Document:

Exhibit 10.2

 

LOAN AND
SECURITY AGREEMENT

 

THIS LOAN AND SECURITY
AGREEMENT is made and dated as of December 3, 2013 and is entered into by and between BAXANO SURGICAL, INC., a Delaware corporation
(“Borrower”), and HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation (“Lender”).

 

RECITALS

 

A.           Borrower
has requested Lender to make available to Borrower three (3) term loans (each a “Term Loan Advance” and
collectively, the “Term Loan Advances”) in an aggregate principal amount of up to Fifteen Million Dollars ($15,000,000)
(the “Maximum Term Loan Amount”); and

 

B.           Lender
is willing to make the Term Loan Advances on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, Borrower
and Lender agree as follows:

 

SECTION
1.          DEFINITIONS AND RULES OF CONSTRUCTION

 

1.1           Unless
otherwise defined herein, the following capitalized terms shall have the following meanings:

 

“Account Control
Agreement(s)” means any agreement entered into by and among the Lender, Borrower and a third party Bank or other institution
(including a Securities Intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and
which grants Lender a perfected first priority security interest in the subject account or accounts.

 

“ACH Authorization”
means the ACH Debit Authorization Agreement in substantially the form of Exhibit H.

 

“Advance(s)”
means a Term Loan Advance.

 

“Advance Date”
means the funding date of any Advance.

 

“Advance Request”
means a request for an Advance submitted by Borrower to Lender in substantially the form of Exhibit A.

 

“Agreement”
means this Loan and Security Agreement, as amended from time to time.

 

“Amortization
Date” means October 1, 2014; provided, however, that if the Milestone Event occurs prior to such date, the Amortization
Date shall be January 2, 2015.

 

“Assignee”
has the meaning given to it in Section 11.13.

 

“Borrower”
has the meaning given to it in the preamble to this Agreement.

 

“Borrower
Products” means all products, software, service offerings, technical data or technology currently being designed, manufactured
or sold by Borrower or which Borrower intends to sell, license, or distribute in the future including any products or service offerings
under development, collectively, together with all products, software, service offerings, technical data or technology that have
been sold, licensed or distributed by Borrower since its incorporation.

 

“Business
Day” is any day that is not a Saturday, Sunday or a day on which Lender is closed.

 

    	 

    	 

    

  

“Cash”
means all cash and liquid funds.

 

“Change in
Control” means any (i) reorganization, recapitalization, consolidation or merger (or similar transaction or series of
related transactions) of Borrower, or any sale or exchange of outstanding shares (or similar transaction or series of related transactions)
of Borrower, in each case in which the holders of Borrower outstanding shares immediately before consummation of such transaction
or series of related transactions do not, immediately after consummation of such transaction or series of related transactions,
retain shares representing more than fifty percent (50%) of the voting power of the surviving entity of such transaction or series
of related transactions (or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each
case without regard to whether Borrower is the surviving entity, or (ii) sale or issuance by Borrower of equity securities to one
or more purchasers, in a single transaction or series of related transactions not registered under the Securities Act of 1933,
which securities represent, as of immediately following the closing (or, if there be more than one, any closing) thereof, thirty
percent (30%) or more of the then-outstanding total combined voting power of Borrower.

 

“Claims”
has the meaning given to it in Section 11.10.

 

“Closing Date”
means the date of this Agreement.

 

“Collateral”
means the property described in Section 3.

 

“Confidential
Information” has the meaning given to it in Section 11.12.

 

“Contingent
Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person
with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which
that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate
credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate,
currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however,
that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course
of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of
the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall
not in any event exceed the maximum amount of such Person’s obligations under the guarantee or other support arrangement.

 

“Copyright
License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

“Copyrights”
means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof, or
of any other country.

 

“Deposit Accounts”
means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account, savings account,
or certificate of deposit.

 

“Draw Period
A” means the period commencing upon the occurrence of the First Revenue Event and ending on the earlier to occur of (i)
March 15, 2014, and (ii) an Event of Default that has occurred and is continuing.

 

“Draw Period
B” means the period commencing upon the occurrence of both the Second Revenue Event and the Equity Event and ending on
the earlier to occur of (i) June 15, 2014, and (ii) an Event of Default that has occurred and is continuing.

 

“End of Term
Charge” is defined in Section 2.5

 

    	 

    	 

    

  

“Equity Event”
means confirmation by Lender that Borrower has received, after the Closing Date, but on or before June 15, 2014, unrestricted and
unencumbered net cash proceeds in an amount of at least Fifteen Million Dollars ($15,000,000) from the issuance and sale by Borrower
of its equity securities with investors acceptable to Lender.

 

“ERISA”
is the Employee Retirement Income Security Act of 1974, and its regulations.

 

“Event of
Default” has the meaning given to it in Section 9.

 

“Excluded
Collateral” has the meaning given to it in Section 3.1.

 

“Facility
Charge” means eighty-five hundredths of one percent (0.85%) of the Maximum Term Loan Amount.

 

“Financial
Statements” has the meaning given to it in Section 7.1.

 

“First Revenue
Event” means delivery by Borrower to Lender, on or prior to March 15, 2014, of evidence satisfactory to Lender in Lender’s
sole discretion (it being agreed that Borrower’s 10-K shall be satisfactory evidence), that Borrower (not calculated on a
consolidated basis) has achieved total Gross Commercial Revenues of at least Six Million Dollars ($6,000,000) for the three (3)
month period beginning October 1, 2013 through and including December 31, 2013.

 

“GAAP”
means generally accepted accounting principles in the United States of America, as in effect from time to time.

 

“Gross Commercial
Revenues” are gross commercial revenues from the sale of Borrower’s Products, including without limitation, stocking
orders from distributors, in each case as determined in accordance with GAAP, which shall not include any (a) one-time, non-recurring
revenue, and/or (b) recognition of upfront payments in connection with strategic transactions.

 

“Indebtedness”
means any of (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding trade credit
entered into in the ordinary course of business due within ninety (90) days), including reimbursement and other obligations with
respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments,
(c) all capital lease obligations, and (d) all Contingent Obligations.

 

“Initial Notice”
has the meaning given to it in Section 8.

 

“Insolvency
Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy
or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.

 

“Intellectual
Property” means all of Borrower’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask
works; Borrower’s applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated
with any of the foregoing, together with Borrower’s rights to sue for past, present and future infringement of Intellectual
Property and the goodwill associated therewith.

 

“Investment”
means any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, or any
loan, advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person.

 

“Joinder Agreements”
means for each Subsidiary, a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit G.

 

“Lender”
has the meaning given to it in the preamble to this Agreement.

 

    	 

    	 

    

  

“License”
means any Copyright License, Patent License, Trademark License or other license of rights or interests.

 

“Lien”
means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or
charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional
sale or other title retention agreement, and any lease in the nature of a security interest.

 

“Loan”
means the Advances made under this Agreement.

 

“Loan Documents”
means this Agreement, the Notes (if any), the ACH Authorization, the Account Control Agreements, the Post-Closing Letter, the Joinder
Agreements, all UCC Financing Statements, the Warrant, and any other documents executed in connection with the Secured Obligations
or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated.

 

“Material
Adverse Effect” means a material adverse effect upon: (i) the business, operations, properties, assets, prospects or
condition (financial or otherwise) of Borrower; or (ii) the ability of Borrower to perform the Secured Obligations in accordance
with the terms of the Loan Documents, or the ability of Lender to enforce any of its rights or remedies with respect to the Secured
Obligations; or (iii) the Collateral or Lender’s Liens on the Collateral or the priority of such Liens.

 

“Maximum Term
Loan Amount” shall have the meaning assigned to such term in the preamble to this Agreement.

 

“Maximum Rate”
shall have the meaning assigned to such term in Section 2.2.

 

“Milestone
Event” means the occurrence of both the First Revenue Event and the Second Revenue Event.

 

“Note(s)”
means a promissory note or promissory notes to evidence Lender’s Loans.

 

“Offer Notice”
has the meaning given to it in Section 8.

 

“Participation
Limit” has the meaning given to it in Section 8.

 

“Patent License”
means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application
is pending, in which agreement Borrower now holds or hereafter acquires any interest.

 

“Patents”
means all letters patent of, or rights corresponding thereto, in the United States or in any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States or any other
country.

 

“Permitted
Indebtedness” means: (i) Indebtedness of Borrower in favor of Lender arising under this Agreement or any other Loan Document;
(ii) Indebtedness existing on the Closing Date which is disclosed in Schedule 1A; (iii) Indebtedness of up to $250,000 outstanding
at any time secured by a Lien described in clause (vii) of the defined term “Permitted Liens,” provided such Indebtedness
does not exceed the lesser of the cost or fair market value of the Equipment financed with such Indebtedness (each measured at
the time such Indebtedness if first incurred); (iv) Indebtedness to trade creditors incurred in the ordinary course of business,
including Indebtedness incurred in the ordinary course of business with corporate credit cards or merchant services; (v) Indebtedness
that also constitutes a Permitted Investment; (vi) Subordinated Indebtedness; (vii) reimbursement obligations in connection with
letters of credit that are secured by Deposit Account No(s). 3301047991, 3301047987, and 3301047972 maintained with Silicon Valley
Bank, and such cash or cash equivalents maintained in such account(s) and issued on behalf of the Borrower or a Subsidiary thereof
in an amount not to exceed $575,000 at any time outstanding, (viii) Indebtedness incurred in the ordinary course of business in
respect of performance bonds, bid bonds, appeal bonds, completion bonds, surety bonds, completion guarantees and similar obligations
in an amount not to exceed $150,000, (ix) Indebtedness in respect of judgments only to the extent not resulting in an Event of
Default, (x) other Indebtedness in an amount not to exceed $100,000 at any time outstanding, and (xi) extensions, refinancings
and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms modified
to impose materially more burdensome terms upon Borrower or its Subsidiary, as the case may be.

 

    	 

    	 

    

  

“Permitted
Investment” means: (i) Investments existing on the Closing Date which are disclosed in Schedule 1B; (ii) (a) marketable
direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing
within one year from the date of acquisition thereof, (b) commercial paper maturing no more than one year from the date of creation
thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (c) certificates of deposit issued by any bank with assets of at least $500,000,000 maturing no more than one
year from the date of investment therein, and (d) money market accounts; (iii) repurchases of stock from former employees, directors,
or consultants of Borrower under the terms of applicable repurchase agreements at the original issuance price of such securities
in an aggregate amount not to exceed $250,000 in any fiscal year, provided that no Event of Default has occurred, is continuing
or would exist after giving effect to the repurchases; (iv) Investments accepted in connection with Permitted Transfers; (v) Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement
of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s
business; (vi) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and
suppliers who are not affiliates, in the ordinary course of business, provided that this subparagraph (vi) shall not apply to Investments
of Borrower in any Subsidiary; (vii) Investments consisting of loans not involving the net transfer on a substantially contemporaneous
basis of cash proceeds to employees, officers or directors relating to the purchase of capital stock of Borrower pursuant to employee
stock purchase plans or other similar agreements approved by Borrower’s Board of Directors; (viii) Investments consisting
of travel and relocation advances or other employee advances in the ordinary course of business; (ix) Investments in newly-formed
Subsidiaries organized in the United States, provided that such Subsidiaries enter into a Joinder Agreement promptly after their
formation by Borrower and execute such other documents as shall be reasonably requested by Lender to perfect or ensure the priority
of Lender’s Lien in the Collateral of such Subsidiary on a basis consistent with the perfection and priority of Lender’s
Lien in the Borrower’s Collateral; (x) Investments in subsidiaries organized outside of the United States approved in advance
in writing by Lender; (xi) joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting
of the nonexclusive licensing of technology, the development of technology or the providing of technical support, provided that
any cash Investments by Borrower do not exceed $100,000 in the aggregate in any fiscal year; and (xii) additional Investments that
do not exceed $250,000 in the aggregate.

 

“Permitted
Liens” means any and all of the following: (i) Liens in favor of Lender; (ii) Liens existing on the Closing Date which
are disclosed in Schedule 1C; (iii) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent
or being contested in good faith by appropriate proceedings; provided, that Borrower maintains adequate reserves therefor in accordance
with GAAP; (iv) Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other
like Persons arising in the ordinary course of Borrower’s business and imposed without action of such parties; provided,
that the payment thereof is not yet required or remains due without penalty or is being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; (v) Liens
arising from judgments, decrees or attachments in circumstances which do not constitute an Event of Default hereunder; (vi) the
following deposits, to the extent made in the ordinary course of business: deposits under worker’s compensation, unemployment
insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the
repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than liens arising under ERISA
or environmental liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; (vii) Liens on Equipment
or software or other intellectual property constituting purchase money liens and liens on related property (including insurance
proceeds) and liens in connection with capital leases securing Indebtedness permitted in clause (iii) of “Permitted Indebtedness”;
(viii) Liens incurred in connection with Subordinated Indebtedness; (ix) leasehold interests in leases or subleases and licenses
granted to or by Borrower or a Subsidiary in the ordinary course of business and not interfering in any material respect with the
business of the licensor; (x) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of
custom duties that are promptly paid on or before the date they become due; (xi) Liens on insurance proceeds securing the payment
of financed insurance premiums that are promptly paid on or before the date they become due (provided that such Liens extend only
to such insurance proceeds and not to any other property or assets); (xii) statutory and common law rights of set-off and other
similar rights as to deposits of cash and securities in favor of banks, other depository institutions and brokerage firms; (xiii)
easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary
course of business so long as they do not materially impair the value or marketability of the related property; (xiv) Liens on
the Deposit Account No(s). 3301047991, 3301047987, and 3301047972 maintained with Silicon Valley Bank, and such cash or cash equivalents
maintained in such accounts, securing obligations permitted under clause (vii) of the definition of Permitted Indebtedness; and
(xv) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described
in clauses (i) through (xi) above; provided, that any extension, renewal or replacement Lien shall be limited to the property encumbered
by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced (as may have been reduced
by any payment thereon) does not increase.

 

    	 

    	 

    

 

“Permitted
Transfers” means (i) sales of Inventory in the normal course of business, (ii) non-exclusive licenses and similar arrangements
for the use of Intellectual Property in the ordinary course of business and licenses that could not result in a legal transfer
of title of the licensed property but that may be exclusive in respects other than territory and that may be exclusive as to territory
only as to discrete geographical areas outside of the United States in the ordinary course of business, or (iii) dispositions of
worn-out, obsolete or surplus Equipment at fair market value in the ordinary course of business, (iv) other Transfers of assets
having a fair market value of not more than $250,000 in the aggregate in any fiscal year, (v) Transfers consisting of Permitted
Investments and Permitted Liens, and (vi) dispositions expressly permitted under Section 7.9 hereof.

