Document:

Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights
Agreement (the “Agreement”) is made and entered into as of this ____ day of March, 2014 (the “Effective
Date”) by and among Crossroads Systems, Inc., a Delaware corporation (the “Company”), and
the Investors (as defined below) who were issued Units consisting of shares of Common Stock and Warrants (the “Units”)
in connection with that certain Securities Purchase Agreement by and among the Company and the Investors, dated as of even date
herewith (the “Securities Purchase Agreement”). Capitalized terms used herein have the respective meanings
ascribed thereto in the Securities Purchase Agreement unless otherwise defined herein.

 

The parties hereby
agree as follows:

 

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

 

“Common
Stock” means the Company’s common stock, par value $0.001 per share, and any securities into which such shares
may hereinafter be reclassified.

 

“Investors”
means the Buyers identified in the Securities Purchase Agreement and any Affiliate or permitted transferee of any Investor who
is a subsequent holder of any Registrable Securities and who agrees to be bound by the provisions of this Agreement.

 

“Prospectus”
means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by
all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference
in such prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the 1933 Act (as defined below).

 

“Register,”
“registered” and “registration” refer to a registration made by preparing and
filing a Registration Statement or similar document in compliance with the 1933 Act, and the declaration or ordering of effectiveness
of such Registration Statement (as defined below) or document by the SEC. (as defined below)

 

“Registrable
Securities” means (i) the Shares (as defined below) and (ii) any other securities issued or issuable with respect
to or in exchange for Registrable Securities, whether by merger, charter amendment or otherwise; provided, that, a security
shall cease to be a Registrable Security upon (A) sale pursuant to an effective Registration Statement or Rule 144 under the 1933
Act, or (B) such security becoming eligible for sale without restriction by the Investors pursuant to Rule 144 under the 1933
Act.

 

“Registration
Statement” means any registration statement of the Company filed under the 1933 Act that covers the resale of any
of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

 

    	 

    	 

    

 

“Required
Investors” means the Investors holding a majority of the Registrable Securities.

 

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

 

“Shares”
means the Common Shares and the Warrant Shares.

 

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

 

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

 

2.                 
Registration.

 

(a)               
Registration Statements. On or prior to sixty (60) days after the Effective Date (the “Filing Deadline”),
the Company shall prepare and file with the SEC a Registration Statement on Form S-3 (or, if Form S-3 is not then available to
the Company, on such form of registration statement as is then available to effect a registration for resale of the Registrable
Securities on a continuous basis), covering the resale of the Registrable Securities from time to time in accordance with the methods
of distribution described in Exhibit A hereto; provided, however, that if the Filing Deadline shall
fall during a period that the Company may not file a registration statement until it files with the SEC its updated financial statements,
the Filing Deadline shall be no later than 20 days after the filing date of such updated financial statements with the SEC (the
“Extended Filing Deadline”). Subject to any SEC comments, such Registration Statement shall include the
plan of distribution attached hereto as Exhibit A. Such Registration Statement also shall cover, to the extent allowable
under the 1933 Act, such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Registrable Securities.

 

(b)              
Expenses. The Company will pay all expenses incurred in complying with this Agreement, including filing and printing
fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for
sale under applicable state securities laws, listing fees, reasonable fees and expenses of one counsel to the Investors and the
Investors’ reasonable expenses in connection with the registration, but excluding underwriting discounts, commissions and
fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable
Securities being sold.

 

(c)               
Effectiveness.

 

(i)                
The Company shall use reasonable best efforts to have the Registration Statement declared effective as soon as practicable.
The Company shall notify the Investors by facsimile, telephone or e-mail as promptly as practicable, and in any event, within forty-eight
(48) hours, after any Registration Statement is declared effective.

 

(ii)              
In the event that the Company determines in good faith that the suspension of the use of any Prospectus is necessary to
(A) delay the disclosure of material non-public information concerning the Company, the disclosure of which at the time is not,
in the good faith opinion of the Company, in the best interests of the Company, provided, that any delays pursuant to this
clause (A) shall not exceed, in the aggregate, thirty (30) days in any twelve-month period, or (B) amend or supplement the affected
Registration Statement or the related Prospectus so that such Registration Statement or Prospectus shall comply with applicable
1933 Act requirements or shall not include an untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under
which they were made, not misleading, then the Company may suspend the use of any such Prospectus (an “Allowed Delay”);
provided, that the Company shall promptly (a) notify each Investor in writing of the suspension of and the reasons for such
suspension, but shall not (without the prior written consent of an Investor) disclose to the Investors any material non-public
information giving rise to an Allowed Delay, (b) advise the Investors in writing to cease all sales under the Registration Statement
until the end of the Allowed Delay and (c) use reasonable best efforts to terminate such suspension as promptly as practicable.

