of the Shares. Buyers shall indemnify the
Seller Indemnified Parties (as defined in Section 12.1 below)
against any Losses (as defined in Section 12.1 below)
incurred by such Seller Indemnified Parties by virtue of the failure to make
and/or obtain any such filings or consents. Recognizing that the failure to make
and/or obtain any filings or consents may cause Seller to incur Losses or
otherwise adversely affect Seller, Buyers and Split-Off Subsidiary confirm that
the provisions of this Section 10.6 will not
limit Seller’s right to treat such failure as the failure of a condition
precedent to Seller’s obligation to close pursuant to Article VIII
above.

      
        
           

        

        
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    10.7        Insurance.  Buyers
acknowledge that on the Closing Date, effective as of the Closing, any insurance
coverage and bonds provided by Seller for Split-Off Subsidiary, and all
certificates of insurance evidencing that Split-Off Subsidiary maintains any
required insurance by virtue of insurance provided by Seller, will terminate
with respect to any insured damages resulting from matters occurring subsequent
to Closing.

     

    10.8        Agreements
Regarding Taxes.

     

    (a)          Tax
Sharing Agreements.  Any tax sharing agreement between Seller
and Split-Off Subsidiary is terminated as of the Closing Date and will have no
further effect for any taxable year (whether the current year, a future year or
a past year).

     

    (b)          Returns
for Periods Through the Closing Date.  Seller will include the
income and loss of Split-Off Subsidiary (including any deferred income triggered
into income by Reg. §1.1502-13 and any excess loss accounts taken into income
under Reg. §1.1502-19) on Seller’s consolidated federal income tax returns for
all periods through the Closing Date and pay any federal income taxes
attributable to such income. Seller and Split-Off Subsidiary agree to allocate
income, gain, loss, deductions and credits between the period up to Closing (the
“Pre-Closing Period”) and the period after Closing (the “Post-Closing Period”)
based on a closing of the books of Split-Off Subsidiary, and both Seller and
Split-Off Subsidiary agree not to make an election under Reg.
§1.1502-76(b)(2)(ii) to ratably allocate the year’s items of income, gain, loss,
deduction and credit. Seller, Split-Off Subsidiary and Buyers agree to report
all transactions not in the ordinary course of business occurring on the Closing
Date after Buyers’ purchase of the Shares on Split-Off Subsidiary’s tax returns
to the extent permitted by Reg. §1.1502-76(b)(1)(ii)(B). Buyers agrees to
indemnify Seller for any additional tax owed by Seller (including tax owned by
Seller due to this indemnification payment) resulting from any transaction
engaged in by Split-Off Subsidiary during the Pre-Closing Period or on the
Closing Date after Buyers’ purchase of the Shares. Split-Off Subsidiary will
furnish tax information to Seller for inclusion in Seller’s consolidated federal
income tax return for the period which includes the Closing Date in accordance
with Split-Off Subsidiary’s past custom and practice.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    (c)          Audits.  Seller
will allow Split-Off Subsidiary and its counsel to participate at Split-Off
Subsidiary’s expense in any audits of Seller’s consolidated federal income tax
returns to the extent that such audit raises issues that relate to and increase
the tax liability of Split-Off Subsidiary. Seller shall have the absolute right,
in its sole discretion, to engage professionals and direct the representation of
Seller in connection with any such audit and the resolution thereof, without
receiving the consent of Buyers or Split-Off Subsidiary or any other party
acting on behalf of Buyers or Split-Off Subsidiary, provided that Seller will
not settle any such audit in a manner which would materially adversely affect
Split-Off Subsidiary after the Closing Date unless such settlement would be
reasonable in the case of a person that owned Split-Off Subsidiary both before
and after the Closing Date. In the event that after Closing any tax authority
informs Buyers or Split-Off Subsidiary of any notice of proposed audit, claim,
assessment or other dispute concerning an amount of taxes which pertain to
Seller, or to Split-Off Subsidiary during the period prior to Closing, Buyers or
Split-Off Subsidiary must promptly notify Seller of the same within 15 calendar
days of the date of the notice from the tax authority. In the event Buyers or
Split-Off Subsidiary does not notify Seller within such 15 day period, Buyers
and Split-Off Subsidiary, jointly and severally, will indemnify Seller for any
incremental interest, penalty or other assessments resulting from the delay in
giving notice. To the extent of any conflict or inconsistency, the provisions of
this Section 10.8 shall control over the provisions of Section 12.2
below.

