Document:

REGISTRATION
RIGHTS AGREEMENT

     

    This
Registration Rights Agreement (this “Agreement”)
is made and entered into as of February 12, 2009, by and among Pressure
BioSciences Inc., a Massachusetts corporation (the “Company”),
and the several purchasers signatory hereto (each such purchaser, a “Purchaser”
and collectively, the “Purchasers”).

     

    This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof, between the Company and each Purchaser (the “Purchase
Agreement”).

     

    The
Company and each Purchaser hereby agrees as follows:

     

    1.           Definitions.  Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase
Agreement.  As used in this Agreement, the following terms shall have
the following meanings:

     

    “Advice”
shall have the meaning set forth in Section
7(c).

     

    “Commission”
means the U.S. Securities and Exchange Commission.

     

    “Common Warrant
Shares” means the shares of Common Stock issuable upon (i) exercise of
the 15-Month Common Warrants and (ii) exercise of the 30-Month
Warrants.

     

    “Effectiveness
Date” means the date on which any Registration Statement required to be
filed hereunder is declared effective by the Commission.

     

    “Effectiveness
Period” means, for any particular Registration Statement, the period from
the Effectiveness Date of such Registration Statement until such time as all
Registrable Securities covered by such Registration Statement have been sold, or
may be sold without volume restrictions pursuant to Rule 144 (or any successor
Rule under the Securities Act), as determined by counsel to the Company pursuant
to a written opinion letter to such effect, addressed and acceptable to the
Company’s transfer agent and the affected Holders.

     

    “Filing
Date” means the date on which the Company initially files the
Registration Statement with the Commission.

     

    “Form S-3”
shall have the meaning set forth in Section
2.

     

    “Holder” or
“Holders”
means the holder or holders, as the case may be, from time to time of
Registrable Securities.

     

    “Indemnified
Party” shall have the meaning set forth in Section
6(c).

     

    “Indemnifying
Party” shall have the meaning set forth in Section
6(c).

     

    “Losses”
shall have the meaning set forth in Section
6(a).

     

    “Plan of
Distribution” shall have the meaning set forth in Section
2.

    

    
      
        
           

        

        
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    “Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

     

    “Registrable
Conversion Shares” means (i) all of the Common Stock issuable in
connection with any conversion of the Preferred Stock, (ii) any Registrable
Warrant Shares that have not been registered on a Registration Statement
pursuant to Section
2, due solely by reason of the maximum number of shares of Common Stock
that the Company may register on Form S-3, and (iii) all of the Common Warrant
Shares issuable upon exercise of the 30-Month Common Warrants.  Upon
the sale, pursuant to a Registration Statement declared effective by the Commission or an
exemption from registration under the Securities Act (such that all transfer restrictions and restrictive
legends with respect thereto are removed upon the consummation of such
sale), of any of the securities described in the preceding sentence, such
securities shall no longer be Registrable Conversion Shares.

     

    “Registrable
Securities” means, collectively, the Registrable Conversion Shares and
the Registrable Warrant Shares.

     

    “Registrable
Warrant Shares” means all of the Common Warrant Shares issued or issuable
upon the exercise of the 15-Month Common Warrants.  Upon the sale,
pursuant to a Registration Statement declared
effective by the Commission or an exemption from registration under the
Securities Act (such that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale), of any of the securities described in the
preceding sentence, such securities shall no longer be Registrable Warrant
Shares.

     

    “Registration
Statement” means the registration statements required to be filed
hereunder and any other registration statement that includes any Registrable
Securities, including (in each case) the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration
statement.

     

    “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 Commission having substantially the same purpose and
effect as such Rule.

     

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

     

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

     

    “Selling
Stockholder Questionnaire” shall have the meaning set forth in Section
4(a).

     

    “SEC
Guidance” means (i) any publicly-available written guidance, or rule of
general applicability of the Commission staff, or (ii) written comments,
requirements or requests of the Commission staff to the Company in connection
with the review of the Registration Statements.

    

    
      
        
           

        

        
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    2.           Required
Registration.  Within 60 days following the Closing Date, the
Company shall prepare and file with the Commission a Registration Statement
covering the resale of all, or if less than all, such maximum number of the
Registrable Warrant Shares as may be registered by the Company on a Registration
Statement on Form S-3 (“Form S-3”)
pursuant to the instructions for Form S-3 and as provided by SEC Guidance on the
Filing Date that are not then registered on an effective Registration Statement
for an offering to be made on a continuous basis pursuant to Rule
415.  The Registration Statement shall be on Form S-3 and shall
contain (unless otherwise directed by Holders of
at least a majority of the then outstanding
Registrable Warrant Shares) substantially the “Plan of
Distribution” attached hereto as Annex
A.  Notwithstanding any other provisions of this Agreement, the
Company shall not be required to file a Registration Statement if the Company is
not eligible to use the Form S-3 as specified in General Instruction I.A to Form
S-3 and SEC Guidance.  Subject to the terms of this Agreement, the
Company shall use commercially reasonable efforts to cause any Registration
Statement filed pursuant to this Section 2 to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event on or prior to the applicable Effectiveness
Date, and shall use commercially reasonable efforts to keep such Registration
Statement continuously effective under the Securities Act until the end of the
applicable Effectiveness Period.  Notwithstanding any other provision of this Agreement,
if any SEC Guidance sets forth a limitation of the number of Registrable Warrant
Shares to be registered on a particular Registration Statement filed
pursuant to this Section 2, the number of Registrable Warrant Shares to be
registered on such Registration Statement will be reduced on a pro rata basis
based on the total number of Registrable Warrant Shares then held by the
Holders.

