Document:

Exhibit 10.10

FORM OF SUBSCRIPTION AGREEMENT

 

This SUBSCRIPTION AGREEMENT
(this “Agreement”) is made as of the last date set forth on the signature page hereof between SpectraScience, Inc.,
a Minnesota corporation (the “Company”), and the undersigned (the “Subscriber”).

 

WITNESSETH:

 

WHEREAS, the Company
is conducting a private offering (the “Offering”)for which Laidlaw & Company (UK) Ltd. is acting as placement agent
on a “best efforts” basis (the “Placement Agent”), consisting of a minimum of $500,000 (the “Minimum
Offering”) and up to a maximum of $1,800,000 (the “Maximum Offering”) of 5% original issue discount unsecured
convertible debentures (the “Debentures”), initially convertible into shares of the Company’s common stock par
value $0.01 per share (the “Common Stock”) at a conversion price equal to $0.0573, subject to adjustment (the “Conversion
Price”), and

 

WHEREAS, the Company
and each Subscriber is executing and delivering this agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act;
and

 

WHEREAS, in connection
with the purchase of the Debentures, each Subscriber will receive a five-year warrant (the “Warrant”, and together
with the Debenture, the “Securities”) to purchase such number of shares of Common Stock of the Company equal to 50%
of the number of shares of Common Stock initially issuable upon conversion of the Debentures in this Offering at an exercise price
equal to $0.0745 per share, subject to adjustment thereunder (the “Exercise Price”); and

 

WHEREAS, the Subscriber
desires to purchase such number of shares of Common Stock as set forth on the signature page hereof on the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration
of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto do hereby agree as follows:

 

		I.	SUBSCRIPTION FOR SECURITIES AND REPRESENTATIONS AND AGREEMENTS BY SUBSCRIBER

 

1.1    Subject
to the terms and conditions hereinafter set forth, the Subscriber hereby subscribes for and agrees to purchase from the Company,
and the Company subject to its rights to accept or reject this subscription, agrees to sell to the Subscriber, such aggregate face
amount of Debentures for the aggregate purchase price as is set forth on the signature page hereof. The purchase price is payable
by wire transfer, to be held in escrow until the Minimum Offering and the other conditions to closing are achieved, to Signature
Bank, the escrow agent (the “Escrow Agent”) as follows:

 

 

    	1

    	 

    

 

Bank:  Signature Bank

ABA Number:    026013576

Account #: 1501730021

Account Name: Signature Bank, as Escrow Agent for
SpectraScience, Inc., Account No. 1501730021

Swift Code: SIGNUS33

 

1.2    The
Securities will be offered for sale until the earlier of (i) the closing on the Maximum Offering or (ii) January 31, 2012, subject
to the right of the Company and the Placement Agent to mutually extend the Termination Date to February 29, 2012 without notice
to prospective investors (the “Termination Date”). The Offering is being conducted on a “best-efforts”
basis.

 

1.3    The
Company may hold an initial closing (“Initial Closing”) at any time after the receipt of accepted subscriptions for
the Minimum Offering. After the Initial Closing, subsequent closings with respect to additional Securities may take place at any
time prior to the Termination Date as determined by the Company, with respect to subscriptions accepted prior to the Termination
Date (each such closing, together with the Initial Closing, being referred to as a “Closing”). The last Closing of
the Offering, occurring on or prior to the Termination Date, shall be referred to as the “Final Closing”. Any subscription
documents or funds received after the Final Closing will be returned, without interest or deduction. In the event that the any
Closing does not occur prior to the Termination Date, all amounts paid by the Subscriber shall be returned to the Subscriber, without
interest or deduction. The Subscriber may revoke its subscription and obtain a return of the subscription amount paid to the Escrow
Account at any time before the date of the Initial Closing by providing written notice to the Placement Agent, the Company and
the Escrow Agent as provided in Section 6.2 below. Upon receipt of a revocation notice from the Subscriber prior to the date of
the Initial Closing, all amounts paid by the Subscriber shall be returned to the Subscriber, without interest or deduction. The
Subscriber may not revoke this subscription or obtain a return of the subscription amount paid to the Escrow Agent on or after
the date of the Initial Closing. Any subscription received after the Initial Closing but prior to the Termination Date shall be
irrevocable.

 

1.4    The
Subscriber recognizes that the purchase of the Securities involves a high degree of risk including, but not limited to, the following:
(a) the Company has a limited operating history and requires substantial funds in addition to the proceeds of the Offering; (b)
an investment in the Company is highly speculative, and only investors who can afford the loss of their entire investment should
consider investing in the Company and the Securities; (c) the Subscriber may not be able to liquidate its investment; (d) transferability
of the Securities is extremely limited; (e) in the event of a disposition, the Subscriber could sustain the loss of its entire
investment; (f) the Company has not paid any dividends since its inception and does not anticipate paying any dividends; and (g)
the other risks associated with the Company’s business, financial situation and the Offering set forth on Exhibit A
annexed hereto.

 

    	2

    	 

    

 

1.5    At
the time such Subscriber was offered the Securities, it was, and as of the date hereof it is, and on each date on which it converts
the Debentures and/or exercises any Warrants it will be an “accredited investor” as defined in Rule 501(a) under the
Securities Act, as indicated by the Subscriber’s responses to the questions contained in Article VII hereof, and that the
Subscriber is able to bear the economic risk of an investment in the Securities.

 

1.6    The
Subscriber hereby acknowledges and represents that (a) the Subscriber has knowledge and experience in business and financial matters,
prior investment experience, including investment in securities that are non-listed, unregistered and/or not traded on a national
securities exchange or the Subscriber has employed the services of a “purchaser representative” (as defined in Rule
501 of Regulation D), attorney and/or accountant to read all of the documents furnished or made available by the Company both to
the Subscriber and to all other prospective investors in the Securities to evaluate the merits and risks of such an investment
on the Subscriber’s behalf; (b) the Subscriber recognizes the highly speculative nature of this investment; and (c) the Subscriber
is able to bear the economic risk that the Subscriber hereby assumes.

 

1.7    The
Subscriber hereby acknowledges receipt and careful review of this Agreement, the Warrant, the Debenture and all other exhibits
thereto (collectively referred to as the “Transaction Documents”) and has had access to the Company’s Annual
Report on Form 10-K and the exhibits thereto for the fiscal year ended December 31, 2010 (the “Form 10-K”), and all
subsequent periodic and current reports filed with the SEC as publicly filed with and available at the website of the SEC which
can be accessed at www.sec.gov, and has received any additional information that the Subscriber has requested from the Company,
and has been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives
of the Company concerning the Company and the terms and conditions of the Offering; provided, however that no investigation performed
by or on behalf of the Subscriber shall limit or otherwise affect its right to rely on the representations and warranties of the
Company contained herein.

 

1.8    (a)          In
making the decision to invest in the Securities the Subscriber has relied solely upon the information provided by the Company in
the Transaction Documents and upon the information set forth in the Form 10-K and all subsequent periodic and current reports filed
with the SEC. To the extent necessary, the Subscriber has retained, at its own expense, and relied upon appropriate professional
advice regarding the investment, tax and legal merits and consequences of this Agreement and the purchase of the Securities hereunder.
The Subscriber disclaims reliance on any statements made or information provided by any person or entity in the course of Subscriber’s
consideration of an investment in the Securities other than the Transaction Documents.

 

(b)          The
Subscriber represents that (i) the Subscriber was contacted regarding the sale of the Securities by the Placement Agent with whom
the Subscriber had a prior substantial pre-existing relationship and (ii) it did not learn of the offering of the Securities by
means of any form of general solicitation or general advertising, and in connection therewith, the Subscriber did not (A) receive
or review any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast
over television or radio, whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor
conference whose attendees were invited by any general solicitation or general advertising.

 

    	3

    	 

    

 

1.9    The
Subscriber hereby acknowledges that the Offering has not been reviewed by the SEC nor any state regulatory authority since the
Offering is intended to be exempt from the registration requirements of Section 5 of the Securities Act, pursuant to Section 4(2)
of the Securities Act and Rule 506 of Regulation D. The Subscriber understands that the Securities have not been registered under
the Securities Act or under any state securities or “blue sky” laws and agrees not to sell, pledge, assign or otherwise
transfer or dispose of the Securities unless they are registered under the Securities Act and under any applicable state securities
or “blue sky” laws or unless an exemption from such registration is available.