 

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(d)              
Rule 415; Cutback. If at any time the SEC takes the position that the offering of some or all of the Registrable
Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule
415 under the 1933 Act or requires any Investor to be named as an “underwriter”, if the Company believes, in its discretion
and upon the advice of counsel, that the Registrable Securities are eligible for registration under Rule 415 or that such Investor
is not an “underwriter” for the purposes of the 1933 Act and the registration, the Company shall use its reasonable
best efforts to persuade the SEC that the offering contemplated by the Registration Statement is a valid secondary offering and
not an offering by or on behalf of the issuer for the purposes of Rule 415 and that such Investor is not an “underwriter.”
Such Investor shall provide to the Company in writing all information requested by the Company to support such Investor’s
contention that it is not an “underwriter.” Such Investor shall have the right to participate or have its counsel participate
in any meetings or discussions with the SEC regarding the SEC’s position and to comment or have its counsel comment on any
written submission made to the SEC with respect thereto. No such written submission regarding the foregoing specifying an Investor
shall be made to the SEC to which the Investor’s counsel reasonably objects. The Company shall not agree to name any Investor
as an “underwriter” in such Registration Statement without the prior written consent of such Investor. In the event
that, despite the Company’s reasonable best efforts and compliance with the terms of this Section 2(d), the SEC refuses to
alter its position, the Company shall (i) remove from the Registration Statement such portion of the Registrable Securities (the
“Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and resale
of the Registrable Securities, in each case as the SEC may require to assure the Company’s compliance with the requirements
of Rule 415.

 

3.                 
Company Obligations. The Company will use reasonable best efforts to effect the registration of the Registrable Securities
in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as practicable:

 

(a)               
use reasonable best efforts to cause such Registration Statement to become effective by the one hundred and twentieth (120th)
day from the Effective Date of the Securities Purchase Agreement and to remain continuously effective for a period that will terminate
upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement have been sold pursuant
thereto, or (ii) the date on which all Registrable Securities covered by such Registration Statement may be sold without restriction
pursuant to Rule 144 (the “Effectiveness Period”);

 

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(b)              
prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus
as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions
of the 1933 Act with respect to the distribution of all of the Registrable Securities covered thereby;

 

(c)               
provide copies to and permit counsel designated by a majority-in-interest of the Investors (if and only if the Company has
been informed that such counsel has been designated) to review each Registration Statement no fewer than five (5) days prior to
their initial filing with the SEC ,two (2) business days in the case of any amendments and supplements thereto, and not file any
document to which such counsel reasonably objects;

 

(d)              
furnish to the Investors and their legal counsel (for the avoidance of doubt, any filing available to the Investor via the
SEC’s EDGAR system shall be deemed “furnished to the Investor” hereunder) (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) business days after the filing
date, receipt date or sending date, as the case may be) (X) one (1) copy of any Registration Statement and any amendment thereto,
each preliminary prospectus and Prospectus and each amendment or supplement thereto (other than any portion thereof which contains
information for which the Company has sought confidential treatment), and (Y) each letter written by or on behalf of the Company
to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC (in the case of any such
letter or correspondence, only to the extent that it relates, and only the portion thereof relating, to the inclusion of any Investor
in the Registration Statement and other than any portion thereof which contains information for which the Company has sought confidential
treatment or which constitutes material non-public information as to any Investor that is not subject to a confidentiality obligation
to the Company with respect thereto), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all
amendments and supplements thereto as each Investor may reasonably require in order to facilitate the disposition of the Registrable
Securities owned by such Investor that are covered by the related Registration Statement or make them electronically available;

 

(e)               
use reasonable best efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii)
if such order is issued, obtain the withdrawal or lifting of any such order at the earliest practicable time;

 

(f)               
prior to any public offering of Registrable Securities, use reasonable best efforts to register or qualify or cooperate
with the Investors and their counsel in connection with the registration or qualification of such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions reasonably requested by the Investors and do any and all other
commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required
to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise
be so subject but for this Section 3(f), or (iii) file a general consent to service of process in any such jurisdiction;

 

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(g)              
use reasonable best efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each
securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

 

(h)              
promptly notify the Investors, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the
happening of any event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances
then existing, and promptly prepare, file with the SEC and furnish to such holder a supplement to or an amendment of such Prospectus
as may be necessary so that such Prospectus shall not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then
existing; and

 

(i)                
otherwise use reasonable best efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act
and the 1934 Act, including, without limitation, Rule 172 under the 1933 Act, file any final Prospectus, including any supplement
or amendment thereof, with the SEC pursuant to Rule 424 under the 1933 Act, promptly inform the Investors in writing if, at any
time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof,
the Investors are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other
actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available
to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings
statement covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the 1933 Act, including Rule 158 promulgated thereunder
(for the purpose of this subsection 3(i), “Availability Date” means the 45th day following the end of the
fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter
is the last quarter of the Company’s fiscal year, “Availability Date” means the 90th day after the
end of such fourth fiscal quarter). If the Company is required to file a prospectus pursuant to Rule 424 at the time the Registration
Statement is declared effective by the SEC, the Company shall file such prospectus by 8:30 a.m., Austin, Texas time, on the next
day on which the SEC’s Electronic Data Gathering, Analysis and Retrieval System accepts documents for filing.