 

“Person”
means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, other entity or government.

 

“Post-Closing
Letter” means that certain letter agreement between Borrower and Lender dated as of the Closing Date.

 

“Potential
Participant” has the meaning given to it in Section 8.

 

“Preferred
Stock” means at any given time any equity security issued by Borrower that has any rights, preferences or privileges
senior to Borrower’s common stock.

 

“Prepayment
Charge” shall have the meaning assigned to such term in Section 2.4.

 

“Prime Rate”
means the “prime rate” as reported in The Wall Street Journal, and if not reported, then the prime rate most recently
reported in The Wall Street Journal.

 

“Receivables”
means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds
of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.

 

“Secured Obligations”
means Borrower’s obligations under this Agreement and any other Loan Document, including any obligation to pay any amount
thereunder now owing or later arising. Notwithstanding the foregoing, the “Secured Obligations” shall not include any
of Borrower’s obligations, liabilities or duties under the Warrant.

 

“Second Revenue
Event” means delivery by Borrower to Lender, on or prior to June 15, 2014, of evidence satisfactory to Lender in Lender’s
sole discretion (it being agreed that Borrower’s 10-Q shall be satisfactory evidence), that Borrower (not calculated on a
consolidated basis) has achieved total Gross Commercial Revenues of at least Seven Million Dollars ($7,000,000) for the three (3)
month period beginning January 1, 2014 through and including March 31, 2014.

 

    	 

    	 

    

  

“Subordinated
Indebtedness” means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions satisfactory
to Lender in its sole discretion.

 

“Subsequent
Financing” means any sale and issuance by Borrower on or after the date hereof and prior to expiration or earlier termination
of this Agreement, in a single transaction or series of related transactions not registered under the Securities Act of 1933, as
amended, of shares of its preferred stock, common stock or other equity security, or of any instrument exercisable for or convertible
into or otherwise representing the right to acquire shares of Borrower preferred stock, common stock or other equity security,
to one or more investors for cash for financing purposes (including, without limitation, any so-called PIPE transaction), which
offering by Borrower is broadly marketed to multiple investors, resulting in aggregate proceeds to Borrower of at least $10,000,000.

 

“Subsidiary”
means an entity, whether corporate, partnership, limited liability company, joint venture or otherwise, in which Borrower owns
or controls 50% or more of the outstanding voting securities, including each entity listed on Schedule 1 hereto.

 

“Term Loan
Advance” and “Term Loan Advances” are each defined in Recital A hereof.

 

“Term Loan
Interest Rate” means for any day, a floating per annum rate equal to the greater of either (i) twelve and one half of
one percent (12.50%), or (ii) the sum of (A) twelve and one half of one percent (12.50%), plus (B) the Prime Rate minus four and
three quarters of one percent (4.75%). The Term Loan Interest Rate will change from time to time on the day the Prime Rate changes.

 

“Term Loan
Maturity Date” means March 1, 2017, provided, however that if the Amortization Date is January 2, 2015, the Term Loan
Maturity Date shall be June 1, 2017.

 

“Trademark
License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

“Trademarks”
means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof.

 

“UCC”
means the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in the
event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with
respect to, Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time,
in effect in a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial
Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

 

“Warrant”
means the warrant issued by Borrower to Lender in connection with the Loan, as the same may be amended, modified, supplemented
or restated.

 

Unless otherwise specified,
all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,”
“Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule
in or to this Agreement. Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other
Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder
shall be computed in accordance with GAAP, consistently applied. Unless otherwise defined herein or in the other Loan Documents,
terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.

 

    	 

    	 

    

 

SECTION
2.          THE LOAN

 

2.1           Term
Loan.

 

(a)          Advances.
Subject to the terms and conditions of this Agreement, Lender will make, and Borrower agrees to draw, an initial Term Loan Advance
in the amount of Seven Million Five Hundred Thousand Dollars ($7,500,000) on the Closing Date. During Draw Period A, Borrower may
submit a request for one additional (1) Term Loan Advance in an amount of Two Million Five Hundred Thousand Dollars ($2,500,000).
During Draw Period B, Borrower may submit a request for one final (1) Term Loan Advance in an amount of Five Million Dollars ($5,000,000).
The aggregate outstanding Term Loan Advances shall not exceed the Maximum Term Loan Amount. Proceeds of any Advance shall be deposited
into an account that is subject to a perfected security interest in favor of Lender perfected by a control agreement.

 

(b)          Advance
Request. To obtain a Term Loan Advance, Borrower shall complete, sign and deliver to Lender an Advance Request (at least five
(5) Business Days before the Advance Date, in the case of any Advance other than the initial Advance). Lender shall fund the Term
Loan Advance in the manner requested by the Advance Request provided that each of the conditions precedent to such Term Loan Advance
is satisfied as of the requested Advance Date.

 

(c)          Interest.
The principal balance of each Term Loan Advance shall bear interest thereon from such Advance Date at the Term Loan Interest Rate
based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed. The Term Loan
Interest Rate will float and change on the day the Prime Rate changes from time to time.

 

(d)          Payment.
Borrower will pay interest on each Term Loan Advance in arrears on the first (1st) Business Day of each month, beginning the month
after the Advance Date. Commencing on the Amortization Date, and continuing on the first (1st) Business Day of each month thereafter,
Borrower shall repay the aggregate principal balance of Term Loan Advances that are outstanding on the Amortization Date in equal
monthly installments of principal and interest (mortgage style) based upon an amortization schedule equal to thirty (30) consecutive
months. After any change in the Term Loan Interest Rate, Lender shall recalculate future payments of principal and interest to
fully amortize the outstanding principal amount over the remaining scheduled monthly payments hereunder prior to the Term Loan
Maturity Date and shall notify Borrower thereof in advance of the next payment. The entire principal balance of the Term Loan Advances
and all accrued but unpaid interest hereunder, and all other Secured Obligations with respect to the Term Loan Advances, shall
be due and payable on Term Loan Maturity Date. Borrower shall make all payments under this Agreement without setoff, recoupment
or deduction and regardless of any counterclaim or defense. Lender will initiate debit entries to the Borrower’s account
as authorized on the ACH Authorization on each payment date of all periodic obligations payable to Lender under each Term Loan
Advance. Once repaid, a Term Loan Advance or any portion thereof may not be reborrowed.

 

2.2           Maximum
Interest. Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent not to
contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent
jurisdiction shall deem applicable hereto (which under the laws of the State of California shall be deemed to be the laws relating
to permissible rates of interest on commercial loans) (the “Maximum Rate”). If a court of competent jurisdiction
shall finally determine that Borrower has actually paid to Lender an amount of interest in excess of the amount that would have
been payable if all of the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually
paid by Borrower shall be applied as follows: first, to the payment of the Secured Obligations consisting of the outstanding principal
amount of the Term Loan Advances; second, after all principal is repaid, to the payment of Lender’s accrued interest, costs,
expenses, professional fees and any other Secured Obligations; and third, after all Secured Obligations are repaid, the excess
(if any) shall be refunded to Borrower.

 

2.3           Default
Interest. In the event any payment is not paid on the scheduled payment date, an amount equal to five percent (5%) of the past
due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default hereunder,
all Secured Obligations, including principal, interest, compounded interest, and professional fees, shall bear interest at a rate
per annum equal to the rate set forth in Section 2.1(c), plus three percent (3%) per annum. In the event any interest is not paid
when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded at the rate
set forth in Section 2.1(c).

 

    	 

    	 

    

 

2.4           Prepayment.
At its option upon at least seven (7) Business Days prior notice to Lender, Borrower may prepay all, or any portion, of the outstanding
Advances by paying the entire principal balance or a portion thereof, all accrued and unpaid interest on the portion prepaid, all
unpaid Lender’s fees and expenses accrued to the date of the repayment (including in the event of a prepayment in full, the
End of Term Charge), together with a prepayment charge on the portion prepaid equal to the following percentage of the Advance
amount being prepaid: if such Advance amounts are prepaid in any of the first twelve (12) months following the Closing Date, zero
percent (0.0%); after twelve (12) months but prior to twenty four (24) months, two percent (2%); and after twenty four (24) months
but prior to the Term Loan Maturity Date, one percent (1%) (each, a “Prepayment Charge”). Borrower agrees that
the Prepayment Charge is a reasonable calculation of Lender’s lost profits in view of the difficulties and impracticality
of determining actual damages resulting from an early repayment of the Advances. Upon the occurrence of a Change in Control, Borrower
shall prepay the outstanding amount of all principal and accrued interest through the prepayment date and all unpaid Lender’s
fees and expenses accrued to the date of the repayment (including the End of Term Charge) together with the applicable Prepayment
Charge.

 

2.5           End
of Term Charge. On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays the outstanding
Secured Obligations in full, or (iii) the date that all Secured Obligations become due and payable, Borrower shall pay Lender a
charge equal to three and one half of one percent (3.50%) of the aggregate original principal amount of all Term Loan Advances
extended by Lender (the “End of Term Charge”). Notwithstanding the required payment date of such charge, it
shall be deemed earned by Lender as of the Closing Date.

 

2.6           Notes.
If so requested by Lender by written notice to Borrower, then Borrower shall execute and deliver to Lender (and/or, if applicable
and if so specified in such notice, to any Assignee) (promptly after the Borrower’s receipt of such notice) a Note or Notes
to evidence Lender’s Loans.

 

SECTION
3.          SECURITY INTEREST

 

3.1           As
security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all the Secured
Obligations, Borrower grants to Lender a security interest in all of Borrower’s right, title, and interest in and to the
following personal property whether now owned or hereafter acquired (collectively, the “Collateral”): (a) Receivables;
(b) Equipment; (c) Fixtures; (d) General Intangibles; (e) Inventory; (f) Investment Property (but excluding thirty-five percent
(35%) of the equity interest of any foreign Subsidiary that constitutes a Permitted Investment); (g) Deposit Accounts; (h) Cash;
(i) Goods; and all other tangible and intangible personal property of Borrower whether now or hereafter owned or existing, leased,
consigned by or to, or acquired by, Borrower and wherever located, and any of Borrower’s property in the possession or under
the control of Lender; and, to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits and products of each of the foregoing. Notwithstanding the foregoing, the
Collateral does not include the following (the “Excluded Collateral”): (i) any interest of Borrower as a lessee
or sublessee under a real property lease, (ii) leased Equipment or Equipment financed by purchase money indebtedness (in each case,
and any accessions, attachments, replacements, or improvements thereon, and any related property (including insurance proceeds))
that is subject to a Lien that is permitted pursuant to subsection (ii) or (vii) of the definition of “Permitted Lien”,
which is securing Indebtedness permitted pursuant to subsection (ii) or (iii) of the definition of “Permitted Indebtedness”,
provided that (x) the foregoing exclusion shall apply only to the extent the applicable lease or finance contract relating to such
Equipment prohibits the granting of security interests other than such Permitted Lien and (y) upon the release of any such Lien,
such Equipment (and any accessions, attachments, replacements or improvements thereon) shall be deemed to be Collateral hereunder
and shall be subject to the security interest granted herein without any action by Borrower or Lender, (iii) property that is non-assignable
by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer
is enforceable under applicable law, including, without limitation, §9-406 and §9-408 of the UCC), (iv) any intent-to-use
trademarks at all times prior to the first use thereof, whether by the actual use thereof in commerce, the recording of a statement
of use with the United States Patent and Trademark Office or otherwise, and (v) Deposit Account No(s). 3301047991, 3301047987,
and 3301047972 maintained with Silicon Valley Bank, and such cash or cash equivalents maintained in such accounts, securing obligations
permitted under clause (viii) of the definition of Permitted Indebtedness.

 

    	 

    	 

    

  

SECTION
4.          CONDITIONS PRECEDENT TO LOAN

 

The obligation of Lender
to make the Term Loan Advances hereunder are subject to the satisfaction by Borrower of the following conditions:

 

4.1           Initial
Advance. On or prior to the Closing Date, Borrower shall have delivered to Lender the following:

 

(a)          executed
originals of the Loan Documents, Account Control Agreement with Silicon Valley Bank (relating to Borrower’s Deposit Account
with Silicon Valley Bank), and all other documents and instruments reasonably required by Lender to effectuate the transactions
contemplated hereby or to create and perfect the Liens of Lender with respect to all Collateral, in all cases in form and substance
reasonably acceptable to Lender;

 

(b)          certified
copy of resolutions of Borrower’s board of directors evidencing approval of (i) the Loan and other transactions evidenced
by the Loan Documents; and (ii) the Warrant and transactions evidenced thereby;

 

(c)          certified
copies of the Certificate of Incorporation and the Bylaws, as amended through the Closing Date, of Borrower;

 

(d)          a
certificate of good standing for Borrower from its state of incorporation and similar certificates from all other jurisdictions
in which it does business and where the failure to be qualified would have a Material Adverse Effect;

 

(e)          duly
executed signature to a payoff letter from Silicon Valley Bank and Oxford Finance LLC, together with evidence (i) the Liens securing
Indebtedness owed by Borrower to Silicon Valley Bank and Oxford Finance LLC will be terminated and (ii) the documents and/or filings
evidencing the perfection of such Liens, including without limitation any financing statements and/or control agreements, have
or will, concurrently with the initial Loan, will be terminated or released;

 

(f)          payment
of the Facility Charge and reimbursement of Lender’s current expenses reimbursable pursuant to this Agreement, which amounts
may be deducted from the initial Advance; and

 

(g)          such
other documents as Lender may reasonably request.

 

4.2           All
Advances. On each Advance Date:

 

(a)          Lender
shall have received an Advance Request for the relevant Advance as required by Section 2.1(b), duly executed by Borrower’s
Chief Executive Officer or Chief Financial Officer.

 

(b)          The
representations and warranties set forth in this Agreement and in Section 5 and in the Warrant shall be true and correct in all
material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date.

 

(c)          Borrower
shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed
or performed, and at the time of and immediately after such Advance no Event of Default shall have occurred and be continuing.

 

(d)          Each
Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Date as to the
matters specified in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in the Advance Request.

 

    	 

    	 

    

  

(e)          No
fact or condition exists that would (or would, with the passage of time, the giving of notice, or both) constitute an Event of
Default and no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing.

 

SECTION
5.          REPRESENTATIONS AND WARRANTIES OF BORROWER

 

Borrower represents
and warrants that:

 

5.1           Corporate
Status. Borrower is a corporation duly organized, legally existing and in good standing under the laws of the State of Delaware,
and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or location of its properties
require such qualifications and where the failure to be qualified could reasonably be expected to have a Material Adverse Effect.
Borrower’s present name, former names (if any), locations, place of formation, tax identification number, organizational
identification number and other information are correctly set forth in Exhibit C, as may be updated by Borrower in a written notice
(including any Compliance Certificate) provided to Lender after the Closing Date.