 

1.10   The
Subscriber understands that the Securities have not been registered under the Securities Act by reason of a claimed exemption under
the provisions of the Securities Act that depends, in part, upon the Subscriber’s investment intention and investment qualification.
In this connection, the Subscriber hereby represents that the Subscriber is purchasing the Securities for the Subscriber’s
own account for investment and not with a view toward the resale or distribution to others; provided, however, that nothing contained
herein shall constitute an agreement by the Subscriber to hold the Securities for any particular length of time and the Company
acknowledges that the Subscriber shall at all times retain the right to dispose of its property as it may determine in its sole
discretion, subject to any restrictions imposed by applicable law. The Subscriber, if an entity, further represents that it was
not formed for the purpose of purchasing the Securities.

 

1.11   The
Subscriber consents to the placement of a legend on any certificate or other document evidencing the Securities and, when issued,
the shares of Common Stock issuable upon conversion of the Debentures (the “Conversion Shares”) and exercise of the
Warrant (the “Warrant Shares” and collectively with the Conversion Shares, the “Shares”) that such securities
have not been registered under the Securities Act or any state securities or “blue sky” laws and setting forth or referring
to the restrictions on transferability and sale thereof contained in this Agreement. The Subscriber is aware that the Company will
make a notation in its appropriate records with respect to the restrictions on the transferability of such Securities or the Shares.

 

1.12   The
Subscriber hereby represents that the address of the Subscriber furnished by Subscriber on the signature page hereof is the Subscriber’s
principal residence if Subscriber is an individual or its principal business address if it is a corporation or other entity.

 

1.13    Such
Subscriber understands that the Securities are “restricted securities” and have not been registered under the Securities
Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view
to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable
state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding
the distribution of such Securities in violation of the Securities Act or any applicable state securities law. Furthermore, such
Subscriber is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.

 

    	4

    	 

    

 

1.14    The
Subscriber represents that the Subscriber has full power and authority (corporate, statutory and otherwise) to execute and deliver
this Agreement and to purchase the Securities. This Agreement constitutes the legal, valid and binding obligation of the Subscriber,
enforceable against the Subscriber in accordance with its terms.

 

1.15    If
the Subscriber is a corporation, partnership, limited liability company, trust, employee benefit plan, individual retirement account,
Keogh Plan, or other tax-exempt entity, it is authorized and qualified to invest in the Company and the person signing this Agreement
on behalf of such entity has been duly authorized by such entity to do so.

 

1.16    The
Subscriber acknowledges that if he or she is a Registered Representative of a Financial Industry Regulatory Authority (“FINRA”)
member firm, he or she must give such firm the notice required by the FINRA’s Rules of Fair Practice, receipt of which must
be acknowledged by such firm in Section 7.4 below.

 

1.17    To
effectuate the terms and provisions hereof, the Subscriber hereby appoints the Placement Agent as its attorney-in-fact (and the
Placement Agent hereby accepts such appointment) for the purpose of carrying out the provisions of the Escrow Agreement by and
between the Company, the Placement Agent and Escrow Agent (the “Escrow Agreement”) including, without limitation, taking
any action on behalf of, or at the instruction of, the Subscriber and executing any release notices required under the Escrow Agreement
and taking any action and executing any instrument that the Placement Agent may deem necessary or advisable (and lawful) to accomplish
the purposes hereof. All acts done under the foregoing authorization are hereby ratified and approved and neither the Placement
Agent nor any designee nor agent thereof shall be liable for any acts of commission or omission, for any error of judgment, for
any mistake of fact or law except for acts of gross negligence or willful misconduct. This power of attorney, being coupled with
an interest, is irrevocable while the Escrow Agreement remains in effect. 

 

1.18    The
Subscriber agrees not to issue any public statement with respect to the Offering, Subscriber’s investment or proposed investment
in the Company or the terms of any agreement or covenant between them and the Company without the Company’s prior written
consent, except such disclosures as may be required under applicable law.

 

1.19    The
Subscriber understands, acknowledges and agrees with the Company that this subscription may be rejected, in whole or in part, by
the Company, in the sole and absolute discretion of the Company, at any time before any Closing notwithstanding prior receipt by
the Subscriber of notice of acceptance of the Subscriber’s subscription.

 

    	5

    	 

    

 

1.20   The
Subscriber acknowledges that the information contained in the Transaction Documents or otherwise made available to the Subscriber
is confidential and non-public and agrees that all such information shall be kept in confidence by the Subscriber and neither used
by the Subscriber for the Subscriber’s personal benefit (other than in connection with this subscription) nor disclosed to
any third party for any reason, notwithstanding that a Subscriber’s subscription may not be accepted by the Company; provided,
however, that (a) the Subscriber may disclose such information to its affiliates and advisors who may have a need for such information
in connection with providing advice to the Subscriber with respect to its investment in the Company so long as such affiliates
and advisors have an obligation of confidentiality, and (b) this obligation shall not apply to any such information that (i) is
part of the public knowledge or literature and readily accessible at the date hereof, (ii) becomes part of the public knowledge
or literature and readily accessible by publication (except as a result of a breach of this provision) or (iii) is received from
third parties without an obligation of confidentiality (except third parties who disclose such information in violation of any
confidentiality agreements or obligations, including, without limitation, any subscription or other similar agreement entered into
with the Company).

 

1.21   Other
than with respect to the transactions contemplated herein, since the the time that such Subscriber was first contacted by the Company,
the Placement Agent or any other person regarding the transactions contemplated herein, neither the Subscriber nor any Affiliate
of such Subscriber which (x) had knowledge of the transactions contemplated hereby, (y) has or shares discretion relating to such
Subscriber’s investments or trading or information concerning such Subscriber’s investments, including in respect of
the Securities, and (z) is subject to such Subscriber’s review or input concerning such Affiliate’s investments or
trading (collectively, “Trading Affiliates”) has directly or indirectly, nor has any person acting on behalf of or
pursuant to any understanding with such Subscriber or Trading Affiliate, effected or agreed to effect any transactions in the securities
of the Company (including, without limitation, any short sales involving the Company’s securities). Notwithstanding the foregoing,
in the case of a Subscriber and/or Trading Affiliate that is, individually or collectively, a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Subscriber’s or Trading Affiliate’s assets and
the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions
of such Subscriber’s or Trading Affiliate’s assets, the representation set forth above shall apply only with respect
to the portion of assets managed by the portfolio managers that have knowledge about the financing transaction contemplated by
this Agreement. Other than to other persons party to this Agreement, such Subscriber has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

 

1.22   Subscriber
understands that the Securities being offered and sold to it in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and
such Subscriber’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of such
Subscriber set forth herein in order to determine the availability of such exemptions and the eligibility of such Subscriber to
acquire the Securities.

 

    	6

    	 

    

 

1.23   Each
Subscriber hereunder acknowledges its primary responsibilities under the Securities Act and accordingly will not sell any of the
Securities or any interest therein without complying with the requirements of the Securities Act. In the event at any time a registration
statement covering the Securities remains effective, each Subscriber seeking to sell Securities thereunder agrees to sell the Securities
only in accordance with the plan of distribution contained in such registration statement and if it does so it will comply therewith
and with the related prospectus delivery requirements unless an exemption therefrom is available.

 

1.24   The
Subscriber will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents, advisors,
affiliates and shareholders, and each other person, if any, who controls any of the foregoing from and against any and all loss,
liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever
reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation
whether commenced or threatened) (a “Loss”) arising out of or based upon any representation or warranty of the Subscriber
contained herein or in any document furnished by the Subscriber to the Company in connection herewith being untrue in any material
respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or therein;
provided, however, that the Subscriber shall not be liable for any Loss that
in the aggregate exceeds the Subscriber’s aggregate purchase price tendered hereunder.