     

    3.           Piggy Back
Registration.

     

    (a)           If
at any time after the date hereof and as long as Registrable Conversion Shares
remain outstanding, the Company shall file with the Commission a registration
statement of the Company under the Securities Act, relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities (a “Registration”),
the Company shall send to each Holder a written notice of such determination
and, if within fifteen (15) days after the giving of such notice, each Holder
shall so request in writing, the Company shall include in such registration
statement all of the Registrable Conversion Shares of such Holder, except that
if, in connection with any underwritten Registration for the account of the
Company, the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in a registration
statement because, in such underwriter(s)’ judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such registration statement only such
limited portion of the Registrable Conversion Shares as the underwriter(s) shall
permit, if any. In the event only a limited
portion of the Registrable Conversion Shares shall be included in a registration
statement, the number of Registrable Conversion Shares to be registered on such
registration statement will be reduced pro rata based on the total number of
Registrable Conversion Shares requested to be included held by such
Holders.  If a Registration in connection with which a Holder
is entitled to registration under this Section 3(a) is an
underwritten Registration, then each such Holder shall, unless otherwise agreed
by the Company, offer and sell such Registrable Conversion Shares in an
underwritten offering using the same underwriter(s) and, subject to the
provisions of this Agreement, on the same terms and conditions as other shares
of Common Stock included in such underwritten offering.

     

    (b)           Notwithstanding
any other provision of this Agreement, this Section 3 shall not
apply to, and a Holder’s right to participate in a Registration shall not be
triggered by, the filing of a registration statement (i) covering shares of
Common Stock issued pursuant to a stock option, stock incentive or employee
benefit plan, (ii) on Form S-4 (or successor form) under the Securities Act for
the purpose of offering such securities to another business entity or the
shareholders of such entity in connection with the acquisition of assets or
shares of capital stock, respectively, of such entity, (iii) in connection with
a resale shelf registration filed in connection with an acquisition,
reorganization, recapitalization, merger, consolidation or similar transaction
involving the Company, or (iv) in accordance with Section 2,
above.

    

    
      
        
           

        

        
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    4.           Registration
Procedures.  In connection with the Company’s registration
obligations hereunder, the Company shall:

     

    (a)           Not
less than five (5) Trading Days prior to the filing of each Registration
Statement and not less than one (1) Trading Day prior to the filing of any
related Prospectus or any amendment or supplement thereto, the Company shall,
(i) furnish to each Holder copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such Holders, and (ii) cause its
officers and directors, counsel and independent certified public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel to each Holder, to conduct a reasonable investigation within
the meaning of the Securities Act. The Company shall not file a Registration
Statement or any such Prospectus or any amendments or supplements thereto to
which the Holders of a majority of the Registrable Securities shall reasonably
object in good faith, provided that the Company is notified of such objection in
writing no later than five (5) Trading Days after the Holders have been so
furnished copies of a Registration Statement or one (1) Trading Day after the
Holders have been so furnished copies of any related Prospectus or amendments or
supplements thereto. Each Holder agrees to furnish to the Company a completed
questionnaire in the form attached to this Agreement as Annex B (a “Selling
Stockholder Questionnaire”) not less than two (2) Trading Days prior to
the Filing Date or by the end of the fourth (4th)
Trading Day following the date on which such Holder receives draft materials in
accordance with this Section.  If any Holder fails to furnish its
Selling Stockholder Questionnaire related to a particular Registration Statement
not less than two (2) Trading Days prior to the Filing Date or by the end of the
fourth (4th)
Trading Day following the date on which such Holder receives draft materials in
accordance with this Section 4 any rights
of such Holder under this Agreement with regard to such Registration Statement,
including without limitation, the right to include such Holder’s Registrable
Securities in such Registration Statement, shall be tolled as to such Holder
until such information is received by the Company.

     

    (b)           (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this
Agreement), and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from
the Commission with respect to a Registration Statement or any amendment thereto
and provide as promptly as reasonably possible to the Holders true and complete
copies of all correspondence from and to the Commission relating to a
Registration Statement (provided that the Company may excise any information
contained therein which would constitute material non-public information as to
any Holder which has not executed a confidentiality agreement with the Company);
and (iv) comply in all material respects with the provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement during the applicable period in
accordance (subject to the terms of this Agreement) with the intended methods of
disposition by the Holders thereof set forth in such Registration Statement as
so amended or in such Prospectus as so supplemented.

    

    
      
        
           

        

        
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    (c)           Notify
each Holder of Registrable Securities to be sold as promptly as reasonably
possible (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement; and (C) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (v) of the occurrence of any event or passage
of time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any 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, in light of the circumstances under which they were
made, not misleading.

     

    (d)           Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of (i) any order suspending the effectiveness of a Registration Statement, or
(ii) any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.

     

    (e)           Furnish
to each Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.

     

    (f)           Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
a Holder under the securities or Blue Sky laws of such jurisdictions within the
United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax in
any such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.

     

    (g)           Upon
the occurrence of any event contemplated by Section 4(c), as
promptly as reasonably possible under the circumstances taking into account the
Company’s good faith assessment of any adverse consequences to the Company and
its stockholders of the premature disclosure of such event, prepare a supplement
or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  If the Company notifies the Holders in accordance
with clauses (iii) through (v) of Section 4(c) above to
suspend the use of any Prospectus until the requisite changes to such Prospectus
have been made, then the Holders shall suspend use of such
Prospectus.  The Company will use its best efforts to ensure that the
use of the Prospectus may be resumed as promptly as is
practicable.  The Company shall be entitled to exercise its right
under this Section
4(g) to suspend the availability of a Registration Statement and
Prospectus for a period not to exceed sixty (60) calendar days (which need not
be consecutive days) in any twelve (12) month period.

    

    
      
        
           

        

        
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    (h)           The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and, if required by the Commission, the natural persons thereof that have
voting and dispositive control over the Shares.  During any periods
that the Company is unable to meet its obligations hereunder with respect to the
registration of the Registrable Securities solely because any Holder fails to
furnish such information within three Trading Days of the Company’s request, any
rights of such Holder under this Agreement, including without limitation, the
right to include such Holder’s Registrable Securities in a Registration
Statement shall be tolled and any Event that may otherwise occur solely because
of such delay shall be suspended as to such Holder only, until such information
is delivered to the Company.