 

5.2           Collateral.
Borrower owns the Collateral and the Intellectual Property, free of all Liens, except for Permitted Liens. Borrower has the power
and authority to grant to Lender a Lien in the Collateral as security for the Secured Obligations.

 

5.3           Consents.
Borrower’s execution, delivery and performance of the Notes (if any), this Agreement and all other Loan Documents, and Borrower’s
execution of the Warrant, (i) have been duly authorized by all necessary corporate action of Borrower, (ii) will not result in
the creation or imposition of any Lien upon the Collateral, other than Permitted Liens and the Liens created by this Agreement
and the other Loan Documents, (iii) do not violate any provisions of Borrower’s Certificate or Articles of Incorporation
(as applicable), bylaws, or any, law, regulation, order, injunction, judgment, decree or writ to which Borrower is subject and
(iv) except as described on Schedule 5.3, do not violate any contract or agreement or require the consent or approval of any other
Person. The individual or individuals executing the Loan Documents and the Warrant are duly authorized to do so.

 

5.4           Material
Adverse Effect. No event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is
continuing.

 

5.5           Actions
Before Governmental Authorities. Except as described on Schedule 5.5 (which may be updated from time to time, provided that
any new information or disclosure shall not be deemed to be included in such schedule unless consented to by Lender in writing
pursuant to the terms and conditions hereof), there are no actions, suits or proceedings at law or in equity or by or before any
governmental authority now pending or, to the knowledge of Borrower, threatened against or affecting Borrower or its property,
which, if adversely determined against Borrower or its property, would reasonably be expected to result in liability in excess
of $150,000.

 

5.6           Laws.
Borrower is not in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree
of any governmental authority, where such violation or default is reasonably expected to result in a Material Adverse Effect. Borrower
is not in default in any manner under any provision of any agreement or instrument evidencing indebtedness, or any other material
agreement to which it is a party or by which it is bound.

 

5.7           Information
Correct and Current. No information, report, Advance Request, financial statement, exhibit or schedule furnished, by or on
behalf of Borrower to Lender in connection with any Loan Document or included therein or delivered pursuant thereto contained or
contains any material misstatement of fact or omitted or omits to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were or are made, not misleading at the time such statement was made or deemed
made. Additionally, any and all financial or business projections provided by Borrower to Lender shall be (i) provided in good
faith and based on the most current data and information available to Borrower, and (ii) the most current of such projections provided
to Borrower’s Board of Directors.

 

    	 

    	 

    

  

5.8           Tax
Matters. Except as described on Schedule 5.8, (a) Borrower has filed all federal, state and local tax returns that it is required
to file, (b) Borrower has duly paid or fully reserved for all taxes or installments thereof (including any interest or penalties)
as and when due, which have or may become due pursuant to such returns, and (c) Borrower has paid or fully reserved for any tax
assessment received by Borrower for the three (3) years preceding the Closing Date, if any (including any taxes being contested
in good faith and by appropriate proceedings).

 

5.9           Intellectual
Property Claims. Borrower is the sole owner of, or otherwise has the right to use, the Intellectual Property. Except as described
on Schedule 5.9,(i) each of the material Copyrights, Trademarks and Patents is valid and enforceable, (ii) no material part of
the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and (iii) no written claim has been made
to Borrower that any material part of the Intellectual Property violates the rights of any third party. Exhibit D is a true, correct
and complete list of each of Borrower’s Patents, registered Trademarks, registered Copyrights, and material agreements under
which Borrower licenses Intellectual Property from third parties (other than shrink-wrap software licenses), together with application
or registration numbers, as applicable, owned by Borrower or any Subsidiary, in each case as of the Closing Date. Borrower is not
in material breach of, nor has Borrower failed to perform any material obligations under, any of the foregoing contracts, licenses
or agreements and, to Borrower’s knowledge, no third party to any such contract, license or agreement is in material breach
thereof or has failed to perform any material obligations thereunder.

 

5.10         Intellectual
Property. Except as described on Schedule 5.10: Borrower has, or in the case of any proposed business, will have, all material
rights with respect to Intellectual Property necessary in the operation or conduct of Borrower’s business as currently conducted
and proposed to be conducted by Borrower. Without limiting the generality of the foregoing, and in the case of Licenses, except
for restrictions that are unenforceable under Division 9 of the UCC, Borrower has the right, to the extent required to operate
Borrower’s business, to freely transfer, license or assign Intellectual Property without condition, restriction or payment
of any kind (other than license payments in the ordinary course of business) to any third party, and Borrower owns or has the right
to use, pursuant to valid licenses, all software development tools, library functions, compilers and all other third-party software
and other items that are used in the design, development, promotion, sale, license, manufacture, import, export, use or distribution
of Borrower Products.

 

5.11         Borrower
Products. Except as described on Schedule 5.11: No Intellectual Property owned by Borrower or Borrower Product is subject to
any actual or, to the knowledge of Borrower, threatened litigation, proceeding (except for any proceeding in the United States
Patent and Trademark Office or any corresponding foreign office or agency, in each case involving a pending application for any
Patents, Trademarks or Copyrights) or outstanding decree, order, judgment, settlement agreement or stipulation that restricts in
any material manner Borrower’s use, transfer or licensing thereof or that may materially affect the validity, use or enforceability
thereof. There is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in connection
with any litigation or proceeding that obligates Borrower to grant licenses or ownership interest in any future Intellectual Property
related to the operation or conduct of the business of Borrower or Borrower Products. Borrower has not received any written notice
or claim, or, to the knowledge of Borrower, oral notice or claim, challenging or questioning Borrower’s ownership in any
of the Intellectual Property purportedly owned by Borrower (or written notice of any claim challenging or questioning the ownership
in any licensed Intellectual Property of the owner thereof) or suggesting that any third party has any claim of legal or beneficial
ownership with respect thereto, which, if adversely determined against Borrower or its property, would reasonably be expected to
result in liability in excess of $150,000, nor, to Borrower’s knowledge, is there a reasonable basis for any such claim.
To the knowledge of Borrower, neither Borrower’s use of its Intellectual Property nor the production and sale of Borrower
Products infringes the intellectual property or other rights of others.

 

5.12         Financial
Accounts. Exhibit E, as may be updated by the Borrower in a written notice provided to Lender after the Closing Date, is a
true, correct and complete list of (a) all banks and other financial institutions at which Borrower or any Subsidiary maintains
Deposit Accounts and (b) all institutions at which Borrower or any Subsidiary maintains an account holding Investment Property,
and such exhibit correctly identifies the name, address and telephone number of each bank or other institution, the name in which
the account is held, a description of the purpose of the account, and the complete account number therefor.

 

    	 

    	 

    

  

5.13         Employee
Loans. Borrower has no outstanding loans to any employee, officer or director of the Borrower nor has Borrower guaranteed the
payment of any loan made to an employee, officer or director of the Borrower by a third party.

 

5.14         Capitalization
and Subsidiaries. Borrower’s capitalization as of the Closing Date is set forth on Schedule 5.14 annexed hereto. Borrower
does not own any stock, partnership interest or other securities of any Person, except for Permitted Investments. Attached as Schedule
5.14, as may be updated by Borrower in a written notice provided after the Closing Date, is a true, correct and complete list of
each Subsidiary.

 

SECTION
6.          INSURANCE; INDEMNIFICATION

 

6.1           Coverage.
Borrower shall cause to be carried and maintained commercial general liability insurance, on an occurrence form, against risks
customarily insured against in Borrower’s line of business. Such risks shall include the risks of bodily injury, including
death, property damage, personal injury, advertising injury, and contractual liability per the terms of the indemnification agreement
found in Section 6.3. Borrower must maintain a minimum of $2,000,000 of commercial general liability insurance for each occurrence.
Borrower has and agrees to maintain a minimum of $2,000,000 of directors’ and officers’ insurance for each occurrence
and $5,000,000 in the aggregate. So long as there are any Secured Obligations outstanding, Borrower shall also cause to be carried
and maintained insurance upon the Collateral, insuring against all risks of physical loss or damage howsoever caused, in an amount
not less than the full replacement cost of the Collateral, provided that such insurance may be subject to standard exceptions and
deductibles. Borrower shall also carry and maintain a fidelity insurance policy in an amount not less than $100,000.

 

6.2           Certificates.
Borrower shall deliver to Lender certificates of insurance that evidence Borrower’s compliance with its insurance obligations
in Section 6.1 and the obligations contained in this Section 6.2. Borrower’s insurance certificate shall state Lender is
an additional insured for commercial general liability, a loss payee for all risk property damage insurance, subject to the insurer’s
approval, a loss payee for fidelity insurance, and a loss payee for property insurance and additional insured for liability insurance.
Attached to the certificates of insurance will be additional insured endorsements for liability and lender’s loss payable
endorsements for all risk property damage insurance and fidelity. All certificates of insurance will provide for a minimum of thirty
(30) days advance written notice to Lender of cancellation or any other change adverse to Lender’s interests, or such shorter
notice as may be acceptable to Lender in its sole discretion. Any failure of Lender to scrutinize such insurance certificates for
compliance is not a waiver of any of Lender’s rights, all of which are reserved.

 

6.3           Indemnity.
Borrower agrees to indemnify and hold Lender and its officers, directors, employees, agents, in-house attorneys, representatives
and shareholders harmless from and against any and all claims, costs, expenses, damages and liabilities (including such claims,
costs, expenses, damages and liabilities based on liability in tort, including strict liability in tort), including reasonable
attorneys’ fees and disbursements and other costs of investigation or defense (including those incurred upon any appeal),
that may be instituted or asserted against or incurred by Lender or any such Person as the result of credit having been extended,
suspended or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection
with or arising out of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection
therewith, or arising out of the disposition or utilization of the Collateral, excluding in all cases claims resulting solely from
Lender’s gross negligence or willful misconduct. Borrower agrees to pay, and to save Lender harmless from, any and all liabilities
with respect to, or resulting from any delay in paying, any and all excise, sales or other similar taxes (excluding taxes imposed
on or measured by the net income of Lender) that may be payable or determined to be payable with respect to any of the Collateral
or this Agreement.

 

SECTION
7.          COVENANTS OF BORROWER

 

Borrower agrees as
follows:

 

7.1           Financial
Reports. Borrower shall furnish to Lender the financial statements and reports listed hereinafter (the “Financial Statements”):

 

    	 

    	 

    

  

(a)          as
soon as practicable (and in any event within 30 days) after the end of each month, unaudited interim and year-to-date financial
statements as of the end of such month (prepared on a consolidated basis), including balance sheet and related statements of income
and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation
by or against Borrower) or any other occurrence that would reasonably be expected to have a Material Adverse Effect, all certified
by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance
with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year-end adjustments, and (iii) they do
not contain certain non-cash items that are customarily included in quarterly and annual financial statements;

 

(b)          as
soon as practicable (and in any event within 30 days) after the end of each calendar quarter, unaudited interim and year-to-date
financial statements as of the end of such calendar quarter (prepared on a consolidated basis), including balance sheet and related
statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of
any material litigation by or against Borrower) or any other occurrence that would reasonably be expected to have a Material Adverse
Effect, certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared
in accordance with GAAP, except (i) for the absence of footnotes, and (ii) that they are subject to normal year-end adjustments;
as well as the most recent capitalization table for Borrower, including the weighted average exercise price of employee stock options;

 

(c)          as
soon as practicable (and in any event within one hundred fifty (150) days) after the end of each fiscal year, unqualified audited
financial statements (other than a “going concern” qualification relating solely to the insufficient cash of Borrower
to cover operational requirements for the next twelve (12) month period) as of the end of such year (prepared on a consolidated
basis), including balance sheet and related statements of income and cash flows, and setting forth in comparative form the corresponding
figures for the preceding fiscal year, certified by a firm of independent certified public accountants selected by Borrower and
reasonably acceptable to Lender, accompanied by any management report from such accountants;

 

(d)          as
soon as practicable (and in any event within 30 days) after the end of each month, a Compliance Certificate in the form of Exhibit
F;

 

(e)          promptly
after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports that Borrower
has made available to holders of its capital stock and copies of any regular, periodic and special reports or registration statements
that Borrower files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor,
or any national securities exchange; and

 

(f)          financial
and business projections promptly following their approval by Borrower’s Board of Directors, as well as budgets, operating
plans and other financial information reasonably requested by Lender.

 

Borrower shall not
make any change in its (a) accounting policies or reporting practices, except as may be required by GAAP, or (b) fiscal years or
fiscal quarters. The fiscal year of Borrower shall end on December 31.

 

The executed Compliance
Certificate may be sent via facsimile to Lender at (650) 473-9194 or via e-mail to BJadot@herculestech.com. All Financial Statements
required to be delivered pursuant to clauses (a), (b) and (c) shall be sent via e-mail to financialstatements@herculestech.com
with a copy to BJadot@herculestech.com and BBang@herculestech.com provided, that if e-mail is not available or sending such Financial
Statements via e-mail is not possible, they shall be sent via facsimile to Lender at: (866) 468-8916, attention Chief Credit Officer.

 

Notwithstanding the
foregoing, documents required to be delivered pursuant to the terms of this Section 7.1 (to the extent any such documents are included
in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered
on the date on which both of the following occur (a) Borrower posts such document, or provides a working link thereto, on Borrower’s
website on the internet (at Borrower’s website address) or files such documents with the SEC provided they are publicly available
on the SEC’s website and (b) Borrower provides an email to Lender confirming the circumstances in clause (a) and Lender acknowledges
receipt of such email.

 

    	 

    	 

    

 

7.2           Management
Rights. Borrower shall permit any representative that Lender authorizes, including its attorneys and accountants, to inspect
the Collateral and examine and make copies and abstracts of the books of account and records of Borrower at reasonable times and
upon reasonable notice during normal business hours. In addition, any such representative shall have the right to meet with management
and officers of Borrower to discuss such books of account and records. In addition, Lender shall be entitled at reasonable times
and intervals to consult with and advise the management and officers of Borrower concerning significant business issues affecting
Borrower. Such consultations shall not unreasonably interfere with Borrower’s business operations. The parties intend that
the rights granted Lender shall constitute “management rights” within the meaning of 29 C.F.R Section 2510.3-101(d)(3)(ii),
but that any advice, recommendations or participation by Lender with respect to any business issues shall not be deemed to give
Lender, nor be deemed an exercise by Lender of, control over Borrower’s management or policies.