 

		II.	REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

 

The Company hereby represents
and warrants to the Subscriber that:

 

2.1    Organization,
Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the
laws of the State of Minnesota and has full corporate power and authority to own and use its properties and its assets and conduct
its business as currently conducted. Each of the Company’s subsidiaries identified on Schedule 2.1 hereto (the “Subsidiaries”)
is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation with
the requisite corporate power and authority to own and use its properties and assets and to conduct its business as currently conducted.
Neither the Company, nor any of its Subsidiaries is in violation of any of the provisions of their respective articles of incorporation,
by-laws or other organizational or charter documents, including, but not limited to the Charter Documents (as defined below). Each
of the Company and its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where
the failure to be so qualified or in good standing, as the case may be, would not result in a direct and/or indirect (i) material
adverse effect on the legality, validity or enforceability of any of the Securities and/or this Agreement, (ii) material adverse
effect on the results of operations, assets, business, condition (financial and other) or prospects of the Company and its Subsidiaries,
taken as a whole, or (iii) material adverse effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under the Transaction Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”).

 

    	7

    	 

    

 

2.2    Capitalization
and Voting Rights. The authorized, issued and outstanding capital stock of the Company is as set forth in Schedule 2.2
hereto and all issued and outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable.
Except as set forth in Schedule 2.2 hereto, (i) there are no outstanding securities of the Company or any of its Subsidiaries
which contain any preemptive, redemption or similar provisions, nor is any holder of securities of the Company or any Subsidiary
entitled to preemptive or similar rights arising out of any agreement or understanding with the Company or any Subsidiary by virtue
of any of the Transaction Documents, and there are no contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (ii) neither
the Company nor any Subsidiary has any stock appreciation rights or "phantom stock" plans or agreements or any similar
plan or agreement; and (iii) except as set forth in Schedule 2.2 there are no outstanding options, warrants, agreements, convertible
securities, preemptive rights or other rights to subscribe for or to purchase or acquire, any shares of capital stock of the Company
or any Subsidiary or contracts, commitments, understandings, or arrangements by which the Company or any Subsidiary is or may become
bound to issue any shares of capital stock of the Company or any Subsidiary, or securities or rights convertible or exchangeable
into shares of capital stock of the Company or any Subsidiary. Except as set forth in Schedule 2.2 and as otherwise required
by law, there are no restrictions upon the voting or transfer of any of the shares of capital stock of the Company pursuant to
the Company’s Charter Documents (as defined below) or other governing documents or any agreement or other instruments to
which the Company is a party or by which the Company is bound. All of the issued and outstanding shares of capital stock of the
Subsidiaries are validly issued, fully paid and nonassessable and are owned by the Company, free and clear of any mortgages, pledges,
liens, claims, charges, encumbrances or other restrictions (collectively, “Encumbrances”). All of such outstanding
capital stock has been issued in compliance in all material respects with applicable federal and state securities laws. The issuance
and sale of the Securities and, upon issuance, the Shares, as contemplated hereby will not obligate the Company to issue shares
of Common Stock or other securities to any other person (other than the Subscriber) and except as set forth in Schedule 2.2 will
not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security. The Company does
not have outstanding shareholder purchase rights or “poison pill” or any similar arrangement in effect giving any person
the right to purchase any equity interest in the Company upon the occurrence of certain events.

 

2.3    Authorization;
Enforceability. The Company has the requisite corporate right, power and authority to enter into, execute and deliver this
Agreement and each other agreement, document, instrument and certificate to be executed by the Company in connection with the consummation
of the transactions contemplated hereby, including, but not limited to Transaction Documents and to perform fully its obligations
hereunder and thereunder. All necessary corporate action on the part of the Company, its directors and shareholders necessary for
the (a) authorization execution, delivery and performance of this Agreement and the Transaction Documents by the Company; and (b)
authorization, sale, issuance and delivery of the Securities and upon issuance, the Shares contemplated hereby and the performance
of the Company’s obligations under this Agreement and the Transaction Documents has been taken. This Agreement and the Transaction
Documents have been duly executed and delivered by the Company and each constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its respective terms, subject to laws of general application relating
to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy. The Securities are duly authorized and, when issued and paid for in accordance
with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all
Encumbrances other than restrictions on transfer provided for in the Transaction Documents. The Shares, when issued and paid for
in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear
of all Encumbrances imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company
has reserved a sufficient number of Conversion Shares and Warrant Shares for issuance upon the conversion of the Debentures and
exercise of the Warrants, respectively, free and clear of all Encumbrances, except for restrictions on transfer set forth in the
Transaction Documents or imposed by applicable securities laws. Except as set forth on Schedule 2.3 hereto, the issuance
and sale of the Securities (including the Shares) contemplated hereby will not give rise to any preemptive rights or rights of
first refusal on behalf of any person other than the Subscribers.

 

    	8

    	 

    

 

2.4    No
Conflict; Governmental Consents.

 

(a)          The
execution and delivery by the Company of this Agreement and the Transaction Documents, the issuance and sale of the Securities
(including, when issued, the Shares) and the consummation of the other transactions contemplated hereby or thereby do not and will
not (i) result in the violation of any law, statute, rule, regulation, order, writ, injunction, judgment or decree of any court
or governmental authority to or by which the Company is bound including without limitation all foreign, federal, state and local
laws applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably
be expected to result in a Material Adverse Effect, (ii) conflict with or violate any provision of the Company’s Amended
and Restated Articles of Incorporation, as amended (the “Articles”) or the Amended Bylaws, (and collectively with the
Articles, the “Charter Documents”) of the Company, and (iii) conflict with, or result in a material breach or violation
of, any of the terms or provisions of, or constitute (with or without due notice or lapse of time or both) a default or give to
others any rights of termination, amendment, acceleration or cancellation (with or without due notice, lapse of time or both) under
any agreement, credit facility, lease, loan agreement, mortgage, security agreement, trust indenture or other agreement or instrument
to which the Company or any Subsidiary is a party or by which any of them is bound or to which any of their respective properties
or assets is subject, nor result in the creation or imposition of any Encumbrances upon any of the properties or assets of the
Company or any Subsidiary.

 

(b)          No
vote, approval or consent of any holder of capital stock of the Company or any other third parties is required to be obtained by
the Company in connection with the authorization, execution, delivery and performance of this Agreement and the other Transaction
Documents or in connection with the authorization, issue and sale of the Securities and, upon issuance, the Shares, except as has
been previously obtained.

 

(c)          No
consent, approval, authorization or other order of any governmental authority or any other person is required to be obtained by
the Company in connection with the authorization, execution, delivery and performance of this Agreement and the other Transaction
Documents or in connection with the authorization, issue and sale of the Securities and, upon issuance, the Shares, except such
post-sale filings as may be required to be made with the SEC, FINRA and with any state or foreign blue sky or securities regulatory
authority, all of which shall be made when required.

 

    	9

    	 

    

 

2.5    Shell
Company Status; SEC Reports; Financial Statements. The Company has never been an issuer subject to Rule 144(i) under the Securities
Act. The Company has filed all reports required to be filed by it under the Securities Act and Securities Exchange Act of 1934,
as amended (the “Exchange Act”), including pursuant to Section 13(a) or 15(d) thereof, for the twenty-four (24) months
preceding the date hereof (or such shorter period as the Company was required by law to file such reports) (the foregoing materials
being collectively referred to herein as the "SEC Reports" and, together with the Schedules to this Agreement (if any),
the "Disclosure Materials") on a timely basis or has timely filed a valid extension of such time of filing and has filed
any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles
(“GAAP”) applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial
statements or the footnotes thereto, and fairly present in all material respects the financial position of the Company and its
consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

2.6    Licenses.
Except as otherwise set forth in the SEC Reports, the Company and its Subsidiaries have sufficient licenses, permits and other
governmental authorizations currently required for the conduct of their respective businesses or ownership of properties and is
in all material respects in compliance therewith.

 

2.7    Litigation.
Except as set forth in the SEC Reports, the Company knows of no pending or threatened legal or governmental proceedings against
the Company or any Subsidiary which could reasonably be expected to have a Material Adverse Effect on the business, property, financial
condition or operations of the Company and its Subsidiaries, taken as a whole, or which materially and adversely questions the
validity of this Agreement or the other Transaction Documents or the right of the Company to enter into this Agreement and the
other Transaction Documents, or to perform its obligations hereunder and thereunder. Neither the Company nor any Subsidiary is
a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality
which could reasonably be expected to have a Material Adverse Effect on the business, property, financial condition or operations
of the Company and its Subsidiaries taken as a whole. There is no action, suit, proceeding or investigation by the Company or any
Subsidiary currently pending in any court or before any arbitrator or that the Company or any Subsidiary intends to initiate. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or since the Form 10-K has been the subject of any action
involving (i) a claim of violation of or liability under federal or state securities laws or (ii) a claim of breach of fiduciary
duty. There has not been, and to the Company’s knowledge, there is not pending or contemplated, any investigation by the
SEC involving the Company or any current or former director or officer of the Company. For purposes of this Agreement, the term
“knowledge” when used with respect to the Company will mean the present, conscious awareness of a particular fact or
matter by the Company’s chief executive officer or chief financial officer.