     

    5.           Registration
Expenses.  All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses) (A) with respect to filings
required to be made with any Trading Market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities, (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement.  In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any broker or
similar commissions of any Holder or, except to the extent provided for in the
Transaction Documents, any legal fees or other costs of the
Holders.

     

    6.           Indemnification.

     

    (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, members, partners, agents, brokers (including brokers who offer and
sell Registrable Securities as principal as a result of a pledge or any failure
to perform under a margin call of Common Stock), investment advisors, and
employees (and any other Persons with a functionally equivalent role of a Person
holding such titles, notwithstanding a lack of such title or any other title) of
each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, members, stockholders, partners, agents and employees (and
any other Persons with a functionally equivalent role of a Person holding such
titles, notwithstanding a lack of such title or any other title) of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”),
as incurred, arising out of or relating to (i) any untrue or alleged untrue
statement of a material fact contained in a 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 (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, or (ii) any violation or alleged violation by
the Company of the Securities Act, Exchange Act or any state securities law, or
any rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (A) 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 a Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood that
each Holder has approved Annex A hereto for
this purpose) or (B) in the case of an occurrence of an event of the type
specified in Section
4(c)(iii)-(v), 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
7(c).  The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the Company is
aware.

    

    
      
        
           

        

        
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    (b)           Indemnification by
Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents, and employees, each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers,
agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent
arising out of or based solely upon: (i) such Holder’s failure to comply with
the prospectus delivery requirements of the Securities Act or (ii) 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 (A) 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 such Registration Statement or such
Prospectus or (B) to the extent that such information relates to 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 a Registration
Statement (it being understood that each Holder has approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (C) in the case of an occurrence of an event of the type
specified in Section
4(c)(iii)-(v), 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
7(c).  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)           Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from
whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the right to
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees and expenses
incurred in connection with defense thereof; provided, that the failure of
any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except (and
only) to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have prejudiced the Indemnifying Party.

    

    
      
        
           

        

        
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    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and counsel to the
Indemnified Party shall reasonably believe that a material conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of no
more than one separate counsel shall be at the expense of the Indemnifying
Party).  The Indemnifying Party shall not be liable for any settlement
of any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld or delayed.  No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

     

    Subject
to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party, provided that the Indemnified Party shall promptly reimburse
the Indemnifying Party for that portion of such fees and expenses applicable to
such actions for which such Indemnified Party is judicially determined to be not
entitled to indemnification hereunder.

     

    (d)           Contribution.  If
the indemnification under Section 6(a) or 6(b) is unavailable
to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then each Indemnifying Party shall contribute to the amount paid
or payable by such Indemnified Party, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.  The amount
paid or payable by a party as a result of any Losses shall be deemed to include,
subject to the limitations set forth in this Agreement, any reasonable
attorneys’ or other fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section 6 was
available to such party in accordance with its terms.

     

    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were
determined by pro rata allocation or by any other method of allocation that does
not take into account the equitable considerations referred to in the
immediately preceding paragraph.  Notwithstanding the provisions of
this Section
6(d), no Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the net proceeds actually received by
such Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, except in the case of fraud by such Holder.

    

    
      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

    

    

    The
indemnity and contribution agreements contained in this Section 6 are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

     

    7.           Miscellaneous.

     

    (a)           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.

     

    (b)           Compliance.  Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to a Registration Statement.

     

    (c)           Discontinued
Disposition.  By its acquisition of Registrable Securities,
each Holder agrees that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 4(c), such
Holder will forthwith discontinue disposition of such Registrable Securities
under a Registration Statement until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed.  The Company will use its
best efforts to ensure that the use of the Prospectus may be resumed as promptly
as it practicable.  The Company may provide appropriate stop orders to
enforce the provisions of this Section
7(c).

     

    (d)           Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and the Holders of at least a majority of the then outstanding
Registrable Securities. If a Registration Statement does not register all of the
Registrable Securities pursuant to a waiver or amendment done in compliance with
the previous sentence, then the number of Registrable Securities to be
registered for each Holder shall be reduced pro rata among all Holders and
each Holder shall have the right to designate which of its Registrable
Securities shall be omitted from such Registration Statement. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of all of the Registrable Securities to which such waiver or consent
relates; provided,
however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding
sentence.

     

    (e)           Notices. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Purchase
Agreement.

     

    (f)           Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Holder. The Company may not assign its rights (except by
merger) or obligations hereunder without the prior written consent of Holders
holding at least a majority of the then outstanding Registrable Securities. Each
Holder may assign their respective rights hereunder in the manner and to the
Persons as permitted under the Purchase Agreement.

    

    
      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

    

    

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

     

    (h)           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreement.

     

    (i)           Cumulative
Remedies.  The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law.

     

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

     

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

     

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

     

    [signature
page follows]

    

    
      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

    

    

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

     

    
      
        
          
            
              
                	 
      	
                         
      PRESSURE BIOSCIENCES INC.