 

7.3           Further
Assurances. Borrower shall from time to time execute, deliver and file, alone or with Lender, any financing statements, security
agreements, collateral assignments, notices, control agreements, or other documents necessary to perfect or give the highest priority
to Lender’s Lien on the Collateral. Borrower shall from time to time procure any instruments or documents as may be requested
by Lender, and take all further action that may be necessary or desirable, that Lender may reasonably request, to perfect and protect
the Liens granted hereby and thereby. For such purposes only, Borrower hereby authorizes Lender to file such financing statements.
In addition, for such purposes only, upon the occurrence and during the continuance of an Event of Default, Borrower hereby authorizes
Lender to execute and deliver on behalf of Borrower collateral assignments, notices, control agreements, security agreements and
other documents without the signature of Borrower either in Lender’s name or in the name of Lender as agent and attorney-in-fact
for Borrower. Borrower shall protect and defend Borrower’s title to the Collateral and Lender’s Lien thereon against
all Persons claiming any interest adverse to Borrower or Lender other than Permitted Liens.

 

7.4           Indebtedness.
Borrower shall not create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary
so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation
to prepay any Indebtedness, except pursuant to the Loan Documents and except for the conversion of Indebtedness into equity securities
and the payment of cash in lieu of fractional shares in connection with such conversion.

 

7.5           Collateral.
Borrower shall at all times keep the Collateral, the Intellectual Property and all other property and assets used in Borrower’s
business or in which Borrower now or hereafter holds any interest free and clear from any legal process or Liens whatsoever (except
for Permitted Liens), and shall give Lender prompt written notice of any legal process affecting the Collateral, such other property
and assets, or any Liens thereon. Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s title to
its assets from and against all Persons claiming any interest adverse to such Subsidiary, and Borrower shall cause its Subsidiaries
at all times to keep such Subsidiary’s property and assets free and clear from any legal process or Liens whatsoever (except
for Permitted Liens), and shall give Lender prompt written notice of any legal process affecting such Subsidiary’s assets.

 

7.6           Investments.
Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries
so to do, other than Permitted Investments.

 

7.7           Distributions.
Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other equity interest
other than (i) as permitted by clause (iii) of the definition of Permitted Investments, (ii) in connection with a reverse stock
split, or (iii) pursuant to employee, director or consultant repurchase plans or other similar agreements or plans, provided, however,
in each case other than clause (ii) above the repurchase or redemption price does not exceed the original consideration paid for
such stock or equity interest, or (b) declare or pay any cash dividend or make a cash distribution on any class of stock or other
equity interest, except that (i) a Subsidiary may pay dividends or make distributions to Borrower, and (ii) Borrower may make payments
in cash, in lieu of the issuance of fractional shares, upon the exercise of warrants or upon the conversion or exchange of equity
interests of Borrower, or (c) lend money to any employees, officers or directors or guarantee the payment of any such loans granted
by a third party in excess of $100,000 in the aggregate or (d) waive, release or forgive any indebtedness owed by any employees,
officers or directors in excess of $100,000 in the aggregate.

 

    	 

    	 

    

 

7.8           Transfers.
Except for Permitted Transfers, Borrower shall not voluntarily or involuntarily transfer, sell, lease, license, lend or in any
other manner convey any equitable, beneficial or legal interest in any material portion of their assets.

 

7.9           Mergers
or Acquisitions. Borrower shall not merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or
into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary or into Borrower),
or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another
Person.

 

7.10         Taxes.
Borrower and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against Borrower, Lender or the Collateral or upon Borrower’s
ownership, possession, use, operation or disposition thereof or upon Borrower’s rents, receipts or earnings arising therefrom.
Borrower shall file on or before the due date therefor all personal property tax returns in respect of the Collateral. Notwithstanding
the foregoing, Borrower may contest, in good faith and by appropriate proceedings, taxes for which Borrower maintains adequate
reserves therefor in accordance with GAAP.

 

7.11         Corporate
Changes. Neither Borrower nor any Subsidiary shall change its corporate name, legal form or jurisdiction of formation without
twenty (20) days’ prior written notice to Lender. Neither Borrower nor any Subsidiary shall relocate its chief executive
office or its principal place of business unless: (i) it has provided prior written notice to Lender; and (ii) such relocation
shall be within the continental United States. Neither Borrower nor any Subsidiary shall relocate any item of Collateral (other
than (x) sales of Inventory in the ordinary course of business, (y) relocations of Equipment having an aggregate value of up to
$150,000 in any fiscal year, and (z) relocations of Collateral from a location described on Exhibit C to another location described
on Exhibit C) unless (i) it has provided prompt written notice to Lender, (ii) such relocation is within the continental United
States and, (iii) if such relocation is to a third party bailee, it has delivered a bailee agreement in form and substance reasonably
acceptable to Lender.

 

7.12         Deposit
Accounts. Subject to the terms of the Post-Closing Letter, neither Borrower nor any Subsidiary shall maintain any Deposit Accounts,
or accounts holding Investment Property, except with respect to which Lender has an Account Control Agreement.

 

7.13         Subsidiaries.
Borrower shall notify Lender of each Subsidiary formed subsequent to the Closing Date and, within 15 days of formation, shall cause
any such Subsidiary organized under the laws of any State within the United States to execute and deliver to Lender a Joinder Agreement.

 

7.14         
[Reserved]

 

7.15         Dissolution
of TranS1 GmbH. Within six (6) months after the Closing Date, Borrower shall dissolve TranS1 GmbH and transfer all assets,
if any, to Borrower, free and clear of any and all liens and/or encumbrances. In the event that TranS1 GmbH is not dissolved within
six (6) months after the Closing Date, Borrower shall cause TranS1 GmbH to become a co-borrower or a secured guarantor under this
Agreement, pursuant to documentation acceptable to Lender in its sole discretion, granting the Lender a first perfected lien in
its assets.

 

SECTION
8.          RIGHT TO INVEST

 

Lender or its assignee or nominee (such
Person, the “Potential Participant”) shall have the right, in its discretion, to participate in any one or more
Subsequent Financings in an aggregate amount, for all such Subsequent Financings in which Borrower participates, of up to One Million
Dollars ($1,000,000) (the “Participation Limit”), on the same terms, conditions and pricing afforded to others
participating in any such Subsequent Financing. In the event Borrower proposes to undertake a Subsequent Financing and the Participation
Limit has not been previously been reached, Borrower shall follow the procedures set forth below:

 

    	 

    	 

    

 

(a)          Borrower
shall deliver to the Potential Participant written notice of its intention to pursue such a Subsequent Financing (the “Initial
Notice”). The Potential Participant shall have three (3) Business Day from delivery of the Initial Notice to deliver
written notice to Borrower of its desire to receive additional information regarding such Subsequent Financing to determine whether
it wishes to participate in such Subsequent Financing. If the Potential Participant declines to request such additional information
or fails to respond in writing to the Initial Notice within three (3) Business Day, the Potential Participant’s participation
rights under this Section shall be deemed waived for a period of one hundred twenty (120) days from the date of delivery of the
Initial Notice.

 

(b)          Following
timely receipt of the Potential Participant’s request for additional information, Borrower shall deliver written notice (the
“Financing Notice”) describing such Subsequent Financing and setting forth in reasonable detail the price and
the terms and conditions upon which Borrower proposes to issue securities in such Subsequent Financing. The Potential Participant
shall have five (5) Business Days from delivery of such Financing Notice to elect in writing to invest in the Subsequent Financing
for the price and upon the terms and conditions specified in the Financing Notice by giving written notice to Borrower and stating
therein the amount of such investment (which amount, together with all other investments pursuant to this Section, shall not exceed
the Participation Limit). If the Potential Participant makes such election, Borrower shall promptly deliver to the Potential Participant
the current draft copies of all definitive transaction agreements, instruments and documents, and thereafter as and when delivered
to the other potential purchasers therein. The Potential Participant may revoke its election to participate in a Subsequent Financing
at any time prior to the closing thereof by written notice to Borrower.

 

(c)          In
the event that the Potential Participant declines to participate in the Subsequent Financing or fails to respond to the Financing
Notice within five (5) Business Days, the Potential Participant’s participation rights under this Section shall be deemed
waived with respect to such Subsequent Financing, and Borrower shall have one hundred twenty (120) days following the date the
Financing Notice was delivered to consummate the Subsequent Financing, at a price and upon terms not materially more favorable
in any respect to the investors thereof than specified in the Financing Notice. If Borrower has not consummated the Subsequent
Financing within such one hundred twenty (120) day period, Borrower shall not thereafter consummate such Subsequent Financing or
any other Subsequent Financing without first delivering a new Initial Notice to the Potential Participant and following the other
procedures set forth in this Section.

 

SECTION
9.          EVENTS OF DEFAULT

 

The occurrence of any
one or more of the following events shall be an Event of Default:

 

9.1           Payments.
Borrower fails to pay any amount due under this Agreement, the Notes, or any of the other Loan Documents on the due date (or within
three (3) days of the due date, provided that such late payment is due to an administrative error in connection with the ACH Authorization);
or

 

9.2           Covenants.
Borrower breaches or defaults in the performance of any other covenant or Secured Obligation under this Agreement or any of the
other Loan Documents, and (a) with respect to a default under any covenant under this Agreement (other than under Sections 6, 7.5,
7.6, 7.7, 7.8, 7.9, or 7.15) and such default continues for more than ten (10) days after the earlier of the date on which (i)
Lender has given notice of such default to Borrower and (ii) Borrower has actual knowledge of such default or (b) with respect
to a default under any of Sections 6, 7.5, 7.6, 7.7, 7.8,7.9 or 7.15, the occurrence of such default; or

 

9.3           Material
Adverse Effect. A circumstance has occurred that would reasonably be expected to have a Material Adverse Effect; or

 

    	 

    	 

    

 

9.4           Other
Loan Documents. The occurrence of any default under any Loan Document or any other agreement between Borrower and Lender and
such default continues for more than ten (10) days after the earlier of (a) Lender has given notice of such default to Borrower,
or (b) Borrower has actual knowledge of such default; or

 

9.5           Representations.
Any representation or warranty made by Borrower in any Loan Document or in the Warrant shall have been false or misleading in any
material respect when made; or

 

9.6           Insolvency.
Borrower (A) (i) shall make an assignment for the benefit of creditors; or (ii) shall be unable to pay its debts as they become
due, or be unable to pay or perform under the Loan Documents, or shall become insolvent; or (iii) shall file a voluntary petition
in bankruptcy; or (iv) shall file any petition, answer, or document seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation pertinent to such
circumstances; or (v) shall seek or consent to or acquiesce in the appointment of any trustee, receiver, or liquidator of Borrower
or of all or any substantial part (i.e., 33-1/3% or more) of the assets or property of Borrower; or (vi) shall cease operations
of its business as its business has normally been conducted, or terminate substantially all of its employees; or (vii) Borrower
or its directors or majority shareholders shall take any action initiating any of the foregoing actions described in clauses (i)
through (vi); or (B) either (i) forty-five (45) days shall have expired after the commencement of an involuntary action against
Borrower seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present
or future statute, law or regulation, without such action being dismissed or all orders or proceedings thereunder affecting the
operations or the business of Borrower being stayed; or (ii) a stay of any such order or proceedings shall thereafter be set aside
and the action setting it aside shall not be timely appealed; or (iii) Borrower shall file any answer admitting or not contesting
the material allegations of a petition filed against Borrower in any such proceedings; or (iv) the court in which such proceedings
are pending shall enter a decree or order granting the relief sought in any such proceedings; or (v) forty-five (45) days shall
have expired after the appointment, without the consent or acquiescence of Borrower, of any trustee, receiver or liquidator of
Borrower or of all or any substantial part of the properties of Borrower without such appointment being vacated; or

 

9.7           Attachments;
Judgments. Any portion of Borrower’s assets is attached or seized, or a levy is filed against any such assets, or a judgment
or judgments is/are entered for the payment of money, individually or in the aggregate, of at least $150,000 (not covered by independent
third party insurance as to which liability has been accepted by such insurance carrier), which judgment or judgments is/are not
discharged or effectively waived or stayed for a period of twenty (20) consecutive days, or Borrower is enjoined or in any way
prevented by court order from conducting any material part of its business; or

 

9.8           Other
Obligations. The occurrence of any default under any agreement or obligation of Borrower involving any Indebtedness in excess
of $150,000, or the occurrence of any default under any agreement or obligation of Borrower that could reasonably be expected to
have a Material Adverse Effect.

 

SECTION
10.         REMEDIES

 

10.1         General.
Upon and during the continuance of any one or more Events of Default, (i) Lender may, at its option, accelerate and demand payment
of all or any part of the Secured Obligations together with a Prepayment Charge and declare them to be immediately due and payable
(provided, that upon the occurrence of an Event of Default of the type described in Section 9.6, all of the Secured Obligations
shall automatically be accelerated and made due and payable, in each case without any further notice or act), and (ii) Lender may
notify any of Borrower’s account debtors to make payment directly to Lender, compromise the amount of any such account on
Borrower’s behalf and endorse Lender’s name without recourse on any such payment for deposit directly to Lender’s
account. Lender may exercise all rights and remedies with respect to the Collateral under the Loan Documents or otherwise available
to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate, collect, realize upon,
or otherwise dispose of all or any part of the Collateral and the right to occupy, utilize, process and commingle the Collateral.
All Lender’s rights and remedies shall be cumulative and not exclusive.

 

    	 

    	 

    

 

10.2         Collection;
Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Lender may, at any time or from time to
time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its
then condition or following any commercially reasonable preparation or processing, in such order as Lender may elect. Any such
sale may be made either at public or private sale at its place of business or elsewhere. Borrower agrees that any such public or
private sale may occur upon ten (10) calendar days’ prior written notice to Borrower. Lender may require Borrower to assemble
the Collateral and make it available to Lender at a place designated by Lender that is reasonably convenient to Lender and Borrower.
The proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be applied by Lender in
the following order of priorities:

 

First, to Lender in an amount
sufficient to pay in full Lender’s costs and professionals’ and advisors’ fees and expenses as described in Section
11.11;

 

Second, to Lender in an amount
equal to the then unpaid amount of the Secured Obligations (including principal, interest, and the Default Rate interest), in such
order and priority as Lender may choose in its sole discretion; and

 

Finally, after the full, final,
and indefeasible payment in Cash of all of the Secured Obligations, to any creditor holding a junior Lien on the Collateral, or
to Borrower or its representatives or as a court of competent jurisdiction may direct.

 

Lender shall be deemed
to have acted reasonably in the custody, preservation and disposition of any of the Collateral if it complies with the obligations
of a secured party under the UCC.

 

10.3         No
Waiver. Lender shall be under no obligation to marshal any of the Collateral for the benefit of Borrower or any other Person,
and Borrower expressly waives all rights, if any, to require Lender to marshal any Collateral.