 

    	10

    	 

    

 

2.8    Compliance.
Except as set forth in the SEC Reports or on Schedule 2.8, neither the Company nor any Subsidiary: (i) is in default under
or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result
in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it
is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has
been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality
and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

 

2.9    Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses, except where the failure to possess
such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither
the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material
Permit.

 

2.10  Investment
Company. The Company is not an “investment company” within the meaning of such term under the Investment Company
Act of 1940, as amended, and the rules and regulations of the SEC thereunder.

 

2.11  Brokers.Except
for the Placement Agent and as set forth on Schedule 2.11, neither the Company nor any of the Company's officers, directors,
employees or shareholders has employed or engaged any broker or finder in connection with the transactions contemplated by this
Agreement and no fee or other compensation is or will be due and owing to any broker, finder, underwriter, placement agent or similar
person other than the Placement Agent in connection with the transactions contemplated by this Agreement. The Company is not party
to any agreement, arrangement or understanding whereby any person other than the Placement Agent has an exclusive right to raise
funds and/or place or purchase any debt or equity securities for or on behalf of the Company.

 

    	11

    	 

    

 

2.12  Intellectual
Property; Employees.

 

(a)          The
Company owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes necessary for its business as now conducted and as presently proposed
to be conducted, without any known infringement of the rights of others as described in the SEC Reports and which the failure to
so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Except as disclosed
on Schedule 2.12 or the SEC Reports, there are no material outstanding options, licenses or agreements of any kind relating
to the Intellectual Property Rights, nor is the Company bound by or a party to any material options, licenses or agreements of
any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information
and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the
purchase of “off the shelf” or standard products. The Company has not received any written communications alleging
that the Company has violated or, by conducting its business as presently proposed to be conducted, would violate any Intellectual
Property Rights of any other person or entity. The Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect

 

(b)          Except
as disclosed in the SEC Reports, the Company is not aware that any of its employees is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court
or administrative agency, that would interfere with their duties to the Company or that would conflict with the Company’s
business as presently conducted.

 

(c)          Neither
the execution nor delivery of this Agreement, nor the carrying on of the Company’s business by the employees of the Company,
nor the conduct of the Company’s business as presently conducted, will, to the Company’s knowledge, conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument
under which any employee is now obligated.

 

(d)          To
the Company’s knowledge, no employee of the Company, nor any consultant with whom the Company has contracted, is in violation
of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such
individual to be employed by, or to contract with, the Company because of the nature of the business conducted by the Company;
and to the Company’s knowledge the continued employment by the Company of its present employees, and the performance of the
Company’s contracts with its independent contractors, will not result in any such violation. The Company has not received
any written notice alleging that any such violation has occurred. Except as described in SEC Reports, no employee of the Company
has been granted the right to continued employment by the Company or to any compensation following termination of employment with
the Company except for any of the same which would not have a Material Adverse Effect on the business of the Company. The Company
is not aware that any officer, key employee or group of employees intends to terminate his, her or their employment with the Company,
nor does the Company have a present intention to terminate the employment of any officer, key employee or group of employees.

 

    	12

    	 

    

 

2.13  Title
to Properties and Assets; Liens, Etc. Except as described in the SEC Reports, the Company has good and marketable title to
its properties and assets, including the properties and assets reflected in the most recent balance sheet included in the Company’s
financial statements, and good title to its leasehold estates, in each case subject to no Encumbrances, other than (a) those resulting
from taxes which have not yet become delinquent; and (b) Encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company; and (c) those that have otherwise arisen in the ordinary course
of business, none of which are material. Except as set forth in Schedule 2.13, the Company is in compliance with all material
terms of each lease to which it is a party or is otherwise bound.

 

2.14  Obligations
to Related Parties. Except as described in the SEC Reports, there are no obligations of the Company to officers, directors,
shareholders who are known to the Company to beneficially own more than 5% of the Company’s Common Stock, or employees of
the Company other than (a) for payment of salary or other compensation for services rendered, (b) reimbursement for reasonable
expenses incurred on behalf of the Company and (c) for other standard employee benefits made generally available to all employees
(including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company).
Except as disclosed in the SEC Reports, none of the officers or directors of the Company and, to the Company’s knowledge,
none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than as
holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement
or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such employee or, to the Company’s knowledge, any
entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

2.15  Material
Changes. Except as set forth in Schedule 2.15, since the date of the latest audited financial statements included within
the SEC Reports, except as specifically disclosed in the subsequent SEC Reports, (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary
course of business consistent with past practice and (B) liabilities not required to be reflected in the Company's financial statements
pursuant to GAAP or required to be disclosed in filings made with the SEC, (iii) the Company has not altered its method of accounting
or the identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other property
to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v)
the Company has not issued any equity securities to any officer, director or affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the SEC any request for confidential treatment of information.

 

    	13

    	 

    

 

2.16  Sarbanes-Oxley.
The Company is in compliance with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations
thereunder, that are applicable to it, except where such noncompliance could not have or reasonably be expected to result in a
Material Adverse Effect.

 

2.17  No
General Solicitation. None of the Company, its Subsidiaries, any of their affiliates, and any person acting on the Company’s
behalf and its direction, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D
under the Securities Act) in connection with the offer or sale of the Securities.

 

2.18  No
Integrated Offering. Assuming the accuracy of the Subscriber representations and warranties set forth in Article I hereunder,
none of the Company, its Subsidiaries, any of their affiliates, and any person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration
of any of the Securities under the Securities Act or that is likely to cause this offering of the Securities to be integrated with
prior offerings by the Company for purposes of the Securities Act or any applicable shareholder approval provisions, including
without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities
of the Company are listed or designated. Except as disclosed in the SEC Reports, none of the Company, its Subsidiaries, their affiliates
and any person acting on their behalf,have taken any action or steps referred to in the preceding sentence that would require registration
of any of the Securities under the Securities Act or cause the offering of the Securities to be integrated with other offerings.

 

2.19  Application
of Takeover Protections. The Company execution and delivery of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby will not impose any restriction on any Subscriber, or create in any party (including any current
shareholder of the Company) any rights, under any control share acquisition, business combination, poison pill (including any distribution
under a rights agreement), or other similar anti--takeover provisions under the Company’s Charter Documents or the laws of
its state of incorporation.

 

2.20  Taxes.
Each of the Company and its subsidiaries has filed all U.S. federal, state, local and foreign tax returns which are required to
be filed by each of them and all such returns are true and correct in all material respects, except for such failures to file which
could not reasonably be expected to have a Material Adverse Effect. The Company and each subsidiary has paid all taxes pursuant
to such returns or pursuant to any assessments received by any of them or by which any of them are obligated to withhold from amounts
owing to any employee, creditor or third party. The Company and each subsidiary has properly accrued all taxes required to be accrued
and/or paid, except where the failure to accrue would not have a Material Adverse Effect. To the knowledge of the Company, the
tax returns of the Company and its subsidiaries are not currently being audited by any state, local or federal authorities. Neither
the Company nor any subsidiary has waived any statute of limitations with respect to taxes or agreed to any extension of time with
respect to any tax assessment or deficiency. The Company has set aside on its books adequate provision for the payment of any unpaid
taxes.

 

    	14

    	 

    

 

2.21  Registration
Rights. Except as set forth on Schedule 2.21, no person has any right to cause the Company to effect the registration
under the Securities Act of any securities of the Company.

 

2.22  Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any trading market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such trading market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in material compliance with all such listing and maintenance requirements

 

2.23  Disclosure.
All disclosure furnished by or on behalf of the Company to the Subscriber in the Transaction Documents regarding the Company, its
business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and
does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not misleading.