                      
	 	 
	 
      	
                        By:

                      	 
      
	 
      	 
      	
                        Name:

                      	
                        Richard
      T. Schumacher

                      
	 
      	 
      	
                        Title:

                      	
                        President
      and Chief Executive
Officer

                      

              

            

          

        

      

    

     

    [SIGNATURE
PAGE OF HOLDERS FOLLOWS]

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                [SIGNATURE
      PAGE OF HOLDERS TO REGISTRATION RIGHTS AGREEMENT]

                              
	 
      
	
                                For Individuals:

                              
	 
	
                                Name
      of Holder:

                              	 
      
	 	 
	
                                Signature
      of Holder:

                              	 
      
	 
      
	
                                For Entities:

                              
	 
	
                                Name
      of Holder:

                              	 
      

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
          
            
              
                
                  
                    	
                            Signature
      of Authorized Signatory of Holder:

                          	 
      
	 	 
	
                            Name
      of Authorized Signatory:

                          	 
      
	 	 
	
                            Title
      of Authorized Signatory:

                          	 
      

                  

                

              

            

          

        

      

    

    

    [SIGNATURE
PAGES CONTINUE]

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    ANNEX
A

     

    Plan of
Distribution

     

    Each
selling stockholder (the “Selling
Stockholders”) of the Registrable Warrant Shares and any of their
pledgees, assignees, and successors-in-interest may, from time to time, sell any
or all of their Registrable Warrant Shares on any stock exchange, market or
trading facility on which the shares of common stock are traded or in private
transactions.  These sales may be at fixed or negotiated
prices.  A Selling Stockholder may use any one or more of the
following methods when selling shares:

     

    
      	
               
      

            	
              ·

            	
              ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

            

    

     

    
      	
               
      

            	
              ·

            	
              block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

            

    

     

    
      	
               
      

            	
              ·

            	
              purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

            

    

     

    
      	
               
      

            	
              ·

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            

    

     

    
      	
               
      

            	
              ·

            	
              privately
      negotiated transactions;

            

    

     

    
      	
               
      

            	
              ·

            	
              settlement
      of short sales entered into after the effective date of the registration
      statement of which this prospectus is a
part;

            

    

     

    
      	
               
      

            	
              ·

            	
              broker-dealers
      may agree with the Selling Stockholders to sell a specified number of such
      shares at a stipulated price per
share;

            

    

     

    
      	
               
      

            	
              ·

            	
              through
      the writing or settlement of options or other hedging transactions,
      whether through an options exchange or
  otherwise;

            

    

     

    
      	
               
      

            	
              ·

            	
              a
      combination of any such methods of sale;
or

            

    

     

    
      	
               
      

            	
              ·

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

     

    The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”), if
available, rather than under this prospectus.

     

    Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales.  Broker-dealers may receive commissions or
discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be negotiated,
but, except as set forth in a supplement to the Prospectus, in the case of an
agency transaction not in excess of a customary brokerage commission in
compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.

     

    The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales.  In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.  Each Selling
Stockholder has informed the Company that it does not have any written or oral
agreement or understanding, directly or indirectly, with any person to
distribute the Registrable Warrant Shares. In no event shall any broker-dealer
receive fees, commissions and markups which, in the aggregate, would exceed
eight percent (8%).

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

     

    Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder.  In addition, any
securities covered by the Prospectus which qualify for sale pursuant to Rule 144
under the Securities Act may be sold under Rule 144 rather than under the
Prospectus.  There is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale shares by the Selling
Stockholders.

     

    The
Company has agreed to keep the Prospectus effective until the earlier of (i) the
date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule 144
under the Securities Act or any other rule of similar effect or (ii) all of the
shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect.  The resale shares
will be sold only through registered or licensed brokers or dealers if required
under applicable state securities laws. In addition, in certain states, the
resale shares may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.

     

    Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution.  In addition, the Selling Stockholders will be subject
to applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person.  The Company will make copies of the Prospectus available to
the Selling Stockholders and have informed them of the need to deliver a copy of
the Prospectus to each purchaser at or prior to the time of the sale (including
by compliance with Rule 172 under the Securities Act).

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    ANNEX
B

     

    PRESSURE
BIOSCIENCES INC.

     

    Selling
Securityholder Notice and Questionnaire

     

    The
undersigned beneficial owner of Registrable Securities (as defined in the
Registration Rights Agreement) of Pressure BioSciences Inc., a Massachusetts
corporation (the “Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”)
a registration statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities
Act”), of the Registrable Securities, in accordance with the terms of the
Registration Rights Agreement (the “Registration
Rights Agreement”) to which this document is annexed.  A copy
of the Registration Rights Agreement is available from the Company upon request
at the address set forth below.  All capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the Registration
Rights Agreement.

     

    Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus.  Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Registration Statement and
the related prospectus.

     

    NOTICE

     

    The
undersigned (the “Selling
Securityholder”) hereby elects to include the Registrable Securities
owned by it in the Registration Statement.

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

     

    1.           Name.

     

    
      
        	
                 
      

              	
                (a)

              	
                Full
      Legal Name of Selling Securityholder:

              
	 	 	 

      

    

     

    
      
        	
                 
      

              	
                (b)

              	
                Full
      Legal Name of Registered Holder (if not the same as (a) above) through
      which Registrable Securities are held:

              
	 	 	 

      

    

    
       

      
        	
                 
      

              	
                (c)

              	
                Full
      Legal Name of Natural Control Person (which means a natural person who
      directly or indirectly alone or with others has power to vote or dispose
      of the securities covered by the questionnaire):

              
	 	 	 

      

    

    
       
2.           Address
for Notices to Selling Securityholder.

    
      	 
      
	 
      
	 
      
	
              Telephone:

            
	
              Fax:

            
	
              Contact
      Person:

            

    

     

    3.           Broker-Dealer
Status.

     

    
      	
               
      

            	
              (a)

            	
              Are
      you a broker-dealer?

            

    

     

    Yes    ̈               No    ̈

     

    
      	
               
      

            	
              (b)

            	
              If
      “yes” to Section 3(a), did you receive your Registrable Securities as
      compensation for investment banking services to the
    Company?

            

    

     

    Yes    ̈               No    ̈

     

    
      Note: 
If no,
the Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.

    

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              (c)

            	
              Are
      you an affiliate of a
broker-dealer?

            

    

     

    Yes    ̈               No    ̈

     

    
      	
               
      

            	
              (d)

            	
              If
      you are an affiliate of a broker-dealer, do you certify that you bought
      the Registrable Securities in the ordinary course of business, and at the
      time of the purchase of the Registrable Securities to be resold, you had
      no agreements or understandings, directly or indirectly, with any person
      to distribute the Registrable
Securities?