     

    (d)          Cooperation
on Tax Matters.  Buyers, Seller and Split-Off Subsidiary shall
cooperate fully, as and to the extent reasonably requested by any party, in
connection with the filing of tax returns pursuant to this Section and any
audit, litigation or other proceeding with respect to taxes. Such cooperation
shall include the retention and (upon the other party’s request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Split-Off Subsidiary shall (i) retain all
books and records with respect to tax matters pertinent to Split-Off Subsidiary
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by Seller,
any extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and
(ii) give Seller reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if Seller so requests,
Buyers agree to cause Split-Off Subsidiary to allow Seller to take possession of
such books and records.

     

    10.9        ERISA.  Effective
as of the Closing Date, Split-Off Subsidiary shall terminate its participation
in, and withdraw from, any employee benefit plans sponsored by Seller, and
Seller and Buyers shall cooperate fully in such termination and withdrawal.
Without limitation, Split-Off Subsidiary shall be solely responsible for
(i) all liabilities under those employee benefit plans notwithstanding any
status as an employee benefit plan sponsored by Seller, and (ii) all
liabilities for the payment of vacation pay, severance benefits, and similar
obligations, including, without limitation, amounts which are accrued but unpaid
as of the Closing Date with respect thereto. Buyers and Split-Off Subsidiary
acknowledge that Split-Off Subsidiary is solely responsible for providing
continuation health coverage, as required under the Consolidated Omnibus
Reconciliation Act of 1985, as amended (“COBRA”), to each person, if any,
participating in an employee benefit plan subject to COBRA with respect to such
employee benefit plan as of the Closing Date, including, without limitation, any
person whose employment with Split-Off Subsidiary is terminated after the
Closing Date.

     

    
      
         

      

      
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    XI.         TERMINATION.  This
Agreement may be terminated at, or at any time prior to, the Closing by mutual
written consent of Seller, Buyers and InVivo.

     

    If this
Agreement is terminated as provided herein, it shall become wholly void and of
no further force and effect and there shall be no further liability or
obligation on the part of any party except to pay such expenses as are required
of such party.

     

    XII.        INDEMNIFICATION.

     

    12.1       Indemnification
by Buyers.  Buyers covenant and agree to indemnify, defend,
protect and hold harmless Seller and InVivo, and their respective officers,
directors, employees, stockholders, agents, representatives and Affiliates
(collectively, the “Seller Indemnified Parties”) at all times from and after the
date of this Agreement from and against all losses, liabilities, damages,
claims, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys’ fees and expenses of investigation), whether or not involving a third
party claim and regardless of any negligence of any Seller Indemnified Party
(collectively, “Losses”), incurred by any Seller Indemnified Party as a result
of or arising from (i) any breach of the representations and warranties of
Buyers set forth herein or in certificates delivered in connection herewith,
(ii) any breach or nonfulfillment of any covenant or agreement (including
any other agreement of Buyers to indemnify set forth in this Agreement) on the
part of Buyers under this Agreement, (iii) any Assigned Asset or Assigned
Liability or any other debt, liability or obligation of Split-Off Subsidiary,
(iv) the conduct and operations, whether before or after Closing, of (A)
the business of Seller pertaining to the Assigned Assets and Assigned
Liabilities or (B) the business of Split-Off Subsidiary, (v) claims
asserted, whether before or after Closing, (A) against Split-Off Subsidiary or
(B) pertaining to the Assigned Assets and Assigned Liabilities, or (vi) any
federal or state income tax payable by Seller or InVivo and attributable to the
transactions contemplated by this Agreement.  The obligations of
Buyers under this Section, as between Buyers and the Seller Indemnified Parties,
are joint and several.