 

2.24  Seniority.
No indebtedness of the Company is senior to the Debentures in right of payment, whether with respect to interest or upon liquidation
or dissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as to
underlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby).

 

2.25  Private
Placement. Assuming the accuracy of the Subscribers’ representations and warranties set forth in Section I, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Subscriber as contemplated
hereby.

 

		III.	TERMS OF SUBSCRIPTION

 

3.1    The
minimum purchase that may be made by any prospective investor shall be $10,000. Subscriptions for investment below the minimum
investment may be accepted at the discretion of the Placement Agent and the Company. The Company and the Placement Agent each reserve
the right to reject any subscription made hereby, in whole or in part, in its sole discretion. The Company’s agreement with
each Subscriber is a separate agreement and the sale of the Securities to each Subscriber is a separate sale. 

 

3.2    All
funds shall be deposited in the account identified in Section 1.1 hereof.

 

3.3    Certificates
representing the Debentures and the Warrants purchased by the Subscriber pursuant to this Agreement will be prepared for delivery
to the Subscriber as soon as practicable (but in no event more than seven (7) calendar days) following the Closing at which such
purchase takes place. The Subscriber hereby authorizes and directs the Company to deliver the certificates representing the Debentures
and the Warrants purchased by the Subscriber pursuant to this Agreement directly to the Placement Agent unless otherwise indicated
on the signature page hereto.

 

    	15

    	 

    

 

		IV.	CONDITIONS TO OBLIGATIONS OF THE SUBSCRIBER

 

4.1    The
Subscriber’s obligation to purchase the Securities at the Closing at which such purchase is to be consummated is subject
to the fulfillment on or prior to such Closing of the following conditions, which conditions may be waived at the option of each
Subscriber to the extent permitted by law:

 

(a)          Representations
and Warranties; Covenants. The representations and warranties made by the Company in Section 2 hereof qualified as to materiality
shall be true and correct as of the Initial Closing at all times prior to and on the Closing Date, except (i) to the extent any
such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be
true and correct as of such earlier date, and, (ii) the representations and warranties made by the Company in Section 2 hereof
not qualified as to materiality shall be true and correct in all material respects at all times prior to and on the Closing Date,
except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation
or warranty shall be true and correct in all material respects as of such earlier date; provided however, that notwithstanding
the foregoing, the Company shall only be required to update the Disclosure Schedules by the delivery to the Subscribers by the
Company of an amended Disclosure Schedule with respect to any information that is of a material nature as of such proposed Closing
Date. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the date
of such Closing shall have been performed or complied with in all material respects.

 

(b)          No
Legal Order Pending. There shall not then be in effect any legal or other order enjoining or restraining the transactions contemplated
by this Agreement.

 

(c)          No
Law Prohibiting or Restricting Such Sale. There shall not be in effect any law, rule or regulation prohibiting or restricting
such sale or requiring any consent or approval of any person, which shall not have been obtained, to issue the Securities (except
as otherwise provided in this Agreement).

 

(d)          Required
Consents. The Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or
appropriate for consummation of the purchase and sale of the Securities and the consummation of the other transactions contemplated
by the Transaction Documents, all of which shall be in full force and effect.

 

(e)          Adverse
Changes. Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably could
have or result in a Material Adverse Effect.

 

    	16

    	 

    

 

(f)          No
Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock shall not have been suspended by the SEC or any
trading market (except for any suspensions of trading of not more than one trading day solely to permit dissemination of material
information regarding the Company) at any time since the date of execution of this Agreement, and the Common Stock shall have been
at all times since such date listed for trading on a trading market.

 

(g)          Blue
Sky. The Company shall have completed any necessary qualification for the Securities and the Shares under applicable Blue Sky
laws.

 

(h)          Legal
Opinion. The Company’s corporate counsel shall have delivered a legal opinion addressed to the Subscribers in a form
reasonably acceptable to the Placement Agent.

 

(i)          Disclosure
Schedules. The Company shall have delivered to the Subscriber a copy of its Disclosure Schedules (or amended Disclosure Schedules)
qualifying any of the representations and warranties contained in Section II which original Disclosure Schedules will speak only
as Initial Closing.

 

		V.	COVENANTS OF THE PARTIES

 

5.1    Transfer
Restrictions.

 

(a)          The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144 promulgated under the Securities Act, to the Company or
to an affiliate of a Subscriber or in connection with, the Company may require the transferor thereof to provide to the Company
an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the
terms of this Agreement, and shall have the rights of a Subscriber under this Agreement.

 

(b)          The
Subscriber agrees to the imprinting, so long as is required by this Section 5.1, of a legend on any of the Securities, including
the Shares, in the following form:

 

[NEITHER] THIS SECURITY [NOR THE SECURITIES
INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE
TO THE COMPANY.

 

    	17

    	 

    

 

(c)          Certificates
evidencing the Shares shall not be required to contain any legend (including the legend set forth in Section 5.1(b) hereof): (i)
while a registration statement covering the resale of such security is effective under the Securities Act, or (ii) following any
sale of such Shares pursuant to Rule 144, or (iii) if such Shares are eligible for sale under Rule 144, without the requirement
for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and without volume
or manner-of-sale restrictions. Upon request by a Subscriber in the event the foregoing permits removal of any legend from certificates
evidencing the Shares, the Company shall cause its counsel, at the Company’s expense, to issue a legal opinion to the Company’s
transfer agent promptly (but in no event later than the requisite share delivery date set forth in the Debenture and the Warrants)
if required by the Company’s transfer agent to effect the removal of the legend hereunder.

 

5.2    Listing
of Securities. The Company agrees, (i) if the Company applies to have the Common Stock traded on any other trading market,
it will include in such application the shares of Common Stock and Shares, and will take such other action as is necessary or desirable
to cause the shares of Common Stock and Shares to be listed on such other trading market as promptly as possible, and (ii) during
the three-year period from and after the Final Closing it will take all action reasonably necessary to continue the listing and
trading of its Common Stock on a trading market and will comply in all material respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of the trading market.

 

5.3    Reservation
of Shares. The Company shall at all times while the Debenture and Warrants are outstanding maintain a reserve from its duly
authorized shares of Common Stock of a number of shares of Common Stock sufficient to allow for the issuance of the Shares.

 

5.4    Replacement
of Securities. If any certificate or instrument evidencing any Securities or the Shares is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company
of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement
securities. If a replacement certificate or instrument evidencing any securities is requested due to a mutilation thereof, the
Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.

 

5.5    Furnishing
of Information. Until the three year anniversary of the Final Closing, the Company covenants to maintain the registration of
the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the
Exchange Act.    Until the three year anniversary of the Final Closing, if the Company is not required to file
reports pursuant to such laws, it will prepare and furnish to the Subscribers and make publicly available in accordance with Rule
144(c) such information as is required for the Subscribers to sell the Securities and/or the Shares under Rule 144. The Company
further covenants that it will take such further action as any holder of Securities and/or Shares may reasonably request, to the
extent required from time to time to enable such person to sell such Securities and/or Shares without registration under the Securities
Act within the requirements of the exemption provided by Rule 144.

 

    	18

    	 

    

 

5.6    Securities
Laws; Publicity. The Company shall, by 8:30 a.m. (New York City time) on the trading day immediately following a Closing hereunder,
issue a press release disclosing the material terms of the transactions contemplated hereby and, if required, will, on or prior
to the fourth business day following a Closing hereunder, file a Current Report on Form 8-K disclosing the material terms of the
transactions contemplated hereby and including the Transaction Documents as exhibits thereto to the extent required by law. The
Company shall not publicly disclose the name of Subscriber, or include the name of any Subscriber in any filing with the SEC or
any regulatory agency or trading market, without the prior written consent of Subscriber, except: (a) as required by federal securities
law in connection with the filing of final Transaction Documents (including signature pages thereto) with the SEC and (b) to the
extent such disclosure is required by law, in which case the Company shall provide the Subscriber with prior notice of such disclosure
permitted under this clause (b).

 

5.7    Form
D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation
D promulgated under the Securities Act and to provide a copy thereof, promptly upon request of the Subscriber. The Company shall
take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the
Securities for, sale to the Subscriber at the Closing under applicable securities or “Blue Sky” laws of the states
of the United States, and shall provide evidence of such actions promptly upon request of any Subscriber.