            

    

     

    Yes    ̈               No    ̈

     

    
      Note:    
If no,
the Commission’s staff has indicated that you should be identified as an
underwriter in the Registration Statement.

    

     

    
      	
              4.

            	
              Beneficial
      Ownership of Other Securities of the Company Owned by the Selling
      Securityholder.

            

    

     

    Except as
set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the
securities.

     

    
      
        	
                 
      

              	
                (a)

              	
                Type
      and amount of other securities beneficially owned by the Selling
      Securityholder:

              
	 	 	 
	 	 	 

      

    

    
       

      
        	
                 
      

              	
                (b)

              	
                Shared
      or sole ownership?  If shared, please indicate the name and
      relationship of the party with whom ownership is
shared:

              
	 	 	 
	 	 	 

      

    

     

    5.           Relationships
with the Company.

     

    Except as
set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.

     

    
      	
               
      

            	
              State
      any exceptions here:

            

    

     

      
        

      

    

    
      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.

     

    By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto.  The undersigned understands that
such information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.

     

    IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

     

    
      
        
          
            	
                    Dated:

                  	
                       

                  	 
      
	 
      	 
      	 
      
	
                    Beneficial
      Owner:

                  	 
      
	 
      	 
      	 
      
	
                    For Individuals:

                  	 
      
	 
      	 
      	 
      
	 
      	
                    Signature:

                  	
                       

                  	 
      
	 
      	 
      	 
      	 
      
	 
      	
                    Name:

                  	
                       

                  	 
      
	 
      	 
      	 
      
	
                    For Entities:

                  	 
      
	 
      	 
      	 
      	 
      
	 
      	
                    By:

                  	
                       

                  	 
      
	 
      	 
      	 
      	 
      
	 
      	
                    Name:

                  	
                       

                  	 
      
	 
      	 
      	 
      	 
      
	 
      	
                    Title:

                  	
                       

                  	 
      

          

        

      

    

     

    PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:

    

    [INSERT
CONTACT DETAILS]Exhibit 10.1
    

    

    

    
      FEDERAL DEPOSIT INSURANCE CORPORATION
    

    
      WASHINGTON, D.C.
    

    
      CALIFORNIA DEPARTMENT OF FINANCIAL INSTITUTIONS
    

    
      SAN FRANCISCO, CALIFORNIA
    

    
    	
           
        	

        	

        
	

        	
          )
        	

        
	

        	
          )
        	

        
	
          In the Matter of
        	
          )
        	

        
	

        	
          )
        	
          STIPULATION AND CONSENT
        
	
          TEMECULA VALLEY BANK
        	
          )
        	
          TO THE ISSUANCE
        
	
          TEMECULA, CALIFORNIA
        	
          )
        	
          OF AN ORDER
        
	

        	
          )
        	
          TO CEASE AND DESIST
        
	
          (INSURED STATE NONMEMBER BANK)
        	
          )
        	

        
	

        	
          )
        	
          Docket FDIC-09-057b
        
	
           
        	
          )
        	

        

    

    

    

    
               Subject to the acceptance of this STIPULATION AND CONSENT TO
      THE ISSUANCE OF AN ORDER TO CEASE AND DESIST (“CONSENT AGREEMENT”) by
      the Federal Deposit Insurance Corporation (“FDIC”) and the California
      Department of Financial Institutions (“CDFI”), it is hereby stipulated
      and agreed by and between a representative of the Legal Division of
      FDIC, a representative of the CDFI, and Temecula Valley Bank, Temecula,
      California (“Bank”), as follows:
    

    
      1.       The Bank has been advised of its right to receive a NOTICE OF
      CHARGES AND OF HEARING (“NOTICE”) detailing the unsafe or unsound
      banking practices and violations of law alleged to have been committed
      by the Bank and of its right to a public hearing on the alleged charges
      under section 8(b)(1) of the Federal Deposit Insurance Act (“Act”), 12
      U.S.C. § 1818(b)(1), and Section 1912 of the California Financial Code
      (“CFC”), and has waived those rights.
    

    
      2.       The Bank, solely for the purpose of this proceeding and without
      admitting or denying any of the alleged charges of unsafe or unsound
      banking practices and any violations of law, hereby consents and agrees
      to the issuance of an ORDER TO CEASE AND DESIST (“ORDER”) by the FDIC
      and the CDFI. The Bank further stipulates and agrees that such ORDER
      will be deemed to be an order which has become final under the Act and
      the CFC, and that said ORDER shall become effective upon its issuance by
      the FDIC and the CDFI, and fully enforceable by the FDIC and the CDFI
      pursuant to the provisions of the Act and the CFC.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
      3.       In the event the FDIC and the CDFI accepts the CONSENT
      AGREEMENT and issues the ORDER, it is agreed that no action to enforce
      said ORDER in the United States District Court will be taken by the
      FDIC, and no action to enforce said ORDER in State Superior Court will
      be taken by the CDFI, unless the Bank or any institution-affiliated
      party, as such term is defined in section 3(u) of the Act, 12 U.S.C. §
      1813(u), has violated or is about to violate any provision of the ORDER.
    

    
      4.       The Bank hereby waives:
    

    
      (a)       The receipt of a NOTICE;
    

    
      (b)       All defenses in this proceeding;
    

    
      (c)       A public hearing for the purpose of taking evidence on such
      alleged charges;
    

    
      (d)       The filing of Proposed Findings of Fact and Conclusions of Law;
    

    
      (e)       A recommended decision of an Administrative Law Judge; and
    

    
      (f)       Exceptions and briefs with respect to such recommended
      decision.
    