 

10.4         Cumulative
Remedies. The rights, powers and remedies of Lender hereunder shall be in addition to all rights, powers and remedies given
by statute or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided herein
shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Lender.

 

SECTION
11.         MISCELLANEOUS

 

11.1         Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective
only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

 

11.2         Notice.
Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents (other than
the Warrant) or with respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served,
given, delivered, and received upon the earlier of: (i) the day of transmission by facsimile or hand delivery or delivery by an
overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States
mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows:

 

		If to Lender:	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

Legal Department

Attention: Chief Legal Officer and Mr. Bryan Jadot

400 Hamilton Avenue, Suite 310

Palo Alto, California 94301

Facsimile: 650-473-9194

Telephone: 650-289-3060

 

    	 

    	 

    

 

		If to Borrower:	BAXANO SURGICAL, INC.

Attention: Chief Financial Officer

110 Horizon Drive, Suite 230

Raleigh, North Carolina 27615

Facsimile: 919-926-1185

Telephone: 919-800-0020

 

or to such other address
as each party may designate for itself by like notice.

 

11.3         Entire
Agreement; Amendments. This Agreement and the other Loan Documents constitute the entire agreement and understanding of the
parties hereto in respect of the subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals,
term sheets, non-disclosure or confidentiality agreements, letters, negotiations or other documents or agreements, whether written
or oral, with respect to the subject matter hereof or thereof (including Lender’s revised proposal letter dated October 15,
2013). None of the terms of this Agreement or any of the other Loan Documents may be amended except by an instrument executed by
each of the parties hereto.

 

11.4         No
Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the
parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

 

11.5         No
Waiver. The powers conferred upon Lender by this Agreement are solely to protect its rights hereunder and under the other Loan
Documents and its interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers. No omission
or delay by Lender at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms, covenants
or provisions hereof by Borrower at any time designated, shall be a waiver of any such right or remedy to which Lender is entitled,
nor shall it in any way affect the right of Lender to enforce such provisions thereafter.

 

11.6         Survival.
Except as provided below, all agreements, representations and warranties contained in this Agreement and the other Loan Documents
or in any document delivered pursuant hereto or thereto shall be for the benefit of Lender and shall survive the execution and
delivery of this Agreement and the expiration or other termination of this Agreement. Notwithstanding anything in this Section
11.6 to the contrary, all covenants contained in this Agreement other than those which expressly survive termination of this Agreement
by their terms and Sections 6.3 and 11.12, shall terminate upon the payment in full of the Secured Obligations.

 

11.7         Successors
and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on
Borrower and its permitted assigns (if any). Borrower shall not assign its obligations under this Agreement or any of the other
Loan Documents (other than the Warrant) without Lender’s express prior written consent, and any such attempted assignment
shall be void and of no effect. Lender may assign, transfer, or endorse its rights hereunder and under the other Loan Documents
(other than the Warrant) without prior notice to Borrower, and all of such rights shall inure to the benefit of Lender’s
successors and assigns. Notwithstanding the foregoing, prior to the occurrence of an Event of Default, Lender shall not assign
any interest in the Loan Documents to an operating company which is a direct competitor of Borrower.

 

11.8         Governing
Law. This Agreement and the other Loan Documents have been negotiated and delivered to Lender in the State of California, and
shall have been accepted by Lender in the State of California. Payment to Lender by Borrower of the Secured Obligations is due
in the State of California. This Agreement and the other Loan Documents shall be governed by, and construed and enforced in accordance
with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any
other jurisdiction.

 

11.9         Consent
to Jurisdiction and Venue. All judicial proceedings (to the extent that the reference requirement of Section 11.10 is not applicable)
arising in or under or related to this Agreement or any of the other Loan Documents may be brought in any state or federal court
located in the State of California. By execution and delivery of this Agreement, each party hereto generally and unconditionally:
(a) consents to nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction
or venue in Santa Clara County, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue
in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement
or the other Loan Documents. Service of process on any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set forth in Section 11.2, and shall be deemed effective
and received as set forth in Section 11.2. Nothing herein shall affect the right to serve process in any other manner permitted
by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.

 

    	 

    	 

    

 

11.10       Mutual
Waiver of Jury Trial / Judicial Reference.

 

(a)          Because
disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced
and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such applicable laws. EACH OF BORROWER AND LENDER SPECIFICALLY WAIVES
ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER
CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST LENDER OR ITS ASSIGNEE OR BY LENDER OR ITS ASSIGNEE AGAINST
BORROWER. This waiver extends to all such Claims, including Claims that involve Persons other than Borrower and Lender; Claims
that arise out of or are in any way connected to the relationship between Borrower and Lender; and any Claims for damages, breach
of contract, tort, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement, any other
Loan Document.

 

(b)          If
the waiver of jury trial set forth in Section 11.10(a) is ineffective or unenforceable, the parties agree that all Claims shall
be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually
acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of the Santa Clara County, California.
Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery applicable
to such proceeding.

 

(c)          In
the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.9, any prejudgment
order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law
notwithstanding that all Claims are otherwise subject to resolution by judicial reference.

 

11.11         Professional
Fees. Borrower promises to pay Lender’s documented fees and expenses necessary to finalize the loan documentation, including
but not limited to reasonable attorneys’ fees, UCC searches, filing costs, and other miscellaneous expenses. In addition,
Borrower promises to pay any and all reasonable attorneys’ and other professionals’ fees and expenses (including fees
and expenses of in-house counsel) incurred by Lender after the Closing Date in connection with or related to: (a) the Loan; (b)
the administration, collection, or enforcement of the Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver,
consent, release, or termination under the Loan Documents; (e) the protection, preservation, sale, lease, liquidation, or disposition
of Collateral or the exercise of remedies with respect to the Collateral; (f) any legal, litigation, administrative, arbitration,
or out of court proceeding in connection with or related to Borrower or the Collateral, and any appeal or review thereof; and (g)
any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action related
to Borrower, the Collateral, the Loan Documents, including representing Lender in any adversary proceeding or contested matter
commenced or continued by or on behalf of Borrower’s estate, and any appeal or review thereof.

 

    	 

    	 

    

 

11.12         Confidentiality.
Lender acknowledges that certain items of Collateral and information provided to Lender by Borrower are confidential and proprietary
information of Borrower, if and to the extent such information either (x) is marked as confidential by Borrower at the time of
disclosure, or (y) should reasonably be understood to be confidential (the “Confidential Information”). Accordingly,
Lender agrees that any Confidential Information it may obtain in the course of acquiring, administering, or perfecting Lender’s
security interest in the Collateral shall not be disclosed to any other person or entity in any manner whatsoever, in whole or
in part, without the prior written consent of Borrower, except that Lender may disclose any such information: (a) to its own directors,
officers, employees, accountants, counsel and other professional advisors and to its affiliates if Lender in its sole discretion
determines that any such party should have access to such information in connection with such party’s responsibilities in
connection with the Loan or this Agreement and, provided that such recipient of such Confidential Information either (i) agrees
to be bound by the confidentiality provisions of this paragraph or (ii) is otherwise subject to confidentiality restrictions that
reasonably protect against the disclosure of Confidential Information; (b) if such information is generally available to the public;
(c) if required or appropriate in any report, statement or testimony submitted to any governmental authority having or claiming
to have jurisdiction over Lender; (d) if required or appropriate in response to any summons or subpoena or in connection with any
litigation, to the extent permitted or deemed advisable by Lender’s counsel; (e) to comply with any legal requirement or
law applicable to Lender; (f) to the extent reasonably necessary in connection with the exercise of any right or remedy under any
Loan Document, including Lender’s sale, lease, or other disposition of Collateral after default; (g) to any participant or
assignee of Lender or any prospective participant or assignee; provided, that such participant or assignee or prospective participant
or assignee agrees in writing to be bound by this Section prior to disclosure; or (h) otherwise with the prior consent of Borrower;
provided, that any disclosure made in violation of this Agreement shall not affect the obligations of Borrower or any of its affiliates
or any guarantor under this Agreement or the other Loan Documents.

 

11.13         Assignment
of Rights. Borrower acknowledges and understands that Lender may sell and assign all or part of its interest hereunder and
under the Loan Documents to any person or entity (an “Assignee”). Subject to Section 11.7, after such assignment the
term “Lender” as used in the Loan Documents shall mean and include such Assignee, and such Assignee shall be vested
with all rights, powers and remedies of Lender hereunder with respect to the interest so assigned; but with respect to any such
interest not so transferred, Lender shall retain all rights, powers and remedies hereby given. No such assignment by Lender shall
relieve Borrower of any of its obligations hereunder. Lender agrees that in the event of any transfer by it of the Note(s)(if any),
it will endorse thereon a notation as to the portion of the principal of the Note(s), which shall have been paid at the time of
such transfer and as to the date to which interest shall have been last paid thereon.

 

11.14         Revival
of Secured Obligations. This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective
if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an assignment
for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of Borrower’s assets,
or if any payment or transfer of Collateral is recovered from Lender. The Loan Documents and the Secured Obligations and Collateral
security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance
of the Secured Obligations or any transfer of Collateral to Lender, or any part thereof is rescinded, avoided or avoidable, reduced
in amount, or must otherwise be restored or returned by, or is recovered from, Lender or by any obligee of the Secured Obligations,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment,
performance, or transfer of Collateral had not been made. In the event that any payment, or any part thereof, is rescinded, reduced,
avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations shall be deemed, without any
further action or documentation, to have been revived and reinstated except to the extent of the full, final, and indefeasible
payment to Lender in Cash.

 

11.15         Counterparts.
This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which
counterparts shall constitute but one and the same instrument.

 

11.16         No
Third Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create
any third-party beneficiary rights or any other rights of any kind in any person other than Lender and Borrower unless specifically
provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely
between the Lender and the Borrower.

 

11.17         Publicity.
(a) Lender may use Borrower’s name and logo, and include a brief description of the relationship between Borrower and Lender,
in Lender’s marketing materials. (a)           Borrower consents to the
publication and use by Lender and any of its member businesses and affiliates of (i) Borrower's name (including a brief description
of the relationship between Borrower and Lender) and logo and a hyperlink to Borrower’s web site, separately or together,
in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations materials or
on its web site (together, the “Lender Publicity Materials”); (ii) the names of officers of Borrower in the Lender
Publicity Materials; and (iii) Borrower’s name, trademarks or servicemarks in any news release concerning Lender.

 

    	 

    	 

    

 

(b)          Neither
Borrower nor any of its member businesses and affiliates shall, without Lender’s consent, publicize or use (i) Lender's name
(including a brief description of the relationship between Borrower and Lender), logo or hyperlink to Lender’s web site,
separately or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public
relations materials or on its web site (together, the “Borrower Publicity Materials”); (ii) the names of officers of
Lender in the Borrower Publicity Materials; and (iii) Lender’s name, trademarks, servicemarks in any news release concerning
Borrower; provided that notwithstanding anything in the foregoing to the contrary, Borrower may use Lender’s name
and describe the transactions contemplated by Loan Documents in the Borrower’s filings with the Securities and Exchange Commission
(the “SEC”) and may file such Loan Documents with the SEC.

 

(SIGNATURES TO FOLLOW)

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Borrower and Lender have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.

 

	 	BORROWER:
	 	BAXANO SURGICAL, INC.
	 	 	 
	 	Signature:	/s/ Ken Reali
	 	Print Name:	Ken Reali
	 	Title:	President and Chief Executive Officer
	 	 	 
	Accepted in Palo Alto, California:	 	 
	 	LENDER:
	 	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
	 	 	 
	 	Signature:	/s/ Ben Bang
	 	Print Name:	Ben Bang
	 	Title:	Senior Counsel

 

    	 

    	 

    

 

Table of Exhibits and Schedules

 

	Exhibit A:	 	Advance Request
	 	 	Attachment to Advance Request
	Exhibit B:	 	Promissory Note
	Exhibit C:	 	Name, Locations, and Other Information for Borrower
	Exhibit D:	 	Borrower’s Patents, Trademarks, Copyrights and Licenses
	Exhibit E:	 	Borrower’s Deposit Accounts and Investment Accounts
	Exhibit F:	 	Compliance Certificate
	Exhibit G:	 	Joinder Agreement
	Exhibit H:	 	ACH Debit Authorization Agreement
	Schedule 1	 	Subsidiaries
	Schedule 1A	 	Existing Permitted Indebtedness
	Schedule 1B	 	Existing Permitted Investments
	Schedule 1C	 	Existing Permitted Liens
	Schedule 5.3	 	Consents, Etc.
	Schedule 5.5	 	Actions Before Governmental Authorities
	Schedule 5.8	 	Tax Matters
	Schedule 5.9	 	Intellectual Property Claims
	Schedule 5.10	 	Intellectual Property
	Schedule 5.11	 	Borrower Products
	Schedule 5.14	 	Capitalization

 

    	 

    	 

    

 

EXHIBIT
A

 

ADVANCE
REQUEST

 

	To:	Lender:	Date:      __________, 2013
	 	Hercules Technology Growth Capital, Inc.	 
	 	400 Hamilton Avenue, Suite 310	 
	 	Palo Alto, CA 94301	 
	 	Facsimile:  650-473-9194	 
	 	Attn:	 

 

Baxano Surgical, Inc.
(“Borrower”) hereby requests from Hercules Technology Growth Capital, Inc. (“Lender”) an Advance in the
amount of _____________________ Dollars ($________________) on ______________, _____ (the “Advance Date”) pursuant
to the Loan and Security Agreement between Borrower and Lender (the “Agreement”). Capitalized words and other terms
used but not otherwise defined herein are used with the same meanings as defined in the Agreement.

 

Please:

(a)          Issue
a check payable to Borrower  ________

 

or

 

(b)          Wire
Funds to Borrower’s account  ________

 

	Bank:	 	 
	Address:	 	 
	 	 	 
	 	 	 
	ABA Number:	 	 
	Account Number:	 	 
	Account Name:	 	 

 

Borrower represents
that the conditions precedent to the Advance set forth in the Agreement are satisfied and shall be satisfied upon the making of
such Advance, including but not limited to: (i) that the representations and warranties set forth in the Agreement and in the Warrant
are and shall be true and correct in all material respects on and as of the Advance Date with the same effect as though made on
and as of such date, except to the extent such representations and warranties expressly relate to an earlier date; (ii) that Borrower
is in compliance with all the terms and provisions set forth in each Loan Document on its part to be observed or performed; and
(iii) that as of the Advance Date, no fact or condition exists that would (or would, with the passage of time, the giving of notice,
or both) constitute an Event of Default under the Loan Documents and no event that has had or could reasonably be expect to have
a Material Adverse Effect has occurred and is continuing. Borrower understands and acknowledges that Lender has the right to review
any financial information supporting these representations.