 

(j)                
With a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or
regulation of the SEC that may at any time permit the Investors to sell their Shares to the public without registration, the Company
covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule
144, until the earlier of (A) six months after such date as all of the Registrable Securities may be sold without restriction by
the holders thereof pursuant to Rule 144 or any other rule of similar effect or (B) such date as all of the Registrable Securities
shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under
the 1934 Act; and (iii) furnish to each Investor upon request, as long as such Investor owns any Registrable Securities, (A) a
written statement by the Company that it has complied in all material respects with the reporting requirements of the 1934 Act,
(B) a copy of the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information
as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that permits the selling of
any such Registrable Securities without registration.

 

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4.                 
Due Diligence Review; Information. Upon written request, the Company shall make available, during normal business
hours, for inspection and review by any underwriters participating in a disposition of Registrable Securities pursuant to a Registration
Statement and to any attorney or accountant retained by such underwriter, all financial and other records, all SEC Filings and
other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees, within a
reasonable time period, to supply all such information reasonably requested by the underwriters in connection therewith (including,
without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and
from time to time after the filing and effectiveness of the Registration Statement. As a condition to such inspection and review,
the Company may require the Investors to enter into confidentiality agreements.

 

The Company shall not
disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior to
disclosure of such information the Company identifies such information as being material nonpublic information and any Investor
wishing to obtain such information enters into an appropriate confidentiality agreement with the Company with respect thereto.

 

5.                 
Obligations of the Investors.

 

(a)               
Each Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held
by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect
the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company
may reasonably request. At least ten (10) Business Days prior to the first anticipated filing date of any Registration Statement,
the Company shall notify each Investor of the information the Company requires from such Investor if such Investor elects to have
any of the Registrable Securities included in the Registration Statement. An Investor shall provide such information to the Company
at least five (5) Business Days prior to the first anticipated filing date of such Registration Statement if such Investor elects
to have any of the Registrable Securities included in the Registration Statement.

 

(b)              
Each Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested
by the Company in connection with the preparation and filing of a Registration Statement hereunder, unless such Investor has notified
the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

 

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(c)               
Each Investor agrees that, upon receipt of any notice from the Company of either (i) the suspension of the use of any Prospectus
pursuant to Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof, such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities,
until the Investor is advised by the Company that such dispositions may again be made.

 

6.                 
Indemnification.

 

(a)               
Indemnification by the Company. To the extent the Investors participate in a Registration Statement, the Company
agrees to indemnify and hold harmless each Investor and its officers, directors, members, managers, employees and agents and each
other person, if any, who controls such Investor within the meaning of the Section 15 of the 1933 Act or Section 20 of the 1934
Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement contained in any Registration Statement, any preliminary Prospectus
or final Prospectus, or any amendment or supplement thereof or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, in light of the circumstances
under which they were made) not misleading; (ii) any blue sky application or other document executed by the Company specifically
for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information
herein called a “Blue Sky Application”); or (iii) the omission or alleged omission to state in a Blue
Sky Application a material fact required to be stated therein or necessary to make the statements therein not misleading; and will
reimburse such Investor, and each such officer, director or member and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made
in conformity with information furnished by such Investor or any such controlling person in writing specifically for use in such
Registration Statement or Prospectus or any offers or sales by or on behalf of the Investor after delivery to the Investor by the
Company of a notice of suspension described in Section 2(c)(ii) above and before delivery of a notice by the Company to the Investor
advising the Investor that dispositions may be made as provided by Section 5(c) above.

 

(b)              
Indemnification by the Investors. Each Investor agrees, severally but not jointly, to indemnify and hold harmless,
to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders, agents and each person who
controls the Company within the meaning of the Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any losses, claims,
damages, liabilities and expenses (including reasonable attorney fees) to which they may become subject under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue
statement contained in any Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement
thereof or any omission to state therein a material fact required to be stated therein or necessary to make the statements therein
(in the case of a Prospectus, in light of the circumstances under which they were made) not misleading, to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or omission or alleged omissions were made in reliance upon
information furnished in writing by or on behalf of such Investor to the Company specifically for inclusion in such Registration
Statement or Prospectus or amendment or supplement thereto, and (ii) any offers or sales by or on behalf of the Investor after
delivery to the Investor by the Company of a notice of suspension described in Section 2(c)(ii) above and before delivery
of a notice by the Company to the Investor advising the Investor that dispositions may be made as provided by Section 5(c) above.
In no event shall the liability of an Investor be greater in amount than the dollar amount of the proceeds (net of all expenses
paid by such Investor in connection with any claim relating to this Section 6 and the amount of any damages such Investor has otherwise
been required to pay by reason of such untrue statement or alleged untrue statement or omission or alleged omission) received by
such Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification
obligation.

 

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(c)               
Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder shall (i) give prompt notice
to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person
entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed
in writing to pay such fees or expenses, or (b) the indemnifying party shall have failed within a reasonable time after notice
from the indemnified party to assume the defense of such claim and employ counsel reasonably satisfactory to the indemnified party
or (c) the named parties to such action (including any impleaded parties) include both the indemnified party and the indemnifying
party and, in the reasonable judgment of any the indemnified party, based upon written advice of its counsel, a material conflict
of interest exists between the indemnified party and the indemnifying party with respect to such claims (in which case, if the
person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided,
further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying
party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related actions arising out of the same general allegations or
circumstances, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified
parties. No indemnifying party will, except with the prior written consent of the indemnified party, consent to entry of any judgment
or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of such claim or litigation. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written consent.