     

    12.2       Third
Party Claims.

     

    (a)           Defense.  If
any claim or liability (a “Third-Party Claim”) should be asserted against any of
the Seller Indemnified Parties (the “Indemnitee”) by a third party after the
Closing for which Buyers have an indemnification obligation under the terms of
Section 12.1, then the
Indemnitee shall notify Buyers (the “Indemnitors”) within 20 days after the
Third-Party Claim is asserted by a third party (said notification being referred
to as a “Claim Notice”) and give the Indemnitor a reasonable opportunity to take
part in any examination of the books and records of the Indemnitee relating to
such Third-Party Claim and to assume the defense of such Third-Party Claim and
in connection therewith and to conduct any proceedings or negotiations relating
thereto and necessary or appropriate to defend the Indemnitee and/or settle the
Third-Party Claim. The expenses (including reasonable attorneys’ fees) of all
negotiations, proceedings, contests, lawsuits or settlements with respect to any
Third-Party Claim shall be borne by the Indemnitors. If the Indemnitors agree to
assume the defense of any Third-Party Claim in writing within 20 days after the
Claim Notice of such Third-Party Claim has been delivered, through counsel
reasonably satisfactory to Indemnitee, then the Indemnitors shall be entitled to
control the conduct of such defense, and any decision to settle such Third-Party
Claim, and shall be responsible for any expenses of the Indemnitee in connection
with the defense of such Third-Party Claim so long as the Indemnitors continue
such defense until the final resolution of such Third-Party Claim. The
Indemnitors shall be responsible for paying all settlements made or judgments
entered with respect to any Third-Party Claim the defense of which has been
assumed by the Indemnitors.  Except as provided on subsection (b)
below, both the Indemnitor and the Indemnitee must approve any settlement of a
Third-Party Claim. A failure by the Indemnitee to timely give the Claim Notice
shall not excuse Indemnitor from any indemnification liability except only to
the extent that the Indemnitors are materially and adversely prejudiced by such
failure.

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

     

    (b)           Failure
to Defend.  If the Indemnitors shall not agree to assume the
defense of any Third-Party Claim in writing within 20 days after the Claim
Notice of such Third-Party Claim has been delivered, or shall fail to continue
such defense until the final resolution of such Third-Party Claim, then the
Indemnitee may defend against such Third-Party Claim in such manner as it may
deem appropriate and the Indemnitee may settle such Third-Party Claim, in its
sole discretion, on such terms as it may deem appropriate. The Indemnitors shall
promptly reimburse the Indemnitee for the amount of all settlement payments and
expenses, legal and otherwise, incurred by the Indemnitee in connection with the
defense or settlement of such Third-Party Claim. If no settlement of such
Third-Party Claim is made, then the Indemnitors shall satisfy any judgment
rendered with respect to such Third-Party Claim before the Indemnitee is
required to do so, and pay all expenses, legal or otherwise, incurred by the
Indemnitee in the defense against such Third-Party Claim.

     

    12.3       Non-Third-Party
Claims.  Upon discovery of any claim for which Buyers has an
indemnification obligation under the terms of Section 12.1 which does not
involve a claim by a third party against the Indemnitee, the Indemnitee shall
give prompt notice to Buyers of such claim and, in any case, shall give Buyers
such notice within 30 days of such discovery. A failure by Indemnitee to timely
give the foregoing notice to Buyers shall not excuse Buyers from any
indemnification liability except to the extent that Buyers is materially and
adversely prejudiced by such failure.

     

    12.4       Survival.  Except
as otherwise provided in this Section 12.4, all
representations and warranties made by Buyers, Split-Off Subsidiary and Seller
in connection with this Agreement shall survive the Closing. Anything in this
Agreement to the contrary notwithstanding, the liability of all Indemnitors
under this Article
XII
shall terminate on the fourth (4th)
anniversary of the Closing Date, except with respect to (a) liability for
any item as to which, prior to the fourth (4th)
anniversary of the Closing Date, any Indemnitee shall have asserted a Claim in
writing, which Claim shall identify its basis with reasonable specificity, in
which case the liability for such Claim shall continue until it shall have been
finally settled, decided or adjudicated, (b) liability of any party for
Losses for which such party has an indemnification obligation, incurred as a
result of such party’s breach of any covenant or agreement to be performed by
such party after the Closing, (c) liability of Buyers for Losses incurred
by a Seller Indemnified Party due to breaches of their representations and
warranties in Article
IV of
this Agreement, and (d) liability of Buyers for Losses arising out of
Third-Party Claims for which Buyers have an indemnification obligation, which
liability shall survive until the statute of limitation applicable to any third
party’s right to assert a Third-Party Claim bars assertion of such
claim.

     

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

     

    XIII.        MISCELLANEOUS.

     

    13.1       Definitions.  Capitalized
terms used herein without definition have the meanings ascribed to them in the
Merger Agreement.