    
      Dated:   February 10, 2009
    

    
      
        

        

      

      
        
          - 2 -
        

        
          

        

      

      
        

        

      

    

    
    	
          FEDERAL DEPOSIT INSURANCE
        	
           
        	
          TEMECULA VALLEY BANK
        
	
          CORPORATION, LEGAL DIVISION
        	

        	
          TEMECULA, CALIFORNIA
        
	
          BY: February 10, 2009
        	

        	

        
	

        	

        	
           
        
	
          /s/ SANDRA A. QUIGLEY
        	

        	
          /s/ STEVE W. AICHLE
        
	
          Sandra A. Quigley
        	

        	
          Steve W. Aichle
        
	
          Counsel
        	

        	

        
	
          CALIFORNIA DEPARTMENT OF
        	

        	

        
	
          FINANCIAL INSTITUTIONS
        	

        	

        
	
          BY:
        	

        	

        
	

        	

        	
           
        
	
          /s/ PAUL T. CRAYTON
        	

        	
          /s/ FRANK BASIRICO
        
	
          Paul T. Crayton
        	

        	
          Frank Basirico
        
	
          Senior Counsel
        	

        	

        
	

        	

        	
           
        
	

        	

        	
          /s/ ROBERT P. BECK
        
	

        	

        	
          Robert P. Beck
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          /s/ NEIL M. CLEVELAND
        
	

        	

        	
          Neil M. Cleveland
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          /s/ GEORGE COSSOLIAS
        
	

        	

        	
          George Cossolias
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          /s/ LUTHER J. MOHR
        
	

        	

        	
          Luther J. Mohr
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          /s/ MARTIN E. PLOURD
        
	

        	

        	
          Martin E. Plourd
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          /s/ RICHARD W. WRIGHT
        
	

        	

        	
          Richard W. Wright
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
          Comprising the Board of Directors
        
	

        	

        	
          of Temecula Valley Bank,
        
	

        	

        	
          Temecula, California
        

    

    

    

    
      
        

        

      

      
        
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      FEDERAL DEPOSIT INSURANCE CORPORATION
    

    
      WASHINGTON, D.C.
    

    
      CALIFORNIA DEPARTMENT OF FINANCIAL INSTITUTIONS
    

    
      SAN FRANCISCO, CALIFORNIA
    

    
    	
           
        	

        	

        
	

        	
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          )
        	

        
	
          In the Matter of
        	
          )
        	

        
	

        	
          )
        	
          ORDER TO
        
	
          TEMECULA VALLEY BANK
        	
          )
        	
          CEASE AND DESIST
        
	
          TEMECULA, CALIFORNIA
        	
          )
        	

        
	

        	
          )
        	
          Docket FDIC-09-057b
        
	
          (INSURED STATE NONMEMBER BANK)
        	
          )
        	

        
	

        	
          )
        	

        
	
           
        	
          )
        	

        

    

    
               Temecula Valley Bank, Temecula, California ("Bank"), having
      been advised of its right to a NOTICE OF CHARGES AND OF HEARING
      detailing the unsafe or unsound banking practices alleged to have been
      committed by the Bank and of its right to a hearing on the alleged
      charges under section 8(b)(1) of the Federal Deposit Insurance Act
      ("Act"), 12 U.S.C. § 1818(b)(1), and Section 1912 of the California
      Financial Code, and having waived those rights, entered into a
      STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST
      ("CONSENT AGREEMENT") with counsel for the Federal Deposit Insurance
      Corporation ("FDIC"), and with counsel for the California Department of
      Financial Institutions (“CDFI”), dated February 10, 2009, whereby solely
      for the purpose of this proceeding and without admitting or denying the
      alleged charges of unsafe or unsound banking practices and violations of
      law and/or regulations, the Bank consented to the issuance of an ORDER
      TO CEASE AND DESIST ("ORDER") by the FDIC and the CDFI.
    

    
      
        

        

      

      
        

        

        
          

        

      

      
        

        

      

    

    
               The FDIC and the CDFI considered the matter and determined that
      they had reason to believe that the Bank had engaged in unsafe or
      unsound banking practices.  The FDIC and the CDFI, therefore, accepted
      the CONSENT AGREEMENT and issued the following:
    

    
      ORDER TO CEASE AND DESIST
    

    
               IT IS HEREBY ORDERED, that the Bank, its institution-affiliated
      parties, as that term is defined in section 3(u) of the Act, 12 U.S.C. §
      1813(u), and its successors and assigns, cease and desist from the
      following unsafe and unsound banking practices, as more fully set forth
      in the joint FDIC and CDFI Report of Examination (“ROE”) dated December
      1, 2008:
    

    
      (a)      operating with management whose policies and practices are
      detrimental to the Bank and jeopardize the safety of its deposits;
    

    
      (b)      operating with a board of directors which has failed to provide
      adequate supervision over and direction to the active management of the
      Bank;
    

    
      (c)      operating with inadequate capital in relation to the kind and
      quality of assets held by the Bank;
    

    
      (d)      operating with an inadequate loan valuation reserve;
    

    
      (e)      operating with a large volume of poor quality loans;
    

    
      (f)      operating in such a manner as to produce operating losses; and
    

    
      (g)      operating with inadequate provisions for liquidity.
    