 

(d)              
Contribution. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable
to an indemnified party or insufficient to hold it harmless, other than for the exceptions specified therein, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the 1933 Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no
event shall the contribution obligation of a holder of Registrable Securities be greater than the dollar amount of the proceeds
(net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages
such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission)
received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

 

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7.                 
Miscellaneous.

 

(a)               
Amendments and Waivers. This Agreement may be amended only by a writing signed by the Company and the Required Investors.
The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or omission to act, of the Required Investors.

 

(b)              
Notices. All notices and other communications provided for or permitted hereunder shall be made as set forth in the
Securities Purchase Agreement.

 

(c)               
Assignments and Transfers by Investors. The provisions of this Agreement shall be binding upon and inure to the benefit
of the Investors and their respective successors and assigns. An Investor may transfer or assign, in whole or from time to time
in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by such Investor
to such person, provided that such Investor complies with all laws applicable thereto and provides written notice of assignment
to the Company promptly after such assignment is effected and agrees in writing to be bound by the terms hereof.

 

(d)              
Assignments and Transfers by the Company. This Agreement may not be assigned by the Company (whether by operation
of law or otherwise) without the prior written consent of the Required Investors; provided, however, that the Company
may assign this Agreement in the event that the Company is a party to a merger, consolidation, share exchange or similar business
combination transaction in which the Common Stock is converted into the equity securities of another Person and, from and after
the effective time of such transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the obligations
of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term “Registrable
Securities” shall be deemed to include the securities received by the Investors in connection with such transaction unless
such securities are otherwise freely tradable by the Investors after giving effect to such transaction.

 

(e)               
Benefits of the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

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(f)               
Counterparts; Faxes; Electronic Signature. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be
executed via facsimile or electronic signature (including delivery of signatures by PDF or other similar format), which shall be
deemed an original.

 

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

 

(h)              
Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law,
and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders
any provisions hereof prohibited or unenforceable in any respect.

 

(i)                
Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all
such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment
of the agreements herein contained.

 

(j)                
Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter
contained herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject
matter.

 

(k)              
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed in accordance with
the laws of the State of Delaware, without regard to the principles of conflicts of laws. The parties further agree that any action
between them shall be heard in City of Wilmington, Delaware and expressly consent to the jurisdiction and venue of the state and
federal courts sitting in City of Wilmington, Delaware for the adjudication of any civil action asserted pursuant to this Agreement.
EACH OF THE PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED
TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE INVESTORS AND THE
COMPANY ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE INVESTORS TO ENTER INTO THIS AGREEMENT.

 

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(l)                
Other Agreements. The Investors acknowledge that the Company is party to (i) that certain Registration Rights Agreement
(the “IRM Agreement”), dated as of July 31, 2012, by and between Iron Mountain Incorporated (“IRM”)
and the Company. The Investors agree and acknowledge that IRM may include any “Registrable Securities” under the IRM
Agreement in any Registration Statement prepared and filed under this Agreement and that IRM may have rights superior to the Investors
in certain circumstances specified under the IRM Agreement (including but not limited to Section 3(f) of the IRM Agreement) and
the Company’s compliance with the terms of the IRM Agreement shall not in any circumstances constitute a breach, default
or violation of this Agreement.

 

[SIGNATURES ON THE FOLLOWING
PAGE]

 

    	11

    	 

    

 

IN WITNESS WHEREOF,
the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first
above written.

 

 

	 	THE COMPANY:	 
	 	 	 	 
	 	CROSSROADS SYSTEMS, INC.	 
	 	 	 	 
	 	 	 	 
	 	By:	 	 
	 	 	 	 
	 	Name:	 	 
	 	 	 	 
	 	Title:	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	INVESTOR:	 
	 	 	 	 
	 	By:	 	 
	 	 	 	 
	 	Name:	 	 
	 	 	 	 
	 	Title: 	 	 

 

 

[Signature Page to Registration Rights
Agreement]

 

    	 

    	 

    

 

Exhibit A

 

PLAN OF DISTRIBUTION

 

The selling securityholders,
which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock, interests
in shares of common stock or warrants received after the date of this prospectus from a selling securityholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of such securities
on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions
may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying
prices determined at the time of sale, or at negotiated prices.

 

The selling securityholders
may use any one or more of the following methods when disposing of securities or interests therein:

 

		·	on any national securities exchange or quotation service on which our common stock may be listed
at the time of sale, in the case of sales of our common stock;

 

		·	in transactions other than on such exchanges;

 

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

 

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

 

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

 

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

 

		·	privately negotiated transactions;

 

		·	short sales effected after the date the registration statement of which this Prospectus is a part
is declared effective by the Securities and Exchange Commission;

 

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

 

		·	broker-dealers may agree with the selling securityholders to sell a specified number of such shares
at a stipulated price per security;

 

		·	a combination of any such methods of sale; or

 

		·	any other method permitted by applicable law.