     

    13.2       Notices.  All
notices and communications required or permitted hereunder shall be in writing
and deemed given when received by means of the United States mail, addressed to
the party to be notified, postage prepaid and registered or certified with
return receipt requested, or personal delivery, or overnight courier, as
follows:

     

    (a)          If
to Seller, addressed to:

     

    InVivo
Therapeutics Holding Corp.

    One
Broadway, 14th
Floor

    Cambridge,
MA 02142

    Attention:
Frank M. Reynolds

    Facsimile:
(617) 225-4430

    

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

     

    Meister
Seelig & Fein, LLP

    140 East
45th
Street

    New York,
NY  10017

    Attention:  Mitchell
Lampert, Esq.

    Facsimile:
(646) 539-3675

    

    (b)         If
to Buyers or Split-Off Subsidiary, addressed to:

     

    Peter
Reichard

    100
Europa Drive, Suite 455

    Chapel
Hill, NC 27515-4321

    Facsimile:  (919)
933-2730

    

    or to
such other address as any party hereto shall specify pursuant to this Section 13.2 from time to
time.

     

    13.3       Exercise
of Rights and Remedies.  Except as otherwise provided herein,
no delay of or omission in the exercise of any right, power or remedy accruing
to any party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.

     

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

     

    13.4       Time.  Time
is of the essence with respect to this Agreement.

     

    13.5       Reformation
and Severability.  In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Agreement, and in either
case the validity, legality and enforceability of the remaining provisions of
this Agreement shall not in any way be affected or impaired
thereby.

     

    13.6       Further
Acts and Assurances.  From and after the Closing, Seller,
Buyers and Split-Off Subsidiary agree that each will act in a manner supporting
compliance, including compliance by its Affiliates, with all of its obligations
under this Agreement and, from time to time, shall, at the request of another
party hereto, and without further consideration, cause the execution and
delivery of such other instruments of conveyance, transfer, assignment or
assumption and take such other action or execute such other documents as such
party may reasonably request in order more effectively to convey, transfer to
and vest in Buyers, and to put Split-Off Subsidiary in possession of, all
Assigned Assets and Assigned Liabilities, and to convey, transfer to and vest in
Seller and Buyers, and to them in possession of, the Purchase Price Securities
and the Shares (respectively), and, in the case of any contracts and rights that
cannot be effectively transferred without the consent or approval of other
Persons that is unobtainable, to use its best reasonable efforts to ensure that
Split-Off Subsidiary receives the benefits thereof to the maximum extent
permissible in accordance with applicable law or other applicable restrictions,
and shall perform such other acts which may be reasonably necessary to
effectuate the purposes of this Agreement.

     

    13.7       Entire
Agreement; Amendments.  This Agreement contains the entire
understanding of the parties relating to the subject matter contained herein.
This Agreement cannot be amended or changed except through a written instrument
signed by all of the parties hereto and by InVivo. No provisions of this
Agreement or any rights hereunder may be waived by any party without the prior
written consent of InVivo.

     

    13.8       Assignment.  No
party may assign his, her or its rights or obligations hereunder, in whole or in
part, without the prior written consent of the other parties.

     

    13.9       Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts or choice of laws thereof.

     

    13.10     Counterparts.  This
Agreement may be executed in one or more counterparts, with the same effect as
if all parties had signed the same document. Each such counterpart shall be an
original, but all such counterparts taken together shall constitute a single
agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature page was an original
thereof.

     

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

     

    13.11     Section
Headings and Gender.  The Section headings used herein are
inserted for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement. All personal pronouns used in this
Agreement shall include the other genders, whether used in the masculine,
feminine or neuter, and the singular shall include the plural, and vice versa, whenever and as
often as may be appropriate.

     

    13.12     Third-Party
Beneficiary.  Each of Seller, Buyers and Split-Off Subsidiary
acknowledges and agrees that this Agreement is entered into for the express
benefit of InVivo, and that InVivo is relying hereon and on the consummation of
the transactions contemplated by this Agreement in entering into and performing
its obligations under the Merger Agreement, and that InVivo shall be in all
respects entitled to the benefit hereof and to enforce this Agreement as a
result of any breach hereof.