 

5.8    Equal
Treatment of Subscribers. No consideration (including any modification of any Transaction Document) shall be offered or paid
to any person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same
consideration is also offered to all of the parties to the Transaction Documents.

 

5.9    Indemnification. 

 

(a)    The
Company agrees to indemnify and hold harmless the Subscriber, its affiliates and their respective officers, directors, employees,
agents and controlling persons (collectively, the “Indemnified Parties”) from and against , any and all loss, liability,
damage or deficiency suffered or incurred by any Indemnified Party by reason of any misrepresentation or breach of warranty by
the Company or, after notice and a reasonable cure period, nonfulfillment of any covenant or
agreement to be performed or complied with by the Company under this Agreement or the Transaction Documents; and will promptly
reimburse the Indemnified Parties for all expenses (including reasonable fees and expenses of legal counsel) as incurred in connection
with the investigation of, preparation for or defense of any pending or threatened claim related to or arising in any manner out
of any of the foregoing, or any action or proceeding arising therefrom (collectively, “Proceedings”), whether or not
such Indemnified Party is a formal party to any such Proceeding.

 

    	19

    	 

    

 

(b)     If
for any reason (other than a final non-appealable judgment finding any Indemnified Party liable for losses, claims, damages, liabilities
or expenses for its gross negligence or willful misconduct) the foregoing indemnity is unavailable to an Indemnified Party or insufficient
to hold an Indemnified Party harmless, then the Company shall contribute to the amount paid or payable by an Indemnified Party
as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect not only the relative
benefits received by the Company on the one hand and the Indemnified Party on the other, but also the relative fault by the Company
and the Indemnified Party, as well as any relevant equitable considerations.

 

5.10       Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other person acting on its behalf, will provide Subscriber or its agents
or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto Subscriber
shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and
confirms that Subscriber shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

5.10       Use
of Proceeds. Except as set forth on Schedule 5.10 attached hereto, the Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and shall not use such proceeds for: (a) the satisfaction of any portion
of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior
practices), (b) the redemption of any Common Stock or Common Stock Equivalents (as defined in the Debenture and Warrant) or (c)
the settlement of any outstanding litigation. 

 

5.11       Participation
in Future Financing.

 

(a)          From
the date hereof until the one year anniversary of the Final Closing, upon any issuance by the Company or any of its Subsidiaries
of Common Stock, Common Stock Equivalents (a “Subsequent Financing”), each Subscriber shall have the right to
participate in up to an amount of the Subsequent Financing equal to such Subscriber’s proportionate share of the Subsequent
Financing based on such Subscriber’s participation in this Offering (the “Participation Maximum”) on the
same terms, conditions and price provided for in the Subsequent Financing.

 

(b)          At
least 5 trading days prior to the closing of the Subsequent Financing, the Company shall deliver to each Subscriber a written notice
of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Subscriber
if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).
Upon the request of a Subscriber, and only upon a request by such Subscriber, for a Subsequent Financing Notice, the Company shall
promptly, but no later than 1 trading day after such request, deliver a Subsequent Financing Notice to such Subscriber. The Subsequent
Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised thereunder and the person or persons through or with whom such Subsequent Financing is proposed to be effected and
shall include a term sheet or similar document relating thereto as an attachment.    

 

    	20

    	 

    

 

(c)          Any
Subscriber desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30
p.m. (New York City time) on the 5th trading day after all of the Subscribers have received the Pre-Notice that the
Subscriber is willing to participate in the Subsequent Financing, the amount of the Subscriber’s participation, and that
the Subscriber has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice.
If the Company receives no notice from a Subscriber as of such 5th trading day, such Subscriber shall be deemed to have
notified the Company that it does not elect to participate.

 

(d)          If
by 5:30 p.m. (New York City time) on the 5th trading day after all of the Subscribers have received the Pre-Notice,
notifications by the Subscribers of their willingness to participate in the Subsequent Financing (or to cause their designees to
participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining
portion of such Subsequent Financing on the terms and with the persons set forth in the Subsequent Financing Notice.

 

(e)          If
by 5:30 p.m. (New York City time) on the 5th trading day after all of the Subscribers have received the Pre-Notice,
the Company receives responses to a Subsequent Financing Notice from Subscribers seeking to purchase more than the aggregate amount
of the Participation Maximum, each such Subscriber shall have the right to purchase its Pro Rata Portion (as defined below) of
the Participation Maximum.  “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities
purchased on the Closing Date by a Subscriber participating under this Section 5.11 and (y) the sum of the aggregate Subscription
Amounts of Securities purchased by all Subscribers participating under this Section 5.11.

 

(f)          The
Company must provide the Subscribers with a second Subsequent Financing Notice, and the Subscribers will again have the right of
participation set forth above in this Section 5.11, if the Subsequent Financing subject to the initial Subsequent Financing Notice
is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within 30 trading days after the date
of the initial Subsequent Financing Notice.

 

(g)          Notwithstanding
the foregoing, this Section 5.11 shall not apply in respect of (i) an Exempt Issuance (as defined in the Debentures and the Warrants),
or (ii) an underwritten public offering of Common Stock.

 

5.12      Most
Favored Nation Provision. For as long as the Debentures are outstanding (including any extension or modification thereto),
if the Company effects a Subsequent Financing, Subscriber may elect, in its sole discretion, to exchange all, but not less than
all, of the Securities then held by Subscriber for any securities issued in a Subsequent Financing on a $1.00 for $1.00 basis based
on the outstanding principal amount of the Debentures, along with any liquidated damages and other amounts owing thereon, and the
effective price at which such securities are to be sold in such Subsequent Financing; provided, however, that this
Section 5.12 shall not apply with respect to (i) an Exempt Issuance (as defined in the Debentures) or (ii) an underwritten public
offering of Common Stock.

 

    	21

    	 

    

 

		VI.	MISCELLANEOUS

 

6.1    Fees
and Expenses. The Company and the Subscribers shall each pay the fees and expenses of their respective advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay its transfer agents’ fees, stamp taxes and other taxes
and duties levied in connection with the sale and issuance of the Securities to the Subscribers

 

6.2    Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered
via facsimile or by electronic communication at or prior to 5:30 p.m. (New York City time) on a day in which the New York Stock
Exchange is open for trading (a “Trading Day”), (b) the next Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile or electronic communication on a day that is not a Trading Day or later than 5:30 p.m.
(New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to
be given. The address for such notices and communications shall be addressed as follows:

 

if to the
Company, to it at:

SpectraScience, Inc.

11568 Sorrento Valley Rd., Suite
11

San Diego, California 92121

Attn: Michael P. Oliver, CEO

 

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

 

Fredrikson & Byron, P.A.

200 South Sixth Street, Suite 4000

Minneapolis, MN 55402-1425

Attn: Ryan C. Brauer, Esq.

Email: rbrauer@fredlaw.com

Fax: (612) 492-7077

 

if to the Subscriber, to the Subscriber’s
address indicated on the signature page of this Agreement.

 

    	22

    	 

    

 

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

 

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, NY 10006

Attn: Richard A. Friedman, Esq.

 

if to the Escrow Agent, to it at:

 

Signature Bank

261 Madison Ave.

New York, NY 10016

Attn: Cliff Broder, Group
Director and Senior Vice President

Fax: 646-822-1359

 

6.3    Amendments;
Waivers. Except as otherwise provided herein, this Agreement shall not be changed, modified or amended except by a writing
signed by the parties to be charged, and this Agreement may not be discharged except by performance in accordance with its terms
or by a writing signed by the party to be charged. No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder
in any manner impair the exercise of any such right.

 

6.4    Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs,
legal representatives, successors and assigns. The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Subscriber (other than by merger). Subscriber may assign any or all of its rights under this
Agreement to any person to whom Subscriber assigns or transfers any Securities, provided that such transferee agrees in writing
to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents

 

6.5    Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

6.6    Company’s
Right of Acceptance. Upon the execution and delivery of this Agreement by the Subscriber and the Company, this Agreement shall
become a binding obligation of the Subscriber with respect to the purchase of Securities as herein provided, subject, however,
to the right hereby reserved by the Company to enter into the same agreements with other Subscribers and to reject any subscription,
in whole or in part, provided the Company returns to Subscriber any funds paid by Subscriber with respect to such rejected subscription
or portion thereof, without interest or deduction.