 

Borrower hereby represents
that Borrower’s corporate status and locations have not changed since the date of the Agreement or, if the Attachment to
this Advance Request is completed, are as set forth in the Attachment to this Advance Request.

 

Borrower agrees to
notify Lender promptly before the funding of the Advance if any of the matters which have been represented above shall not be true
and correct on the Advance Date and if Lender has received no such notice before the Advance Date then the statements set forth
above shall be deemed to have been made and shall be deemed to be true and correct as of the Advance Date.

 

(SIGNATURE PAGE FOLLOWS)

 

    	 

    	 

    

 

Executed as of [              ], 2013.

 

	 	BORROWER: BAXANO SURGICAL, INC.
	 	 
	 	SIGNATURE:	 
	 	TITLE:	 
	 	PRINT NAME:	 

 

    	 

    	 

    

 

ATTACHMENT
TO ADVANCE REQUEST

 

Dated: _____________________

 

Borrower hereby represents
and warrants to Lender that Borrower’s current name and organizational status is as follows:

 

	Name:	 	Baxano Surgical, Inc.          	 
	 	 	 	 
	Type of organization:	 	Corporation	 
	 	 	 	 
	State of organization:	 	[	]
	 	 	 	 
	Organization file number:	 	[	]

 

Borrower hereby represents
and warrants to Lender that the street addresses, cities, states and postal codes of its current locations are as follows:

 

    	 

    	 

    

 

EXHIBIT
B

 

PROMISSORY
NOTE

 

	$[  ],000,000	Advance Date:  ___ __, 20[  ]

 

Maturity Date:  _____ ___, 20[ ]

 

FOR VALUE RECEIVED,
Baxano Surgical, Inc., a Delaware corporation, for itself and each of its Subsidiaries (the “Borrower”) hereby promises
to pay to the order of Hercules Technology Growth Capital, Inc., a Maryland corporation or the holder of this Note (the “Lender”)
at 400 Hamilton Avenue, Suite 310, Palo Alto, CA 94301 or such other place of payment as the holder of this Promissory Note (this
“Promissory Note”) may specify from time to time in writing, in lawful money of the United States of America, the principal
amount of [ ] Million Dollars ($[ ],000,000) or such other principal amount as Lender has advanced to Borrower, together with interest
at a floating per annum rate equal to the greater of either (i) twelve and one half of one percent (12.50%), or (ii) the sum of
(A) twelve and one half of one percent (12.50%), plus (B) the Prime Rate minus four and three quarters of one percent (4.75%) based
upon a year consisting of 360 days, with interest computed daily based on the actual number of days in each month.

 

This Promissory Note
is one of the Notes referred to in, and is executed and delivered in connection with, that certain Loan and Security Agreement
dated [              ], 2013, by and between Borrower and
Lender (as the same may from time to time be amended, modified or supplemented in accordance with its terms, the “Loan Agreement”),
and is entitled to the benefit and security of the Loan Agreement and the other Loan Documents, other than the Warrant (as such
terms are defined in the Loan Agreement), to which reference is made for a statement of all of the terms and conditions thereof.
All payments shall be made in accordance with the Loan Agreement. All terms defined in the Loan Agreement shall have the same definitions
when used herein, unless otherwise defined herein. An Event of Default under the Loan Agreement shall constitute a default under
this Promissory Note.

 

Borrower waives presentment
and demand for payment, notice of dishonor, protest and notice of protest under the UCC or any applicable law. Borrower agrees
to make all payments under this Promissory Note without setoff, recoupment or deduction and regardless of any counterclaim or defense.
This Promissory Note has been negotiated and delivered to Lender and is payable in the State of California. This Promissory Note
shall be governed by and construed and enforced in accordance with, the laws of the State of California, excluding any conflicts
of law rules or principles that would cause the application of the laws of any other jurisdiction.

 

	 	BAXANO SURGICAL, INC.
	 	 
	 	By:
	 	Title:

 

 

    	 

    	 

    

 

EXHIBIT
C

 

NAME, LOCATIONS,
AND OTHER INFORMATION FOR BORROWER

 

1.          Borrower
represents and warrants to Lender that Borrower’s current name and organizational status as of the Closing Date is as follows:

 

	Name:	 	Baxano Surgical, Inc.          	 
	 	 	 	 
	Type of organization:	 	Corporation	 
	 	 	 	 
	State of organization:	 	[	]
	 	 	 	 
	Organization file number:	 	[	]

 

 

2.          Borrower
represents and warrants to Lender that for five (5) years prior to the Closing Date, Borrower did not do business under any other
name or organization or form except the following:

 

Name:

Used during dates of:

Type of Organization:

State of organization:

Organization file Number:

Borrower’s fiscal
year ends on _____

Borrower’s federal
employer tax identification number is: _______________

 

3.          Borrower
represents and warrants to Lender that its chief executive office is located at _______________.

 

4.          Borrower
also maintains Collateral at the locations below:

 

    	 

    	 

    

 

EXHIBIT
D

 

BORROWER’S
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

 

    	 

    	 

    

 

EXHIBIT
E

 

BORROWER’S
DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS

 

    	 

    	 

    

 

EXHIBIT
F

 

COMPLIANCE
CERTIFICATE

 

Hercules Technology Growth
Capital, Inc.

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

 

Reference is made to
that certain Loan and Security Agreement dated [          ], 2013 and all ancillary documents entered into in connection with such Loan
and Security Agreement all as may be amended from time to time, (hereinafter referred to collectively as the “Loan Agreement”)
between Hercules Technology Growth Capital, Inc. (“Hercules”) as Lender and Baxano Surgical, Inc. (the “Borrower”)
as Borrower. All capitalized terms not defined herein shall have the same meaning as defined in the Loan Agreement.

 

The undersigned is
an Officer of the Borrower, knowledgeable of Borrower financial matters, and is authorized to provide certification of information
regarding the Borrower; hereby certifies that in accordance with the terms and conditions of the Loan Agreement, the Borrower is
in compliance as of ____________ with all covenants, conditions and terms and hereby reaffirms that all representations and warranties
contained therein are true and correct on and as of the date of this Compliance Certificate with the same effect as though made
on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, after giving
effect in all cases to any standard(s) of materiality contained in the Loan Agreement as to such representations and warranties.
The undersigned further certifies that the attached financial statements are prepared in accordance with GAAP (except for (i) the
absence of footnotes with respect to unaudited financial statement, (ii) that they are subject to normal year-end adjustments,
and (iii) they do not contain certain non-cash items that are customarily included in quarterly and annual financial statements)
and are consistent from one period to the next except as explained below.

 

	REPORTING REQUIREMENT	 	REQUIRED	 	CHECK IF ATTACHED
	 	 	 	 	 
	Interim Financial Statements	 	Monthly within 30 days	 	_______
	 	 	 	 	 
	Interim Financial Statements	 	Quarterly within 30 days	 	_______
	 	 	 	 	 
	Audited Financial Statements	 	FYE within 150 days	 	_______

 

	 	Very Truly Yours,
	 	 
	 	BAXANO SURGICAL, INC.
	 	 	 
	 	By:	 
	 	Name:	 
	 	Its:	 

 

    	 

    	 

    

 

EXHIBIT
G

 

FORM OF
JOINDER AGREEMENT

 

This Joinder Agreement
(the “Joinder Agreement”) is made and dated as of [          ], 20[  ],
and is entered into by and between__________________, a ___________ corporation (“Subsidiary”), and HERCULES TECHNOLOGY
GROWTH CAPITAL, INC., a Maryland corporation, as a Lender.

 

RECITALS

 

A.           Subsidiary’s
Affiliate, Baxano Surgical, Inc. (“Borrower”) [has entered/desires to enter] into that certain Loan and Security Agreement
dated [         ], 2013, with Lender, as such agreement may be amended (the “Loan
Agreement”), together with the other agreements executed and delivered in connection therewith;

 

B.           Subsidiary
acknowledges and agrees that it will benefit both directly and indirectly from Borrower’s execution of the Loan Agreement
and the other agreements executed and delivered in connection therewith;

 

AGREEMENT

 

NOW THEREFORE, Subsidiary
and Lender agree as follows:

 

1.          The
recitals set forth above are incorporated into and made part of this Joinder Agreement. Capitalized terms not defined herein shall
have the meaning provided in the Loan Agreement.

 

2.          By
signing this Joinder Agreement, Subsidiary shall be bound by the terms and conditions of the Loan Agreement the same as if it were
the Borrower (as defined in the Loan Agreement) under the Loan Agreement, mutatis mutandis, provided however, that Lender shall
have no duties, responsibilities or obligations to Subsidiary arising under or related to the Loan Agreement or the other agreements
executed and delivered in connection therewith. Rather, to the extent that Lender has any duties, responsibilities or obligations
arising under or related to the Loan Agreement or the other agreements executed and delivered in connection therewith, those duties,
responsibilities or obligations shall flow only to Borrower and not to Subsidiary or any other person or entity. By way of example
(and not an exclusive list): (a) Lender’s providing notice to Borrower in accordance with the Loan Agreement or as otherwise
agreed between Borrower and Lender shall be deemed provided to Subsidiary; (b) a Lender’s providing an Advance to Borrower
shall be deemed an Advance to Subsidiary; and (c) Subsidiary shall have no right to request an Advance or make any other demand
on Lender.

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]

 

    	 

    	 

    

 

[SIGNATURE PAGE TO JOINDER
AGREEMENT]

 

	SUBSIDIARY:	 
	 	 
	 	.

 

	 	By:	 
	 	Name:	 
	 	Title:	 
	 	Address:	 
	 	 	 
	 	Telephone: ___________	 
	 	Facsimile: ____________	 
	 	 	 
	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.	 
	 	 	 
	 	By:	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 
	 	Address:	 
	 	400 Hamilton Ave., Suite 310	 
	 	Palo Alto, CA 94301	 
	 	Facsimile:  650-473-9194	 
	 	Telephone:  650-289-3060	 

 

    	 

    	 

    

 

EXHIBIT
H

 

ACH DEBIT
AUTHORIZATION AGREEMENT

 

Hercules Technology Growth
Capital, Inc.

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

 

             Re: Loan and
Security Agreement dated _______________ between Baxano Surgical, Inc. (“Borrower”) and Hercules Technology Growth
Capital, Inc. (“Lender”) (the “Agreement”)

 

In connection with the
above referenced Agreement, the Borrower hereby authorizes the Lender to initiate debit entries for the periodic payments due under
the Agreement to the Borrower’s account indicated below. The Borrower authorizes the depository institution named below to
debit to such account.

 

	DEPOSITORY NAME	
        BRANCH

         

	CITY	
        STATE AND ZIP CODE

        

         

	TRANSIT/ABA NUMBER	
        ACCOUNT NUMBER

         

 

This authority will remain
in full force and effect so long as any amounts are due under the Agreement.

 

	 	 
	(Borrower)(Please Print)	 
	By:	 	 
	Date:Exhibit 10.3

 

THIS WARRANT AND THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR, SUBJECT TO SECTION 11 HEREOF, AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT, OR ANY APPLICABLE STATE SECURITIES LAWS.

 

WARRANT AGREEMENT

 

To Purchase Shares of the Common Stock of

 

Baxano Surgical, Inc.

 

Dated as of December 3, 2013 (the “Effective
Date”)

 

WHEREAS, Baxano Surgical, Inc., a Delaware
corporation (the “Company”), has entered into a Loan and Security Agreement of even date herewith (as amended
and in effect from time to time, the “Loan Agreement”) with Hercules Technology Growth
Capital, Inc., a Maryland corporation (the “Warrantholder”);

 

WHEREAS, pursuant to the Loan Agreement
and as additional consideration to the Warrantholder for, among other things, its agreements in the Loan Agreement, the Company
has agreed to issue to the Warrantholder this Warrant Agreement, evidencing the right to purchase shares of the Company’s
Common Stock (this “Warrant,” “Agreement” or “Warrant Agreement”);

 

NOW, THEREFORE, in consideration of
the Warrantholder having executed and delivered the Loan Agreement and provided the financial accommodations contemplated therein,
and in consideration of the mutual covenants and agreements contained herein, the Company and Warrantholder agree as follows:

 

SECTION 1.           GRANT
OF THE RIGHT TO PURCHASE COMMON STOCK. 

 

(a)           For value received, the Company
hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter
set forth, to subscribe for and purchase, from the Company, up to the number of fully paid and non-assessable shares of Common
Stock (as defined below) as determined pursuant to Section 1(b) below, at a purchase price per share equal to the Exercise Price
(as defined below). The number and Exercise Price of such shares are subject to adjustment as provided in Section 8. As used herein,
the following terms shall have the following meanings:

 

“Act” means the Securities
Act of 1933, as amended.

 

“Charter” means the Company’s
Certificate of Incorporation or other constitutional document, as may be amended and in effect from time to time.

 

“Common Stock” means
the Company’s common stock, $0.0001 par value per share, as presently constituted under the Charter, and any class and/or
series of Company capital stock for or into which such common stock may be converted or exchanged in a reorganization, recapitalization
or similar transaction.

 

    	 

    	 

    

 

“Effective Price” shall
mean the quotient determined by dividing (i) the aggregate gross cash consideration received, or deemed to have been received,
by the Company, for the issuance of additional shares of Common Stock by the Company (including, without limitation, shares of
Common Stock issuable upon the conversion or exercise of Convertible Securities (as defined below) issued by the Company) for cash
for financing purposes in a single transaction or series of related transactions not registered under the Act (including, without
limitation, a so-called PIPE transaction) after the Effective Date, by (ii) the total number of such additional shares of Common
Stock issued or deemed to be issued in such transaction. In the event the Company issues any Convertible Securities (as defined
below) in such transaction, then the calculation of “Effective Price” shall be adjusted as follows: (a) the amount
of cash consideration included in the numerator in clause (i) above shall include the amount determined by multiplying the conversion
or exercise price, as applicable, of any shares of Common Stock issuable upon conversion or exercise of any such Convertible Securities
(the “Conversion Shares”) by the number of Conversion Shares; and (b) the number of Conversion Shares shall
be included in the denominator in clause (ii) above.

 

“Exercise Price” means
$1.02, subject to adjustment from time to time in accordance with the provisions of this Warrant; provided, that if, at
any time and from time to time on or after the Effective Date and prior to the first anniversary thereof, the Company shall sell
and issue shares of Common Stock, or securities, instruments or other rights exercisable for, convertible into or otherwise representing
the right to acquire shares of Common Stock (collectively, “Convertible Securities”) to one or more investors
for cash for financing purposes, in a single transaction or series of related transactions not registered under the Act (including,
without limitation, a so-called PIPE transaction), at an Effective Price per share of Common Stock less than the Exercise Price
in effect as of immediately prior to the consummation of such sale and issuance, then from and after such consummation, the Exercise
Price shall equal such lower Effective Price, subject to adjustment thereafter from time to time in accordance with the provisions
of this Warrant.