 

The selling securityholders
may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if
they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell such shares from
time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act amending the list of selling securityholders to include the pledgee, transferee or other successors in interest
as selling securityholders under this prospectus. The selling securityholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for
purposes of this prospectus.

 

    	Exhibit A

    	 

    

  

In connection with
the sale of such shares or such interests, the selling securityholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the common stock, as the case may be, in the course
of hedging the positions they assume. The selling securityholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge such stock to broker-dealers that in turn may sell these securities.
The selling securityholders may also enter into options or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution
of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).

 

The aggregate proceeds
to the selling securityholders from the sale of the common stock offered by them will be the purchase price of such stock less
discounts or commissions, if any. Each of the selling securityholders reserves the right to accept and, together with their agents
from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents.
We will not receive any of the proceeds from the sale of securities by selling securityholders.

 

The selling securityholders
also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided that they meet the criteria and conform to the requirements of that rule.

 

The selling securityholders
and any underwriters, broker-dealers or agents that participate in the sale of the shares or interests therein may be “underwriters”
within the meaning of Section 2(a)(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any
resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling securityholders who are “underwriters”
within the meaning of Section 2(a)(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities
Act.

 

To the extent required,
the shares of our common stock to be sold, the names of the selling securityholders, the respective purchase prices and public
offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular
offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration
statement that includes this prospectus.

 

In order to comply
with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered
or licensed brokers or dealers. In addition, in some states such stock may not be sold unless it has been registered or qualified
for sale or an exemption from registration or qualification requirements is available and is complied with.

 

    	Exhibit A

    	 

    

  

We have advised the
selling securityholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in
the market and to the activities of the selling securityholders and their affiliates. In addition, to the extent applicable we
will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling securityholders
for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling securityholders may indemnify
any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities
arising under the Securities Act.

 

We have agreed to indemnify
the selling securityholders against certain liabilities, including liabilities under the Securities Act and state securities laws,
relating to the registration of the shares offered by this prospectus.

 

We have agreed with
the selling securityholders to keep the registration statement of which this prospectus constitutes a part effective until the
earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with
the registration statement or (2) the date on which the shares may be sold without restriction pursuant to Rule 144 of the Securities
Act.

 

    	ExhibitAExhibit 10.7

 

EMPLOYMENT
AGREEMENT

 

 

THIS
EMPLOYMENT AGREEMENT (the "Agreement") is made as of September 1,

2010,
by and between CAPRICOR, INC., a Delaware corporation, with its principal place of business presently in California (hereinafter
referred to as "Capricor"), and LINDA S. MARBAN, PH.D., a California resident (hereinafter referred to as "Dr.
Marban"),

 

Explanatory
Statement

 

A.
Capricor desires to employ Dr. Marban as its Chief Executive Officer and President in accordance
with the terms and conditions of this Agreement.

 

B. Dr.
Marban desires to serve in the employ of Capricor on a 3/4
full-time basis as

Chief
Executive Officer and President, subject to the terms and conditions of this Agreement.

 

Agreement

 

NOW,
THEREFORE, in consideration of the mutual covenants, promises, agreements, representations, and warranties of Capricor and Dr.
Marban, each to the other made, the Explanatory Statement which shall be deemed a substantial part hereof, and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Capricor and Dr. Marban hereby covenant,
promise, agree, represent, and warrant as follows:

 

SECTION 1. EMPLOYMENT.

 

1.1.
Engagement of Employment. Effective as of September 1, 2010 (the "Employment Commencement Date"), Capricor hereby
employs Dr. Marban, and Dr. Marban accepts such employment as Chief Executive Officer and President, and Dr. Marban agrees to
render such duties as are set forth in Section 1.2, subject to the terms and conditions of this Agreement.

 

1.2.
Duties. During Dr. Marban's employment under this Agreement, Dr. Marban shall render to the best of her ability, on behalf of
Capricor and on a 3/4 full-time
basis, and at the direction of Capricor, services as Capricor' s Chief Executive Officer and President, and such other duties
as the Board of Directors shall direct. In particular, subject to oversight and direction of the Board of Directors, Dr. Marban
shall:

 

(a)
manage, oversee, and direct Capricor's operations;

 

(b)
be primarily responsible for implementing the strategic goals and objectives of Capricor;

 

(c)
give direction and leadership to the achievement of Capricor's philosophy, mission, and annual goals and objectives;

 

    	Page 1

    	 

    

 

Exhibit
10.7

 

(d)
support operations and administration of Capricor's Board of Directors by advising and informing Board members and interfacing
between Board members and staff;

 

(e)
oversee the design, marketing, promotion, and quality of Capricor's products and services;

 

(f)
together with any Chief Operating Officer, any Vice President of Finance, or other appropriate officers recommend an annual budget
for Board approval and prudently manage Capricor's resources with those budget guidelines according to current laws and regulations;

 

(g)
effectively manage Capricor's human resources according to authorized personnel policies and procedures that fully conform to
current laws and regulations;

 

(h)
ensure that Capricor and its mission, programs, products, and services are consistently presented in a positive image to stockholders
and the public;

 

(i)
oversee investor relations, and fundraising planning and implementation, including identifying resource requirements, researching
funding sources, establishing strategies to approach investors, submitting proposals, and managing investor records and documentation;

 

(j) assist in
the selection and evaluation of Board members; (k) be available as a contact for appropriate investors;

(1)
provide strategic counsel to the Board of Directors regarding

Capricor's
growth prospects;

 

(m)
ensure that all financial and non-financial reporting requirements are met on a timely and regular basis; and

 

(n)
perform such other managerial and operational functions within or outside the scope of the above-referenced services as may be
requested from time to time by the Board of Directors.