 

    	23

    	 

    

 

6.7Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement
of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding.

 

6.8Attorneys’
Fees. Notwithstanding anything to the contrary in this Agreement, in order to discourage frivolous claims the parties agree
that unless a claimant in any proceeding arising out of this Agreement succeeds in establishing his claim and recovering a judgment
against another party (regardless of whether such claimant succeeds against one of the other parties to the action), then the other
party shall be entitled to recover from such claimant all of its/their reasonable legal costs and expenses relating to such proceeding
and/or incurred in preparation therefor.

 

6.9Severability.
The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Agreement, which shall remain in full force and effect. If any provision of this Agreement shall be
declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision
shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision unless
so expressed herein.

 

6.10Further
Assurances. The Company and each Subscriber agrees to execute and deliver all such further documents, agreements and instruments
and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

 

6.11Counterparts.
This Agreement may be executed in two or more counterparts each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument. In the event that any signature is delivered by facsimile transmission or by e-mail delivery
of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature
page were an original thereof.

 

    	24

    	 

    
  

6.12No
Third Party Beneficiaries. Nothing in this Agreement shall create or be deemed to create any rights in any person or entity
not a party to this Agreement.

 

6.13Injunctive
Relief. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages,
the Subscriber and the Company will be entitled to specific performance under this Agreement. The parties agree that monetary damages
may not be adequate compensation for any loss incurred by reason of any breach of obligations described in this Agreement and hereby
agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

		VII.	CONFIDENTIAL INVESTOR QUESTIONNAIRE

 

7.1The
Subscriber represents and warrants that he, she or it comes within one category marked below, and that for any category marked,
he, she or it has truthfully set forth, where applicable, the factual basis or reason the Subscriber comes within that category.
ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The Subscriber agrees to furnish any additional
information which the Company deems necessary in order to verify the answers set forth below.

 

	Category A  __	 	The Subscriber is an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with his or her spouse, presently exceeds $1,000,000.
	 	 	 
	 	 	Explanation.  In calculating net worth you may NOT include equity in your principal residence.
	 	 	 
	Category B __	 	The Subscriber is an individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year.
	 	 	 
	Category C __	 	The undersigned is a director or executive officer of the Company.
	 	 	 
	Category D __	 	The Subscriber is a bank; a savings and loan association; insurance company; registered investment company; registered business development company; licensed small business investment company (“SBIC”); or employee benefit plan within the meaning of Title 1 of ERISA and (a) the investment decision is made by a plan fiduciary which is either a bank, savings and loan association, insurance company or registered investment advisor, or (b) the plan has total assets in excess of $5,000,000 or (c) is a self directed plan with investment decisions made solely by persons that are accredited investors. (describe entity)
	 	 	 
	 	 	 

 

    	25

    	 

    

 

	Category E __	 	The Subscriber is a private business development company as defined in section 202(a)(22) of the Investment Advisors Act of 1940. (describe entity)
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Category F __	 	The Subscriber is either a corporation, partnership, Massachusetts business trust, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the specific purpose of acquiring the Securities and with total assets in excess of $5,000,000. (describe entity)
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Category G __	 	The Subscriber is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, where the purchase is directed by a “sophisticated investor” as defined in Regulation 506(b)(2)(ii) under the Act.
	 	 	 
	Category H __ 	 	The Subscriber is an entity (other than a trust) in which all of the equity owners are “accredited investors” within one or more of the above categories.  If relying upon this Category alone, each equity owner must complete a separate copy of this Agreement.  (describe entity)
	 	 	 
	 	 	 
	 	 	 
	Category I __ 	 	The Subscriber is not within any of the categories above and is therefore not an accredited investor.
	 	 	 
	 	 	The Subscriber agrees that the Subscriber will notify the Company at any time on or prior to the Closing in the event that the representations and warranties in this Agreement shall cease to be true, accurate and complete.

 

	 	7.2	SUITABILITY (please answer each question)

 

(a)   For an individual
Subscriber, please describe your current employment, including the company by which you are employed and its principal business:

 

    	26

    	 

    

 

	 	 
	 	 
	 	 
	 	 

 

(b)  For all Subscribers,
are you familiar with the risk aspects and the non-liquidity of investments such as the securities for which you seek to subscribe?

 

YES £                     NO £

 

(c) For all Subscribers,
do you understand that there is no guarantee of financial return on this investment and that you run the risk of losing your entire
investment?

 

YES £                     NO £

 

	 	7.3	MANNER IN WHICH TITLE IS TO BE HELD. (circle one)

 

	 	(a)	Individual Ownership
	 	(b)	CommShare Property
	 	(c)	Joint Tenant with Right of
	 	 	Survivorship (both parties
	 	 	must sign)
	 	(d)	Partnership*
	 	(e)	Tenants in Common
	 	(f)	Company*
	 	(g)	Trust*
	 	(h)	Other*

 

*If Securities are being
subscribed for by an entity, the attached Certificate of Signatory must also be completed.

 

	 	7.4	FINRA AFFILIATION.

  

Are you affiliated or associated with an
FINRA member firm (please check one):

 

Yes £                     No £

 

If Yes, please describe:

 

	 
	 
	 

 

*If Subscriber is a Registered Representative
with an FINRA member firm, have the following acknowledgment signed by the appropriate party:

 

    	27

    	 

    

 

The Subscriber NASD member firm acknowledges
receipt of the notice required by Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.

 

	 	 
	Name of FINRA Member Firm
	 	 
	By:	 
	 	Authorized Officer
	 	 
	Date:	 

 

7.5The
Subscriber is informed of the significance to the Company of the foregoing representations and answers contained in the Confidential
Investor Questionnaire contained in this Article VII and such answers have been provided under the assumption that the Company
will rely on them.

  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

    	28

    	 

    

 

AGGREGATE PURCHASE PRICE OF THE DEBENTURE
= $_________ (the “Purchase Price”)

 

	 	 	 
	Signature	 	Signature (if purchasing jointly)
	 	 	 
	 	 	 
	Name Typed or Printed	 	Name Typed or Printed
	 	 	 
	 	 	 
	Title (if Subscriber is an Entity)	 	Title (if Subscriber is an Entity)
	 	 	 
	 	 	 
	Entity Name (if applicable)	 	Entity Name (if applicable
	 	 	 
	 	 	 
	 	 	 
	Address	 	Address
	 	 	 
	 	 	 
	City, State and Zip Code	 	City, State and Zip Code
	 	 	 
	 	 	 
	Telephone-Business	 	Telephone-Business
	 	 	 
	 	 	 
	Telephone-Residence	 	Telephone-Residence
	 	 	 
	 	 	 
	Facsimile-Business	 	Facsimile-Business
	 	 	 
	 	 	 
	Facsimile-Residence	 	Facsimile-Residence
	 	 	 
	 	 	 
	Tax ID # or Social Security #	 	Tax ID # or Social Security #
	 	 	 
	 	 	 
	E-Mail Address	 	E-Mail Address

 

Name in which securities should be issued:_________________________________

 

Delivery Address (if not to Placement Agent):
_________________________________________________

 

Dated:            ___________
, 201_

 

This Subscription Agreement
is agreed to and accepted as of ________________, 201_.

 

	 	SPECTRASCIENCE, INC.
	 	 	 
	 	By:	 
	 	Name: 
	 	Title:

 

    	29

    	 

    
  

CERTIFICATE OF SIGNATORY

 

(To be completed if Securities are

being subscribed for by an entity)

  

I, ____________________________, am the
____________________________ of __________________________________________ (the “Entity”).

 

I certify that I am empowered and duly
authorized by the Entity to execute and carry out the terms of the Subscription Agreement and to purchase and hold the Debentures
and Warrants (and, upon issuance, the Shares), and certify further that the Subscription Agreement has been duly and validly executed
on behalf of the Entity and constitutes a legal and binding obligation of the Entity.