 

“Liquid Sale” means the
closing of a Merger Event in which the consideration received by the Company and/or its stockholders, as applicable, consists solely
of cash and/or Marketable Securities.

 

“Marketable Securities”
in connection with a Merger Event means securities meeting all of the following requirements: (i) the issuer thereof is then subject
to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange
Act; (ii) the class and series of shares or other security of the issuer that would be received by the Warrantholder in connection
with the Merger Event were the Warrantholder to exercise this Warrant on or prior to the closing thereof is then traded on a national
securities exchange or over-the-counter market, and (iii) following the closing of such Merger Event, Warrantholder would not be
restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Warrantholder
in such Merger Event were Warrantholder to exercise this Warrant in full on or prior to the closing of such Merger Event, except
to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y)
does not extend beyond six (6) months from the closing of such Merger Event.

 

    	2

    	 

    

 

“Merger Event” means
any of the following: (i) a sale, lease or other transfer of all or substantially all assets of the Company, (ii) any merger or
consolidation involving the Company in which the Company is not the surviving entity or in which the outstanding shares of the
Company’s capital stock are otherwise converted into or exchanged for shares of capital stock or other securities or property
of another entity, or (iii) any sale by holders of the outstanding voting equity securities of the Company in a single transaction
or series of related transactions of shares constituting a majority of the outstanding combined voting power of the Company.

 

"Purchase Price" means,
with respect to any exercise of this Warrant, an amount equal to the then-effective Exercise Price multiplied by the number of
shares of Common Stock as to which this Warrant is then exercised.

 

(b)           Number of Shares.           This Warrant
shall be exercisable for 882,353 shares of Common Stock, subject to adjustment from time to time in accordance with the provisions
of this Warrant (the “Initial Shares”); provided, that, in addition to and not in lieu of the Initial
Shares, on such date (if any) as a Term Loan Advance (as defined in the Loan Agreement), other than the initial Term Loan Advance,
shall first be made to the Company in any amount, this Warrant automatically shall become exercisable for 294,118 additional shares
of Common Stock, subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.

 

SECTION 2.           TERM
OF THE AGREEMENT. 

 

The term of this Agreement and the right
to purchase Common Stock as granted herein shall commence on the Effective Date and, subject to Section 8(a) below, shall be exercisable
for a period ending upon the fifth (5th) anniversary of the Effective Date.

 

SECTION 3.           EXERCISE
OF THE PURCHASE RIGHTS. 

 

(a)           Exercise. The purchase rights
set forth in this Agreement are exercisable by the Warrantholder, in whole or in part, at any time, or from time to time, prior
to the expiration of the term set forth in Section 2, by tendering to the Company at its principal office a notice of exercise
in the form attached hereto as Exhibit I (the “Notice of Exercise”), duly completed and executed. Promptly
upon receipt of the Notice of Exercise and the payment of the Purchase Price in accordance with the terms set forth below, and
in no event later than three business (3) days thereafter, the Company shall issue to the Warrantholder a certificate for the number
of shares of Common Stock purchased and shall execute the acknowledgment of exercise in the form attached hereto as Exhibit
II (the “Acknowledgment of Exercise”) indicating the number of shares which remain subject to future purchases
under this Warrant, if any.

 

The Purchase Price may be paid at the
Warrantholder’s election either (i) by cash or check, or (ii) by surrender of all or a portion of the Warrant for shares
of Common Stock to be exercised under this Agreement and, if applicable, an amended Agreement setting forth the remaining number
of shares purchasable hereunder, as determined below (“Net Issuance”). If the Warrantholder elects the Net Issuance
method, the Company will issue shares of Common Stock in accordance with the following formula:

 

    	3

    	 

    

 

X = Y(A-B)

     A

 

	Where:	X = 	the number of shares of Common Stock to be issued to the Warrantholder.
	 	 	 
	 	Y = 	the number of shares of Common Stock requested to be exercised under this Agreement.
	 	 	 
	 	A = 	the then-current fair market value of one (1) share of Common Stock at the time of exercise.
	 	 	 
	 	B = 	the then-effective Exercise Price.

 

For purposes of the above calculation, the
current fair market value of shares of Common Stock shall mean with respect to each share of Common Stock:

 

(i)           at all times when the Common
Stock shall be traded on a national securities exchange, inter-dealer quotation system or over-the-counter bulletin board service,
the average of the closing prices over a five (5) day period ending three days before the day the current fair market value of
the securities is being determined;

 

(ii)           if the exercise is in connection
with a Merger Event, the fair market value of a share of Common Stock shall be deemed to be the per share value received by the
holders of the outstanding shares of Common Stock pursuant to such Merger Event as determined in accordance with the definitive
transaction documents executed among the parties in connection therewith; or

 

(iii)           in cases other than as described
in the foregoing clauses (i) and (ii), the current fair market value of a share of Common Stock shall be determined in good faith
by the Company’s Board of Directors.

 

Upon partial exercise by either cash
or, upon request by the Warrantholder and surrender of all or a portion of this Warrant, Net Issuance, prior to the expiration
or earlier termination hereof, the Company shall promptly issue an amended Agreement representing the remaining number of shares
purchasable hereunder. All other terms and conditions of such amended Agreement shall be identical to those contained herein, including,
but not limited to the Effective Date hereof.

 

(b)           Exercise Prior to Expiration.
To the extent this Warrant is not previously exercised as to all shares subject hereto, and if the then-current fair market value
of one share of Common Stock is greater than the Exercise Price then in effect, or, in the case of a Liquid Sale, where the value
per share of Common Stock (as determined as of the closing of such Liquid Sale in accordance with the definitive agreements executed
by the parties in connection with such Merger Event) to be paid to the holders thereof is greater than the Exercise Price then
in effect, this Agreement shall be deemed automatically exercised on a Net Issuance basis pursuant to Section 3(a) (even if not
surrendered) as of immediately before its expiration determined in accordance with Section 2. For purposes of such automatic exercise,
the fair market value of one share of Common Stock upon such expiration shall be determined pursuant to Section 3(a). To the extent
this Warrant or any portion hereof is deemed automatically exercised pursuant to this Section 3(b), the Company agrees to promptly
notify the Warrantholder of the number of shares of Common Stock if any, the Warrantholder is to receive by reason of such automatic
exercise, and to issue a certificate to Warrantholder evidencing such shares.

 

    	4

    	 

    

 

SECTION 4.           RESERVATION
OF SHARES. 

 

During the term of this Agreement, the
Company will at all times have authorized and reserved a sufficient number of shares of its Common Stock to provide for the exercise
of the rights to purchase Common Stock as provided for herein.

 

SECTION 5.           NO
FRACTIONAL SHARES OR SCRIP. 

 

No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Agreement, but in lieu of such fractional shares the Company shall
make a cash payment therefor upon the basis of the Exercise Price then in effect.

 

SECTION 6.           NO
RIGHTS AS SHAREHOLDER/STOCKHOLDER.

 

Without limitation of any provision
hereof, Warrantholder agrees that this Agreement does not entitle the Warrantholder to any voting rights or other rights as a shareholder/stockholder
of the Company prior to the exercise of any of the purchase rights set forth in this Agreement.

 

SECTION 7.           WARRANTHOLDER
REGISTRY. 

 

The Company shall maintain a registry
showing the name and address of the registered holder of this Agreement. Warrantholder's initial address, for purposes of such
registry, is set forth in Section 12(g) below. Warrantholder may change such address by giving written notice of such changed address
to the Company.

 

SECTION 8.           ADJUSTMENT
RIGHTS. 

 

The Exercise Price and the number of
shares of Common Stock purchasable hereunder are subject to adjustment from time to time, as follows:

 

(a)        Merger Event. In connection with
a Merger Event that is a Liquid Sale, this Warrant shall, on and after the closing thereof, automatically and without further
action on the part of any party or other person, represent the right to receive the consideration payable on or in respect of
all shares of Common Stock that are issuable hereunder as of immediately prior to the closing of such Merger Event less the Purchase
Price for all such shares of Common Stock (such consideration to include both the consideration payable at the closing of such
Merger Event and all deferred consideration payable thereafter, if any, including, but not limited to, payments of amounts deposited
at such closing into escrow and payments in the nature of earn-outs, milestone payments or other performance-based payments),
and such Merger Event consideration shall be paid to Warrantholder as and when it is paid to the holders of the outstanding shares
of Common Stock. In connection with a Merger Event that is not a Liquid Sale, the Company shall cause the successor or surviving
entity to assume this Warrant and the obligations of the Company hereunder on the closing thereof, and thereafter this Warrant
shall be exercisable for the same number and type of securities or other property as the Warrantholder would have received in
consideration for the shares of Common Stock issuable hereunder had it exercised this Warrant in full as of immediately prior
to such closing, at an aggregate Exercise Price no greater than the aggregate Exercise Price in effect as of immediately prior
to such closing, and subject to further adjustment from time to time in accordance with the provisions of this Warrant. The provisions
of this Section 8(a) shall similarly apply to successive Merger Events.

 

    	5

    	 

    

 

(b)        Reclassification of Shares.
Except for Merger Events subject to Section 8(a), if the Company at any time shall, by combination, reclassification, exchange
or subdivision of securities or otherwise, change any of the securities as to which purchase rights under this Agreement exist
into the same or a different number of securities of any other class or classes of securities, this Agreement shall thereafter
represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with
respect to the securities which were subject to the purchase rights under this Agreement immediately prior to such combination,
reclassification, exchange, subdivision or other change. The provisions of this Section 8(b) shall similarly apply to successive
combination, reclassification, exchange, subdivision or other change.

 

(c)        Subdivision or Combination of Shares.
If the Company at any time shall combine or subdivide its Common Stock, (i) in the case of a subdivision, the Exercise Price shall
be proportionately decreased and the number of shares for which this Warrant is exercisable shall be proportionately increased,
or (ii) in the case of a combination, the Exercise Price shall be proportionately increased and the number of shares for which
this Warrant is exercisable shall be proportionately decreased.

 

(d)           Stock Dividends. If the Company
at any time while this Agreement is outstanding and unexpired shall:

 

(i)           pay a dividend with respect to the
outstanding shares of Common Stock payable in additional shares of Common Stock, then the Exercise Price shall be adjusted, to
that price determined by multiplying the Exercise Price in effect immediately prior to such date of determination by a fraction
(A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or
distribution, and (B) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after
such dividend or distribution, and the number of shares of Common Stock for which this Warrant is exercisable shall be proportionately
increased; or

 

(ii)           make any other dividend or distribution
on or with respect to Common Stock, except any dividend or distribution (A) in cash, or (B) specifically provided for in any other
clause of this Section 8, then, in each such case, provision shall be made by the Company such that the Warrantholder shall
receive upon exercise or conversion of this Warrant a proportionate share of any such distribution as though it were the holder
of the Common Stock (or other stock for which the Common Stock is convertible) as of the record date fixed for the determination
of the shareholders of the Company entitled to receive such distribution.

 

(e) Notice of Certain Events. If: (i)
the Company shall declare any dividend or distribution upon its outstanding Common Stock, payable in stock, cash, property or other
securities (provided that Warrantholder in its capacity as lender under the Loan Agreement consents to such dividend); (ii) the
Company shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or
other rights; (iii) there shall be any Merger Event; or (iv) there shall be any voluntary dissolution, liquidation or winding up
of the Company; then, in connection with each such event, the Company shall give the Warrantholder notice thereof at the same time
and in the same manner as it gives notice thereof to the holders of outstanding Common Stock.

 

    	6

    	 

    

 

SECTION 9.           REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE COMPANY.

 

(a)      Reservation of Common Stock.
The Company covenants and agrees that all shares of Common Stock, if any, that may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and non-assessable. The Company further covenants
and agrees that the Company will, at all times during the term hereof, have authorized and reserved, free from preemptive rights,
a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. If at any
time during the term hereof the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise
of this Warrant in full, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

 

(b)      Due Authority. The execution
and delivery by the Company of this Agreement and the performance of all obligations of the Company hereunder, including the issuance
to Warrantholder of the right to acquire the shares of Common Stock, have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement: (1) does not violate the Company's Charter or current bylaws; (2) does not contravene
any law or governmental rule, regulation or order applicable to it; and (3) except as could not reasonably be expected to have
a Material Adverse Effect (as defined in the Loan Agreement), does not and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument to which it is a party or by which it is bound. This Agreement
constitutes a legal, valid and binding agreement of the Company, enforceable in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally
(including, without limitation, fraudulent conveyance laws) and by general principles of equity, regardless of whether considered
in a proceeding in equity or at law.

 

(c)      Consents and Approvals. No
consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal
or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of
its obligations under this Agreement, except for the filing of notices pursuant to Regulation D under the Act and any filing required
by applicable state securities law, which filings will be effective by the time required thereby.

 

(d)      [Intentionally
Omitted].

 

(e)      [Intentionally Omitted].

 

(f)      Exempt Transaction. Subject
to the accuracy of the Warrantholder's representations in Section 10, the issuance of the Common Stock upon exercise of this Agreement
will constitute a transaction exempt from (i) the registration requirements of Section 5 of the Act, in reliance upon Section 4(a)(2)
thereof, and (ii) the qualification requirements of the applicable state securities laws.

 

(g)      Registration Rights. If, prior
to the date on which Warrantholder may sell all shares of Common Stock issuable upon exercise of this Warrant without restriction
pursuant to Rule 144 promulgated under the Act (assuming that Warrantholder were to exercise this Warrant by Net Issuance), the
Company proposes to register under the Act for resale any shares of Common Stock held by any person (other than the Company, Lincoln
Park Capital Fund, LLC (“LPC”) and affiliates of LPC), then the Company shall give Warrantholder reasonable
prior written notice of such proposed registration and shall permit Warrantholder to include (but Warrantholder shall not be obligated
to include) all or a portion (as determined by Warrantholder in its sole discretion) of the shares of Common Stock issuable upon
exercise of this Warrant in such registration on a pari passu basis with the other holders participating therein and on
the same terms and conditions as applicable to such other holders.

 

    	7

    	 

    

 

(h)      Information Rights. At all
times (if any) prior to the earlier to occur of (x) the date on which all shares of Common Stock issued on exercise of this Warrant
have been sold, or (y) the expiration or earlier termination of this Warrant, when the Company shall not be required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act or shall not have timely filed all such required reports, Warrantholder shall
be entitled to the information rights contained in Section 7.1(b) – (f) of the Loan Agreement, and in any such event Section
7.1(b) – (f) of the Loan Agreement is hereby incorporated into this Agreement by this reference as though fully set forth
herein, provided, however, that the Company shall not be required to deliver a Compliance Certificate once all Indebtedness (as
defined in the Loan Agreement) owed by the Company to Warrantholder has been repaid.