 

Dr.
Marban shall report to the Board of Directors.

 

1.3.
Exclusivity. Except as may be expressly approved in advance by the Board of Directors in writing or by resolution, Dr.
Marban shall not pursue other employment, consulting, Board service, or professional endeavors during her employment; provided,
however, because Dr. Marban is being employed as a 3/4full-time employee under this Agreement, Dr. Marban is permitted to continue
to work as a part-time employee for Cedars-Sinai Medical Center, provided that such service does not interfere with the performance
of Dr. Marban’s duties 

under
Section 1.2 herein.

 

    	Page 2

    	 

    

 

Exhibit
10.7

 

1.4.
Duration. Dr. Marban shall serve as the Chief Executive Officer and President of the Company until such time when the Company
determines it is necessary to hire a full-time Chief Executive Officer. Upon the employment of a new Chief Executive Officer,
if the Company does not employ Dr. Marban at a level of at least a Vice-President of the Company, then the Company shall pay Dr.
Marban an amount (as a severance payment) equal to three (3) months of Dr. Marban’s then current salary and the vesting
of her then unvested stock options shall be accelerated by six (6) months.

 

1.5.
Offices and Support. Capricor shall provide Dr. Marban with suitable office space and equipment, including access to telephone,
facsimile, photocopying, and any other equipment reasonably required for Dr. Marban to perform her duties as set forth in Section
1.2 herein.

 

SECTION
2. COMPENSATION.

 

2.1
Salary. Capricor shall pay Dr. Marban (in addition to any benefits provided for in this Agreement) an annual salary of One Hundred
Fifty Thousand Dollars ($150,000.00) (the "Annual Salary"), payable biweekly in arrears, and subject to customary payroll
deductions in accordance with the general practice of Capricor.

 

2.2
Performance Bonus Compensation. In addition to the Annual Salary
provided for by Section 2.1, upon such terms as are hereafter promulgated by the Board of Directors and subject to customary payroll
deductions in accordance with the general practice of Capricor, Capricor shall pay Dr. Marban additional compensation in the form
of an annual bonus (the "Annual Performance-Based Bonus") as follows:

 

(a)
Setting of Goals and Payment Upon Advancement. On or before December of each year during Dr. Marban's employment, Dr. Marban
and Capricor's Board of Directors shall establish challenging performance-based goals relating to Dr. Marban's and Capricor's
performance over the following calendar year (the "Performance Goals"). Capricor shall pay Dr. Marban an Annual Performance-Based
Bonus, in cash, of up to twenty percent (20%) of the Annual Salary (pro-rated, as appropriate) upon achieving (in the judgment
of the Board of Directors) the Performance Goals;

 

(b)
Payment. Payment of the Annual Performance-Based Bonus earned with respect to a particular calendar year shall be payable
as of March 1 of the following year (or upon such later, appropriate date if the applicable Performance Goals are based in part
upon financial reports not then received); and

 

(c)
Other. If Dr. Marban is not employed by Capricor as of December 31 of any calendar year and/or if Dr. Marban is in default
of any material term of this Agreement, then Capricor may, in its sole discretion, discontinue or lessen any and all payments
attributable to the Annual Performance-Based Bonus.

 

2.3 Benefits.
Dr. Marban shall be provided with at least such health, dental, disability, life insurance, and other benefits as may be
provided to comparable management-level employees of Capricor from time to time and subject to the terms of any such plans or
programs. Additionally, Dr. Marban shall be eligible to participate in any pension and/or profit sharing plans or
employee stock incentive programs that may be provided by Capricor for its key employees generally in accordance with the
provisions of any such plans, as the same may be in effect on and after the date hereof.

 

    	Page 3

    	 

    

 

Exhibit 10.7

 

SECTION
3. VACA TION LEAVE, PERSONAL LEAVE, SICK LEAVE, AND HOLIDAYS.

 

3.1.
Vacation and Personal Leave. Dr. Marban shall be entitled to "Vacation" during each calendar year as set forth
in this Section 3.1 and as follows: Twenty (20) working days for "Vacation" during each twelve (12) month period during
which Dr. Marban is employed under this Agreement. Vacation shall be used for all vacation, personal leave, sick leave, and any
other time during which Dr. Marban is not required to perform the duties set forth in Section

1.2.
Dr. Marban shall take Vacation at such time or times in accordance with the policy of

Capricor
so as not to disrupt Capricor's operations. During Dr. Marban's Vacation, the Annual Salary, and all benefits paid and provided
pursuant to this Agreement, shall be paid and provided in full. Up to ten (10) unused Vacation days for any given year may be
carried over to the following year; any other unused Vacation days shall be paid out in accordance with applicable law and such
policy as the Board of Directors may adapt from time to time.