    
               IT IS FURTHER ORDERED, that the Bank, its
      institution-affiliated parties, and its successors and assigns, take
      affirmative action as follows:
    

    
      1.       The Bank shall have and retain qualified management.
    

    
      
        

        

      

      
        
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      (a)      Each member of management shall have qualifications and
      experience commensurate with his or her duties and responsibilities at
      the Bank.  Management shall include the following:  (i) a chief
      executive officer with proven ability in managing a bank of comparable
      size, and experience in upgrading a low quality loan portfolio,
      improving earnings, and other matters needing particular attention; (ii)
      a chief financial officer with demonstrated ability in all financial
      areas including but not limited to, accounting, regulatory reporting,
      budgeting and planning, management of the investment function, liquidity
      management, and interest rate risk management; and (iii) a chief credit
      officer with significant appropriate lending, collection, and loan
      supervision experience and experience in upgrading a low quality loan
      portfolio.  The chief executive officer, the chief financial officer,
      and the chief credit officer are hereafter referred to collectively as
      “Senior Executive Officers.”  Each Senior Executive Officer shall be
      provided appropriate written authority from the Bank’s Board to
      implement provisions of this ORDER and shall perform his or her duties
      onsite at the Bank.  Without limiting the generality of the foregoing,
      the Regional Director of the FDIC’s San Francisco Regional Office
      (“Regional Director”) and the Commissioner of the CDFI (“Commissioner”)
      reserve the right to determine whether current senior executive officers
      and directors of the Bank will be considered to be qualified for
      purposes of this Order.
    

    
      (b)      During the life of this ORDER, the Bank shall notify the
      Regional Director and the Commissioner in writing when it proposes to
      add any individual to the Bank's Board or employ any individual as a
      senior executive officer.  The notification must be received at least 30
      days before such addition or employment is intended to become effective
      and should include a description of the background and experience of the
      individual or individuals to be added or employed.  The Bank shall not
      add, elect or appoint any individual to the Bank’s Board or employ any
      individual as a senior executive officer if the Regional Director or
      Commissioner, in response to the Bank’s notification as required in this
      paragraph, notifies the Bank of his or her disapproval.
    

    
      
        

        

      

      
        
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      2.       Within 30 days from the effective date of this ORDER, the
      Bank’s Board shall increase its participation in the affairs of the
      Bank, assuming full responsibility for the approval of sound policies
      and objectives and for the supervision of all of the Bank's activities,
      consistent with the role and expertise commonly expected for directors
      of banks of comparable size.  This participation shall include meetings
      to be held no less frequently than monthly at which, at a minimum, the
      following areas shall be reviewed and approved: reports of income and
      expenses; new, overdue, renewal, insider, charged-off, and recovered
      loans; investment activity; operating policies; and individual committee
      actions.  The Bank’s Board minutes shall document these reviews and
      approvals, including the names of any dissenting directors.
    

    
      3.       (a)       Within 90 days from the effective date of this ORDER,
      the Bank shall develop and adopt a capital plan that requires the
      maintenance of the Bank’s Tier 1 Leverage Capital ratio above 10 (ten)
      percent throughout the life of this ORDER.
    

    
      (b)      Within 60 days from the effective date of this ORDER, the Bank
      shall develop and adopt a plan to meet and thereafter maintain the
      minimum risk-based capital requirements as described in the FDIC’s
      Statement of Policy on Risk-Based Capital contained in Appendix A to
      Part 325 of the FDIC’s Rules and Regulations, 12 C.F.R. Part 325,
      Appendix A.  The Plan shall be in a form and manner acceptable to the
      Regional Director and the Commissioner as determined at subsequent
      examinations.
    

    
      
        

        

      

      
        
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      (c)      If all or part of the increase in Tier 1 capital required by
      Paragraph 3 of this Order is accomplished by the sale of new securities,
      the Bank’s Board shall forthwith take all necessary steps to adopt and
      implement a plan for the sale of such additional securities, including
      the voting of any shares owned or proxies held or controlled by them in
      favor of the plan.  Should the implementation of the plan involve a
      public distribution of the Bank’s securities (including a distribution
      limited only to the Bank’s existing shareholders), the Bank shall
      prepare offering materials fully describing the securities being
      offered, including an accurate description of the financial condition of
      the Bank and the circumstances giving rise to the offering, and any
      other material disclosures necessary to comply with the federal
      securities laws.  Prior to the implementation of the plan and, in any
      event, not less than fifteen (15) days prior to the dissemination of
      such materials, the plan and any materials used in the sale of the
      securities shall be submitted to the FDIC, Registration and Disclosure
      Unit, Washington, D.C. 20429, for review and to the Commissioner to
      obtain any and all necessary securities permits or other approvals.  Any
      changes requested to be made in the plan or materials by the FDIC or the
      Commissioner shall be made prior to their dissemination.  If the
      increase in Tier 1 capital is provided by the sale of noncumulative
      perpetual preferred stock, then all terms and conditions of the issue,
      including but not limited to those terms and conditions relative to
      interest rate and convertibility factor, shall be presented to the
      Regional Director and the Commissioner for prior approval.
    

    
      (d)      For the purposes of this ORDER, the terms "Tier 1 capital" and
      "total assets" shall have, the meanings ascribed to them in Part 325 of
      the FDIC’s Rules and Regulations, 12 C.F.R. §§ 325.2(v) and 325.2(x).
    

    
      4.       (a)       Within 60 days from the effective date of this ORDER,
      the Bank shall develop written asset disposition plans for each
      classified asset greater than 2.5 million.  The plans shall be reviewed
      and approved by the Bank’s Board and acceptable to the Regional Director
      and the Commissioner as determined at subsequent examinations and/or
      visitations.
    

    
                         (b)       Within 60 days from the effective date of
      this ORDER, the Bank shall adopt and implement a written plan for the
      reduction and collection of delinquent loans and a written plan to
      reduce the overall level of classified assets.  The plans shall be
      acceptable to the Regional Director and the Commissioner as determined
      at subsequent examinations and/or visitations.
    

    
      
        

        

      

      
        
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      5.       Within 60 days from the effective date of this ORDER, the Bank
      shall develop, adopt, and implement a comprehensive policy for
      determining the appropriateness of the allowance for loan and lease
      losses.  The policy shall include requirements for complying with the
      standards and guidelines in the Policy Statement on Allowance for Loan
      and Lease Loss Methodology and Documentation for the Bank and Savings
      and Loans dated July 2, 2001, and the Interagency Policy Statement on
      Allowance for Loan and Lease Losses dated December 13, 2006.
    