 

(i)      Rule 144 Compliance.           The
Company shall, at all times prior to the earlier to occur of (x) the date of sale or other disposition by Warrantholder of this
Warrant or all shares of Common Stock issued on exercise of this Warrant, (y) the registration pursuant to subsection (g) above
of the shares issued on exercise of this Warrant, or (z) the expiration or earlier termination of this Warrant if the Warrant has
not been exercised in full or in part on such date, use all commercially reasonable efforts to timely file all reports required
under the 1934 Act and otherwise timely take all actions necessary to permit the Warrantholder to sell or otherwise dispose of
this Warrant and the shares of Common Stock issued on exercise hereof pursuant to Rule 144 promulgated under the Act as amended
and in effect from time to time, provided that the foregoing shall not apply in the event of a Merger Event following which the
successor or surviving entity is not subject to the reporting requirements of the 1934 Act. If the Warrantholder proposes to sell
Common Stock issuable upon the exercise of this Agreement in compliance with Rule 144, then, upon Warrantholder’s written
request to the Company, the Company shall furnish to the Warrantholder, within five (5) business days after receipt of such request,
a written statement confirming the Company’s compliance with the filing and other requirements of such Rule.

 

SECTION 10.      REPRESENTATIONS
AND COVENANTS OF THE WARRANTHOLDER. 

 

This Agreement has been entered into
by the Company in reliance upon the following representations and covenants of the Warrantholder:

 

(a)       Investment Purpose. This Warrant
and the shares issued on exercise hereof will be acquired for investment and not with a view to the sale or distribution of any
part thereof in violation of applicable federal and state securities laws, and the Warrantholder has no present intention of selling
or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

(b)      Private Issue. The Warrantholder
understands (i) that the Common Stock issuable upon exercise of this Agreement is not, as of the Effective Date, registered under
the Act or qualified under applicable state securities laws, and (ii) that the Company's reliance on exemption from such registration
is predicated on the representations set forth in this Section 10.

 

(c)      Financial Risk. The Warrantholder
has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its
investment, and has the ability to bear the economic risks of its investment.

 

(d)      Accredited Investor. Warrantholder
is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Act, as presently in
effect (“Regulation D”).

 

(e)     No Short Sales.  Warrantholder
has not at any time on or prior to the Effective Date engaged in any short sales or equivalent transactions in the Common Stock.
Warrantholder agrees that at all times from and after the Effective Date and on or before the expiration or earlier termination
of this Warrant, it shall not engage in any short sales or equivalent transactions in the Common Stock.

 

    	8

    	 

    

 

SECTION 11.           TRANSFERS.

 

Subject to compliance with applicable
federal and state securities laws, this Agreement and all rights hereunder are transferable, in whole or in part, without charge
to the holder hereof (except for transfer taxes) upon surrender of this Agreement properly endorsed. Each taker and holder of this
Agreement, by taking or holding the same, consents and agrees that this Agreement, when endorsed in blank, shall be deemed negotiable,
and that the holder hereof, when this Agreement shall have been so endorsed and its transfer recorded on the Company’s books,
shall be treated by the Company and all other persons dealing with this Agreement as the absolute owner hereof for any purpose
and as the person entitled to exercise the rights represented by this Agreement. The transfer of this Agreement shall be recorded
on the books of the Company upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit III (the
"Transfer Notice"), at its principal offices and the payment to the Company of all transfer taxes and other governmental
charges imposed on such transfer. Until the Company receives such Transfer Notice, the Company may treat the registered owner hereof
as the owner for all purposes. Notwithstanding anything herein or in any legend to the contrary, the Company shall not require
an opinion of counsel in connection with any sale, assignment or other transfer by Warrantholder of this Warrant (or any portion
hereof or any interest herein) or of any shares of Common Stock issued upon any exercise hereof to an affiliate (as defined in
Regulation D) of Warrantholder, provided that such affiliate is an “accredited investor” as defined in Regulation D.

 

SECTION 12.           MISCELLANEOUS.

 

(a)   Effective Date. The provisions
of this Agreement shall be construed and shall be given effect in all respects as if it had been executed and delivered by the
Company on the date hereof. This Agreement shall be binding upon any successors or assigns of the Company.

 

(b)  Remedies. In the event of
any default hereunder, the non-defaulting party may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including but not limited to an action for damages as a result of any such default, and/or an action for specific
performance for any default where Warrantholder will not have an adequate remedy at law and where damages will not be readily ascertainable.

 

(c)  No Impairment of Rights. The
Company will not, by amendment of its Charter or through any other means, avoid or seek to avoid the observance or performance
of any of the terms of this Agreement, but will at all times in good faith assist in the carrying out of all such terms and in
the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against impairment.

 

(d)  Additional Documents. The
Company agrees to supply such other documents as the Warrantholder may from time to time reasonably request.

 

(e)  Attorneys’ Fees. In
any litigation, arbitration or court proceeding between the Company and the Warrantholder relating hereto, the prevailing party
shall be entitled to attorneys’ fees and expenses and all costs of proceedings incurred in enforcing this Agreement. For
the purposes of this Section 12(e), attorneys’ fees shall include without limitation fees incurred in connection with the
following: (i) contempt proceedings; (ii) discovery; (iii) any motion, proceeding or other activity of any kind in connection with
an insolvency proceeding; (iv) garnishment, levy, and debtor and third party examinations; and (v) post-judgment motions and proceedings
of any kind, including without limitation any activity taken to collect or enforce any judgment.

 

    	9

    	 

    

 

(f)    Severability. In the event
any one or more of the provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable, the remaining
provisions of this Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually
acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid,
illegal or unenforceable provision.

 

(g)   Notices. Except as otherwise
provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication that is
required, contemplated, or permitted under this Agreement or with respect to the subject matter hereof shall be in writing, and
shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (a) personal delivery to
the party to be notified, (b) when sent by confirmed telex, electronic transmission or facsimile if sent during normal business
hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt, and shall be addressed to the party to be notified as follows:

 

	 	If to Warrantholder:
	 	 	 
	 	 	Hercules Technology GROWTH CAPITAL, INC.
	 	 	Legal Department
	 	 	Attention:  Chief Legal Officer and Manuel Henriquez
	 	 	400 Hamilton Avenue, Suite 310
	 	 	Palo Alto, CA 94301
	 	 	Facsimile:  650-473-9194
	 	 	Telephone:  650-289-3060
	 	 	 
	 	If to the Company:
	 	 	 
	 	 	BAXANO SURGICAL, INC.
	 	 	Attention: Chief Financial Officer
	 	 	110 Horizon Drive, Suite 230
	 	 	Raleigh, NC 27615
	 	 	Facsimile: 919-926-1185
	 	 	Telephone: 919-800-0020

 

or to such other address as each party may
designate for itself by like notice.

 

(h)    Entire Agreement; Amendments.
This Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof,
and supersedes and replaces in their entirety any prior proposals, term sheets, letters, negotiations or other documents or agreements,
whether written or oral, with respect to the subject matter hereof. None of the terms of this Agreement may be amended except by
an instrument executed by each of the parties hereto.

 

(i)     Headings. The various headings
in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any
provisions hereof.

 

(j)     Advice of Counsel. Each of
the parties represents to each other party hereto that it has discussed (or had an opportunity to discuss) with its counsel this
Agreement and, specifically, the provisions of Sections 12(n), 12(o), 12(p), 12(q) and 12(r).

 

    	10

    	 

    

 

(k)    No Strict Construction. The
parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption
or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

 

(l)     No Waiver. No omission or
delay by Warrantholder at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms,
covenants or provisions hereof by Warrantholder at any time designated, shall be a waiver of any such right or remedy to which
Warrantholder is entitled, nor shall it in any way affect the right of Warrantholder to enforce such provisions thereafter during
the term of this Agreement.

 

(m)    Survival. All agreements,
representations and warranties contained in this Agreement or in any document delivered pursuant hereto shall be for the benefit
of Warrantholder and shall survive the execution and delivery of this Agreement and the expiration or other termination of this
Agreement.

 

(n)    Governing Law. This Agreement
has been negotiated and delivered to Warrantholder in the State of California, and shall be deemed to have been accepted by Warrantholder
in the State of California. Delivery of Common Stock to Warrantholder by the Company under this Agreement is due in the State of
California. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California,
excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

 

(o)    Consent to Jurisdiction and Venue.
All judicial proceedings arising in or under or related to this Agreement may be brought in any state or federal court of competent
jurisdiction located in the State of California. By execution and delivery of this Agreement, each party hereto generally and unconditionally:
(a) consents to personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction or
venue in Santa Clara County, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue in
the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement.
Service of process on any party hereto in any action arising out of or relating to this Agreement shall be effective if given in
accordance with the requirements for notice set forth in Section 12(g), and shall be deemed effective and received as set forth
in Section 12(g). Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the
right of either party to bring proceedings in the courts of any other jurisdiction.

 

(p)    Mutual Waiver of Jury Trial.
Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced
and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes arising under or in connection with this Warrant be resolved by a judge applying such applicable laws.
EACH OF THE COMPANY AND WARRANTHOLDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM,
CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, "CLAIMS") ASSERTED BY THE COMPANY AGAINST
WARRANTHOLDER OR ITS ASSIGNEE OR BY WARRANTHOLDER OR ITS ASSIGNEE AGAINST THE COMPANY RELATING TO THIS WARRANT. This waiver extends
to all such Claims, including Claims that involve persons or entities other the Company and Warrantholder; Claims that arise out
of or are in any way connected to the relationship between the Company and Warrantholder; and any Claims for damages, breach of
contract, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement.

 

    	11

    	 

    

 

(q)    Arbitration. If the Mutual
Waiver of Jury Trial set forth in Section 12(p) is ineffective or unenforceable, the parties agree that all Claims shall be submitted
to binding arbitration in accordance with the commercial arbitration rules of JAMS (the “Rules”), such arbitration
to occur before one arbitrator, which arbitrator shall be a retired California state judge or a retired Federal court judge. Such
proceeding shall be conducted in Santa Clara County, State of California, with California rules of evidence and discovery applicable
to such arbitration. The decision of the arbitrator shall be binding on the parties, and shall be final and nonappealable to the
maximum extent permitted by law. Any judgment rendered by the arbitrator may be entered in a court of competent jurisdiction and
enforced by the prevailing party as a final judgment of such court.

 

(r)    Pre-arbitration Relief. In
the event Claims are to be resolved by arbitration, either party may seek from a court of competent jurisdiction identified in
Section 12(o), any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the
fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by binding arbitration.

 

(s)    Counterparts. This Agreement
and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties
hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.

 

(t)    Specific Performance. The
parties hereto hereby declare that it is impossible to measure in money the damages which will accrue to Warrantholder by reason
of the Company’s failure to perform any of the obligations under this Agreement and agree that the terms of this Agreement
shall be specifically enforceable by Warrantholder. If Warrantholder institutes any action or proceeding to specifically enforce
the provisions hereof, any person against whom such action or proceeding is brought hereby waives the claim or defense therein
that Warrantholder has an adequate remedy at law, and such person shall not offer in any such action or proceeding the claim or
defense that such remedy at law exists.

 

(u)    Lost, Stolen, Mutilated or Destroyed
Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise
as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an
original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall
be at any time enforceable by anyone.

 

(v)    Legends. To the extent required
by applicable laws, this Warrant and the shares of Common Stock issuable hereunder (and the securities issuable, directly or indirectly,
upon conversion of such shares of Common Stock, if any) may be imprinted with a restricted securities legend in substantially the
following form:

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED
OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR PURSUANT
TO RULE 144 OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

[Remainder of Page Intentionally Left Blank]

 

    	12

    	 

    

  

IN WITNESS WHEREOF, the parties hereto have
caused this Warrant Agreement to be executed by its officers thereunto duly authorized as of the Effective Date.

 

	 	COMPANY:	 	BAXANO SURGICAL, INC.	 
	 	 	 	 	 	 
	 	 	 	By:	/s/ Ken Reali	 
	 	 	 	Name: 	Ken Reali 	 
	 	 	 	Title:	President and Chief Executive Officer	 

 

	WARRANTHOLDER:	 	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
	 	 	 	 	 
	 	 	By:	/s/ Ben Bang	 
	 	 	Name:	Ben Bang	 
	 	 	Title:	Senior Counsel	 

 

    	 

    	 

    

 

EXHIBIT I

 

NOTICE OF EXERCISE

 

To:     [____________________________]

 

		(1)	The undersigned Warrantholder hereby elects to purchase [_______] shares of the Common Stock of [_________________], pursuant
to the terms of the Agreement dated the [___] day of [______, _____] (the "Agreement") between [_________________] and
the Warrantholder, and tenders herewith payment of the Purchase Price in full, together with all applicable transfer taxes, if
any. [NET ISSUANCE: elects pursuant to Section 3(a) of the Agreement to effect a Net Issuance.]

 

		(2)	Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such
other name as is specified below.

 

	 	 
	 	 
	 	(Name)
	 	 
	 	 
	 	(Address)

 

	WARRANTHOLDER:	 	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
	 	 	 	 
	 	 	By:	 
	 	 	Name:	 
	 	 	Title:	 

 

    	14

    	 

    

 

EXHIBIT II

 

		1.	ACKNOWLEDGMENT OF EXERCISE

 

The undersigned [____________________________________], hereby
acknowledge receipt of the "Notice of Exercise" from Hercules Technology Growth Capital, Inc. to purchase [_____] shares
of the Common Stock of [_________________], pursuant to the terms of the Agreement, and further acknowledges that [______] shares
remain subject to purchase under the terms of the Agreement.

 

		COMPANY:	 	[_________________]
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	 	 
	 	 	 	Title:	 
	 	 	 	 	 
	 	 	 	Date:	 

 

    	15

    	 

    

 

EXHIBIT III

 

TRANSFER NOTICE

 

(To transfer or assign the foregoing Agreement execute this
form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Agreement and all rights evidenced
thereby are hereby transferred and assigned to

 

	(Please Print)	 
	 	 
	whose address is	 	 
	 	 
	 	 

 

	 	Dated:	 	 	 
	 	 	 	 
	 	Holder's Signature:	 	 
	 	 	 	 
	 	Holder's Address:	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	Signature Guaranteed:	 	 	 	 

 

NOTE:       The signature to this Transfer
Notice must correspond with the name as it appears on the face of the Agreement, without alteration or enlargement or any change
whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence
of authority to assign the foregoing Agreement.

 

    	16

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