 

3.2.
Holidays. In addition to Vacation, Dr. Marban shall be entitled to New Year's Eve (112 day), New Year's Day, Memorial Day,
July 4th, Labor Day, Thanksgiving, the day after Thanksgiving, Christmas Eve, Christmas, and such other holidays as are recognized
by Capricor in accordance with applicable federal, state, or local laws and as are offered to comparable employees of Capricor.

 

SECTION
4. BUSINESS EXPENSES. Dr. Marban is authorized to incur reasonable expenses, including travel expenses, in connection with
Dr. Marban's exercise of her duties under this Agreement. It
is intended by Capricor and Dr. Marban that all such expenses shall be ordinary
and necessary expenses incurred in connection with the duties of Dr. Marban under this Agreement. Capricor may establish guidelines,
budgets, pre-approval requirements, and restrictions pertaining to Dr. Marban’s authorization to incur business expenses
on behalf of Capricor and Dr. Marban shall comply with all Capricor policies relating to the authorization, verification, and
approval of such expenses. Dr. Marban shall be entitled to book "business class" tickets for international travel. Submission
of expense reports will be made monthly. Dr. Marban shall be reimbursed for all authorized business expenses within thirty (30)
days of submission of such expenses, provided that such expenses have been approved by the Board of Directors.

 

SECTION
5. INCENTIVE STOCK OPTION AGREEMENT. Contemporaneously with this Agreement, Capric or has granted Dr. Marban the opportunity
to purchase up to Two Hundred Thousand (200,000) shares of Capricor's Common Stock. This grant shall be made in accordance with
Capricor's 2006 Stock Option Plan, as amended from time to time. Capricor and Dr. Marban shall execute an Incentive Stock Option
Agreement between Capricor and Dr. Marban, a copy of which is attached hereto as Exhibit A and incorporated herein by reference.
Dr. Marban’s Stock Option Agreement does not obligate Dr. Marban to exercise her options to purchase stock of Capricor nor
obligates Capricor to continue Dr. Marban's employment.

 

    	Page 4

    	 

    

 

Exhibit 10.7

 

SECTION
6. CONFIRMATION OF "AT WILL" EMPLOYMENT AND TERMINATION.

 

(a)
Dr. Marban acknowledges and confirms that she is an "at will" employee and that her employment may be terminated at
any time by the Board of Directors of Capricor, with or without cause. Dr. Marban shall adhere to and obey all Capricor policies
as they now exist and as they may be adopted and amended from time to time.

 

(b)
The following actions, failures or events by or affecting Dr. Marban shall constitute "Cause" for termination within
the meaning of clause (a) above: (i) determination by the Board of Directors of Capricor, acting in good faith and with reasonable
justification, that Dr. Marban’s performance of her duties hereunder has been unsatisfactory, after first giving written
notice to Dr. Marban that her performance has been unsatisfactory (which notice shall set forth in reasonable detail the nature
of the unsatisfactory performance), (ii) failure by Dr. Marban to obey the reasonable and lawful directions of the Board of Directors,
(iii) Dr. Marban's willful breach of any material agreement or covenant of this Agreement or any breach of any fiduciary duty
owed to Capricor, (iv) conviction of, or being charged with, having committed a felony involving fraud or an act of dishonesty
against Capricor, (v) acts of dishonesty or moral turpitude that are detrimental to Capricor, or (vi) acts or omissions that Dr.
Marban knew or should have reasonably known were likely to damage the business of Capricor. With regard to clause (i) above, Dr.
Marban shall be given thirty (30) days to cure the unsatisfactory performance specified in any notice given by Capricor, and if
Dr. Marban so cures any such performance, Dr. Marban subsequently shall not be subject to termination pursuant to such clause
merely by reason of Capricor giving one or more notices of other unsatisfactory performances without having further opportunities
to cure such unsatisfactory performances, except that Dr. Marban shall be subject to termination if an unsatisfactory performance
subsequently occurs, or two (2) or more additional unsatisfactory performances (whether or not cured) occur, during the six (6)
month period following such cure. Clause (i) may be invoked by Capricor any number of times and cure of deficiencies contained
in any notice shall not be construed as a waiver of such clause nor prevent Capricor from issuing any subsequent notices thereunder.

 

(c)
In the event that Dr. Marban's employment is terminated by Capricor during the term of this Agreement other than (i) for Cause,
(ii) upon the death of Dr. Marban, or (iii) subject to applicable law, upon Dr. Marban's disability (either (A) permanent or (B)
rendering and/or anticipating to render Dr. Marban unable to fulfill her duties under Section 1.2 for at least three months),
then Capricor shall pay to Dr. Marban, her Annual Salary calculated on a pro rata basis through the date of termination and, in
addition, as a severance payment, the amount of Annual Salary that Dr. Marban would have otherwise been entitled to receive, paid
in monthly intervals in accordance with Capricor's payroll practices, during the three (3) month period commencing on the date
of termination (such amounts being herein referred to as the "Severance Payments").