     

    13.13     Specific
Performance; Remedies.  Each of Seller, Buyers and Split-Off
Subsidiary acknowledge and agree that InVivo would be damaged irreparably if any
provision of this Agreement is not performed in accordance with its specific
terms or is otherwise breached. Accordingly, each of Seller, Buyers and
Split-Off Subsidiary agrees that InVivo will be entitled to seek an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and its terms and provisions in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter, subject to Section 13.9, in addition to
any other remedy to which InVivo may be entitled, at law or in equity. Except as
expressly provided herein, the rights, obligations and remedies created by this
Agreement are cumulative and are in addition to any other rights, obligations or
remedies otherwise available at law or in equity, and nothing herein will be
considered an election of remedies.

     

    13.14     Submission
to Jurisdiction; Process Agent; No Jury Trial.

     

    (a)           Each
party to the Agreement hereby submits to the jurisdiction of any state or
federal court sitting in the State of New York in any action arising out of or
relating to this Agreement and agrees that all claims in respect of the action
may be heard and determined in any such court. Each party to the Agreement also
agrees not to bring any action arising out of or relating to this Agreement in
any other court. Each party to the Agreement agrees that a final judgment in any
action so brought will be conclusive and may be enforced by action on the
judgment or in any other manner provided at law or in equity. Each party to the
Agreement waives any defense of inconvenient forum to the maintenance of any
action so brought and waives any bond, surety or other security that might be
required of any other party with respect thereto.

     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    (b)           EACH
PARTY TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RIGHTS TO JURY TRIAL OF ANY
DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR ANY DEALINGS AMONG THEM
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. The scope of this waiver is
intended to be all encompassing of any and all actions that may be filed in any
court and that relate to the subject matter of the transactions, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party to the Agreement hereby acknowledges that this
waiver is a material inducement to enter into a business relationship and that
they will continue to rely on the waiver in their related future dealings. Each
party to the Agreement further represents and warrants that it has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. NOTWITHSTANDING
ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL APPLY TO ANY
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of commencement of
any action, this Agreement may be filed as a written consent to trial by a
court.

     

    13.15     Construction.  The
parties hereto have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof will arise favoring or disfavoring any party
because of the authorship of any provision of this Agreement. Any reference to
any federal, state, local or foreign law will be deemed also to refer to law as
amended and all rules and regulations promulgated thereunder, unless the context
requires otherwise. The words “include,” “includes,” and “including” will be
deemed to be followed by “without limitation.”  The words “this
Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. The parties hereto intend that each representation,
warranty and covenant contained herein will have independent significance. If
any party hereto has breached any representation, warranty or covenant contained
herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which that party has not breached will not
detract from or mitigate the fact that such party is in breach of the first
representation, warranty or covenant.

     

    [Signature
page follows this page.]

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties hereto have duly executed this Split-Off Agreement as of the day and
year first above written.

    

    
      
        
          
            
              
                
                  
                    	
                            INVIVO
      THERAPEUTICS HOLDING CORP.

                          
	 
      
	
                            By:

                          	 
      	 
      
	
                            Name:

                          	
                            Peter
      Reichard

                          
	
                            Title:

                          	
                            President

                          
	 
      
	
                            DSOURCE
      SPLIT CORP.

                          
	 
      
	
                            By:

                          	 
      	 
      
	
                            Name:

                          	
                            Peter
      Reichard

                          
	
                            Title:

                          	
                            President

                          
	 
      
	
                            BUYERS

                          
	 
      
	 
      	 
      
	
                            Peter
      Reichard

                          	 
      
	 
      	 
      
	 
      	 
      
	
                            Lawrence
      Reichard

                          	 
      
	 
      	 
      
	 
      	 
      
	
                            Peter
      Coker

                          	 
      

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    
      	
              Buyers

            	 
      	
              Purchase Price Security

            	 
      	
              Number

            
	 
      	 
      	 
      	 
      	 
      
	
              Peter
      Reichard

            	 
      	
              Common
      Stock

            	 
      	
              6,644,910

            
	 
      	 
      	 
      	 
      	 
      
	
              Lawrence
      Reichard

            	 
      	
              Common
      Stock

            	 
      	
              405,796

            
	 
      	 
      	 
      	 
      	 
      
	
              Peter
      Coker

            	
                

            	
              Common
      Stock

            	
                

            	
              7,696,848

            

    

    

    
      * As
adjusted to reflect the 2.02898-for-1 forward stock split of the common stock of
Seller, in the form of a dividend.

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