    
      6.       Within 60 days from the effective date of this ORDER, the Bank
      shall develop a written plan, approved by its Board and acceptable to
      the Regional Director and the Commissioner for systematically reducing
      the amount of loans or other extensions of credit advanced, directly or
      indirectly, to or for the benefit of, any borrowers in the “Land &
      Construction Loan” Concentrations, as more fully set forth in the ROE
      dated December 1, 2008.  
    

    
      7.       Within 90 days of the effective date of this ORDER, the Bank
      shall develop and submit to the Regional Director and the Commissioner a
      written three-year strategic plan.  Such plan shall include specific
      goals for the dollar volume of total loans, total investment securities,
      and total deposits as of December 31, 2009, December 31, 2010, and
      December 31, 2011.  For each time frame, the plan will also specify the
      anticipated average maturity and average yield on loans and securities;
      the average maturity and average cost of deposits; the level of earning
      assets as a percentage of total assets; and the ratio of net interest
      income to average earning assets.  The plan shall be in a form and
      manner acceptable to the Regional Director and the Commissioner as
      determined at subsequent examinations and/or visitations.
    

    
      
        

        

      

      
        
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      8.       Within 90 days from the effective date of this ORDER, the Bank
      shall formulate and implement a written profit plan.  This plan shall be
      forwarded to the Regional Director and the Commissioner for review and
      comment and shall address, at a minimum, the following:
    

    
      (a)      goals and strategies for improving and sustaining the earnings
      of the Bank, including:
    

    
      (i)      an identification of the major areas in, and means by which,
      the Bank’s Board will seek to improve the Bank's operating performance;
    

    
      (ii)     realistic and comprehensive budgets;
    

    
      (iii)    a budget review process to monitor the income and expenses of
      the Bank to compare actual figures with budgetary projections; and
    

    
      (iv)     a description of the operating assumptions that form the basis
      for, and adequately support, major projected income and expense
      components.
    

    
      (b)      coordination of the Bank's loan, investment, and operating
      policies, and budget and profit planning, with the funds management
      policy.
    

    
      9.       Within 60 days from the effective date of this ORDER, the Bank
      shall develop or revise, adopt, and implement a written liquidity and
      funds management policy.  Such policy and its implementation shall be in
      a form and manner acceptable to the Regional Director and the
      Commissioner as determined at subsequent examinations and/or visitations.
    

    
      10.      Within 30 days of the effective date of this ORDER, the Bank
      shall submit to the Regional Director and the Commissioner a written
      plan for reducing its reliance on brokered deposits.  The plan should
      contain details as to the current composition of brokered deposits by
      maturity and explain the means by which such deposits will be paid in
      compliance with 12 C.F.R. § 337.6.  The Regional Director and the
      Commissioner shall have the right to reject the Bank’s plan.  On the 15th
      day of each month, the Bank shall provide a written progress report to
      the Regional Director and the Commissioner with specific reference to
      progress under the Bank’s plan.  For purposes of this ORDER, brokered
      deposits are defined as described in section 337.6(a)(2) of the FDIC’s
      Rules and Regulations to include any deposits funded by third party
      agents or nominees for depositors, including deposits managed by a
      trustee or custodian when each individual beneficial interest is
      entitled to or asserts a right to federal deposit insurance.
    

    
      
        

        

      

      
        
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      11.      The Bank shall not pay cash dividends without the prior written
      consent of the Regional Director and the Commissioner.
    

    
      12.      Within 30 days of the end of the first quarter, following the
      effective date of this ORDER, and within 30 days of the end of each
      quarter thereafter, the Bank shall furnish written progress reports to
      the Regional Director and the Commissioner detailing the form and manner
      of any actions taken to secure compliance with this ORDER and the
      results thereof.  Such reports shall include a copy of the Bank's Report
      of Condition and the Bank's Report of Income.  Such reports may be
      discontinued when the corrections required by this ORDER have been
      accomplished and the Regional Director and the Commissioner have
      released the Bank in writing from making further reports.
    

    
      13.      Following the effective date of this ORDER, the Bank shall send
      to its shareholder(s) or otherwise furnish a description of this ORDER
      in conjunction with the Bank's next shareholder communication and also
      in conjunction with its notice or proxy statement preceding the Bank's
      next shareholder meeting.  The description shall fully describe the
      ORDER in all material respects.  The description and any accompanying
      communication, statement, or notice shall be sent to the FDIC,
      Accounting and Securities Section, Washington, D.C. 20429, and to the
      Commissioner, at least 15 days prior to dissemination to
      shareholders.  Any changes requested to be made by the FDIC shall be
      made prior to dissemination of the description, communication, notice,
      or statement.
    

    
      
        

        

      

      
        
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               This ORDER will become effective upon its issuance by the FDIC
      and the CDFI.  Violation of any provision of this Order will be deemed
      to be conducting business in an unsafe or unsound manner, and will
      subject the Bank to further regulatory enforcement action.  The
      provisions of this ORDER shall remain effective and enforceable except
      to the extent that, and until such time as, any provisions of this ORDER
      shall have been modified, terminated, suspended, or set aside by the
      FDIC and the CDFI.
    

    
               Pursuant to delegated authority.
    

    
               Dated at San Francisco, California, this 12th
      day of February, 2009.
    

    
    	
           
        	

        
	

        	
          /s/ J. GEORGE DOERR, for
        
	

        	
          Stan Ivie
        
	

        	
          Regional Director
        
	

        	
          Division of Supervision and Consumer Protection
        
	

        	
          San Francisco Region
        
	

        	
          Federal Deposit Insurance Corporation
        
	

        	
           
        
	

        	
           
        
	

        	
           
        
	

        	
          /s/ WILLIAM S. HARAF
        
	

        	
          William S. Haraf
        
	

        	
          Commissioner
        
	

        	
          California Department of Financial Institutions
        

    

    

    

    
      - 9 -

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