 

    	Page 5

    	 

    

 

 Exhibit 10.7

 

(d)
Dr. Marban shall not be entitled to receive any Severance Payments pursuant to this Section 6 unless Dr. Marban has executed and
delivered to Capricor a general release in form and substance satisfactory to Capricor and may only receive such payments so long
as Dr. Marban has not breached any of the provisions of this Agreement. Amounts payable pursuant to this Section 6 are in lieu
of any severance pay that would otherwise be payable to Dr. Marban upon termination of her employment with Capricor under Capricor's
severance pay policies, if any.

 

SECTION
7. CONFIDENTIALITY, NON -COMEPTITION, NON-SOLICITATION AND OWNERSHIP OF WORKS. Dr. Marban hereby covenants, agrees, and
acknowledges that the December 1, 2006 Employee Invention Assignment, Non-Disclosure, Non-Solicitation, and Non-Competition Agreement
between the Company and Dr. Marban (the "Employee Invention Agreement") is in full force and effect (to the extent enforceable
under applicable law) and agrees to abide by the terms and conditions of such Employee Invention Agreement.

 

SECTION
8. CONSULTING AGREEMENT. Dr. Marban hereby agrees that the terms and conditions of the March 31, 2007 Consulting Agreement
by and between the Company and Cardio Sciences Consulting, Inc. is binding on Dr. Marban until August 31, 2010, at which time
such Consulting Agreement shall be superseded and replaced by this Agreement in all respects, including that Dr. Marban shall
become an employee of the Company rather than an independent contractor to the Company.

 

SECTION
9. CONSTRUCTION OF AGREEMENT: CHOICE OF LAW, SEVERABILITY, AND NUMBER. The validity, legality, and construction of this
Agreement or of any of its provisions shall be determined under the laws of the State of California (without regard to its principles
of conflicts of law) except that the laws of the State of Delaware shall govern all matters as to the Incentive Stock Option Agreement.
If any provision contained in this Agreement cannot be enforced to its fullest extent, then such provision shall be enforced to
the maximum extent permitted by law, and Capricor and Dr. Marban consent and agree that such provision may be judicially modified
accordingly in any proceeding brought to enforce such provision. The invalidity, illegality, or inability to enforce any provision
of this Agreement shall not affect or limit the validity and enforceability of any other provision hereof. Where context requires,
the plural shall include the singular and vice versa.

 

SECTION
10. NOTICES. All notices and communications hereunder shall be in writing and shall be deemed given when sent postage prepaid
by registered or certified mail, return receipt requested, by hand delivery with a signed returned copy, or by delivery of a nationally
recognized overnight delivery service, and addressed as follows:

 

 

	If intended for Capricor: 	Capricor, Inc.
	 	8700 Beverly Boulevard - Davis 1099
	 	Los Angeles, California 90048
	 	 
	With a copy to: 	William E. Carlson, Esquire
	 	Shapiro Sher Guinot & Sandler
	 	2000 Charles Center South
	 	36 South Charles Street
	 	 
	 	Baltimore, Maryland 21201
	 	 
	If intended for Dr. Marban:	 Linda S. Marban, Ph.D.
	 	815 North Roxbury Drive
	 	Beverly Hills, California 90210

 

    	Page 6

    	 

    

 

Exhibit 10.7

 

If,
however, a party furnishes another party with notice of a change of address, as provided in this Section, then all notices and
communications thereafter shall be addressed as provided in such notice.

 

SECTION
11. ASSIGNMENT. The rights and obligations of the parties to this Agreement shall not be assignable or delegable by Dr.
Marban, Capricor may assign this Agreement in connection with any subsequent merger, consolidation, sale or other transfer of
all or substantially all of the assets of Capricor or similar reorganization of a successor corporation.

 

SECTION
12. ENTIRE AGREEMENT. This Agreement, which is the product of a negotiation between Capricor and Dr. Marban, the Incentive
Stock Option Agreement, and the Employee Invention Agreement contain the entire understanding between Capricor and Dr. Marban
with respect to matters set forth herein and therein and supersedes all other oral and written agreements or understandings between
them with respect to matters set forth herein and therein. No modification or addition hereto or waiver or cancellation of any
provision shall be valid except as provided in a writing signed by the party against whom such modification, addition, waiver,
or cancellation is being enforced.

 

SECTION
13. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be an original and all
of which shall be deemed to constitute one and the same instrument.

 

IN
WITNESS WHEREOF, Capricor and Dr. Marban have executed this Employment Agreement as of the day and year first above written.

 

	ATTEST: 	 	CAPRICOR, INC.
	 	 	 	 
	/s/ William E. Carlson	 	 	 
	 	 	 	 
	William E. Carlson, Secretary 	 	By:	/s/ Linda Marban        (SEAL)
	 	 	 	Linda S. Marban, Ph.D.
	 	 	 	Chief Executive Officer
	 	 	 	 
	 	 	 	 
	WITNESS:	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	      /s/ Linda Marban              (SEAL)
	 	 	 	Dr. Linda S. Marban

 

    	Page 7

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