 

IN WITNESS WHEREOF, I have set my hand
this ________ day of _________________, 20__

 

	 	 
	 	(Signature)

 

    	30

    	 

    

 

Exhibit A

 

Portions
of the following Exhibit are an excerpt of the information contained in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2010 as filed with the Securities and Exchange Commission (the “Form 10-K”).
As such, this Exhibit is qualified in its entirety by the more detailed information regarding the Company’s business
and financial conditions as set forth in the Form 10-K and subsequently filed Forms 10-Q and Forms 8-K. In addition,
investors are advised that certain of the information in this Exhibit has not been updated since the filing of
the Form 10-K. Investors should review the Company’s financial statements and other information set forth in the Form
10-K and other periodic reports, including Forms 10-Q
and 8-K, filed with the Securities and Exchange
Commission, as well as the Disclosure Schedules to the Transaction Documents. You are encouraged to seek the advice of your
attorney, tax consultant, and business advisor with respect to the legal, tax, and business aspects of an investment in the
Securities.

 

RISK FACTORS

 

An investment in the Securities involves
a high degree of risk and is subject to many uncertainties. These risks and uncertainties may adversely affect our business, operating
results and financial condition. In such an event, the trading price for our common stock could decline substantially, and you
could lose all or part of your investment. In order to attain an appreciation for these risks and uncertainties, you should read
these risk factors in their entirety and consider all of the information and advisements contained in the Transaction Documents,
including the following risk factors and uncertainties.

 

RISKS RELATED TO OUR BUSINESS

 

We have a limited operating history
with significant losses and expect losses to continue for the foreseeable future.

 

We have yet to establish any history of
profitable operations. We have incurred annual operating losses of approximately $4,098,000 and $4,437,000, respectively, during
the past two years of operations. As a result, at December 31, 2010 we had an accumulated deficit of approximately $24,770,000.
We have incurred net losses from continuing operations of approximately $4,098,000 and $4,432,000 for the fiscal years ended 2010
and 2009, respectively. Our revenues have not been sufficient to sustain our operations and we expect that they will be insufficient
to sustain our operations for the foreseeable future. Our failure to generate meaningful revenues and ultimately profits from the
WavSTAT System and applications of our technology could force us to raise additional capital which may not be available or available
on acceptable terms. This could ultimately reduce or suspend our operations and ultimately cause us to go out of business. Our
profitability will require the successful commercialization of our imaging systems and no assurances can be given when this will
occur or if we will ever be profitable.

 

We will require additional financing
to sustain our operations and without it, we may not be able to continue operations.

 

At December 31, 2010, we had a working
capital balance of approximately $4,001,000. We had an operating cash flow deficit of approximately $2,328,000 for the fiscal year
ended December 31, 2010 and an operating cash flow deficit of approximately $2,463,000 in 2009. We may not have sufficient financial
resources to fund our operations and will likely require additional funds to continue our operations.

 

We face intense competition from
companies that have greater financial, personnel and research and development resources.

 

Competitive forces may impact our projected
growth and ability to generate revenues and profits, which would have a negative impact on our business and the price of our common
stock. Our competitors may be developing products that compete with the WavSTAT Systems. Our commercial opportunities would then
be reduced or eliminated should our competitors develop and market products for any of the diseases that we target that are more
effective or are less expensive than the products or product candidates we are developing.

 

    	 

    	 

    

 

Even if we are successful in developing an effective WavSTAT System, and we obtain FDA and other regulatory approvals necessary for commercialization, our products
may not compete effectively with other successful products. Researchers are continually learning more about diseases, which may
lead to new technologies and tools for analysis.

 

Our competitors include fully integrated
medical device companies, universities and public and private research institutions. Many of the organizations competing with us
may have substantially greater capital resources, larger research and development staffs and facilities, greater experience in
product development and in obtaining regulatory approvals, and greater marketing capabilities than we do.

 

The market for medical devices is intensely
competitive. Many of our potential competitors have longer operating histories, greater name recognition, more employees, and significantly
greater financial, technical, marketing, public relations, and distribution resources than we have. This intense competitive environment
may require us to make changes in our products, pricing, licensing, services or marketing to develop, maintain and extend our current
technology. Price concessions or the emergence of other pricing or distribution strategies of competitors may diminish our revenues,
adversely impact our margins or lead to a reduction in our market share, any of which may harm our business.

 

Our WavSTAT System technology may
become obsolete.

 

Our WavSTAT System products may be made
unmarketable by new scientific or technological developments where new treatment modalities are introduced that are more efficacious
or more economical. Any one of our competitors could develop a more effective product which may render our technology obsolete.

 

Our inability to attract and retain
qualified personnel could impede our ability to generate revenues and profits and to otherwise implement our business plan and
growth strategies, which would have a negative impact on our business and could adversely affect the price of our common stock.

 

We currently have a staff of seven full
time employees, consisting of, among others, our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer,
Director of Sales and Marketing and Chief Engineer Director, as well as administrative employees and other personnel retained on
a contract basis. Although we believe that these employees, together with the consultants currently engaged by the Company, will
be able to handle most of our additional administrative, research and development and business development in the near term, we
will nevertheless be required over the longer-term to hire highly skilled managerial, scientific and administrative personnel to
fully implement our business plan and growth strategies. We cannot assure you that we will be able to engage the services of such
qualified personnel at competitive prices or at all, particularly given the risks of employment attributable to our limited financial
resources and lack of an established track record.

 

We plan to grow very rapidly, which
will place strains on our management team and other Company resources to both implement more sophisticated managerial, operational and financial systems, procedures and controls and to train
and manage the personnel necessary to implement those functions. Our inability to manage our growth could impede our ability to
generate revenues and profits and to otherwise implement our business plan and growth strategies, which would have a negative impact
on our business.

 

We will need to significantly expand our
operations to implement our longer-term business plan and growth strategies. We will also be required to manage multiple relationships
with various strategic partners, technology licensors, customers, manufacturers and suppliers, consultants and other third parties.
This expansion and these expanded relationships will require us to significantly improve or replace our existing managerial, operational
and financial systems, procedures and controls; to improve the coordination between our various corporate functions; and to manage,
train, motivate and maintain a growing employee base. The time and costs to effectuate these steps may place a significant strain
on our management personnel, systems and resources, particularly given the limited amount of financial resources and skilled employees
that may be available at the time. We cannot assure you that we will institute, in a timely manner or at all, the improvements
to our managerial, operational and financial systems, procedures and controls necessary to support our anticipated increased levels
of operations and to coordinate our various corporate functions, or that we will be able to properly manage, train, motivate and
retain the anticipated increased number of employees.

 

    	 

    	 

    

 

We may have difficulty in developing
and retaining an effective sales force or in obtaining effective distribution partners and may not be able to achieve sufficient
revenues to effect our business plan.

 

The market for skilled sales and marketing
personnel is highly competitive and specialized. If we are unable to hire and retain skilled and knowledgeable sales people it
may negatively impact our ability to introduce our products or generate revenue sufficient to affect our future business plans.
In addition, our inability to develop business relationships with key technical distributors may also negatively impact our ability
to successfully market our products.

 

We may have difficulty in attracting
and retaining management and outside independent members to our Board of Directors as a result of their concerns relating to their
increased personal exposure to lawsuits and shareholder claims by virtue of holding these positions in a publicly held company.

 

The directors and management of publicly
traded corporations are increasingly concerned with the extent of their personal exposure to lawsuits and shareholder claims, as
well as governmental and creditor claims which may be made against them, particularly in view of recent changes in securities laws
imposing additional duties, obligations and liabilities on management and directors. Due to these perceived risks, directors and
management are also becoming increasingly concerned with the availability of directors and officers liability insurance to pay
on a timely basis the costs incurred in defending such claims. We currently carry directors and officers liability insurance, but
such insurance is expensive and can be difficult to obtain. If we are unable to obtain directors and officers liability insurance
at affordable rates or at all in the future, it may become increasingly more difficult to attract and retain qualified outside
directors to serve on our board of directors. The fees of directors are also rising in response to their increased duties, obligations
and liabilities as well as increased exposure to such risks. As a company with a limited operating history and limited resources,
we will have a more difficult time attracting and retaining management and outside independent directors than a more established
company due to these enhanced duties, obligations and liabilities.

 

If we fail to comply with the extensive
regulations enforced by domestic and foreign regulatory authorities, the commercialization of our products could be prevented or
delayed.

 

Our WavSTAT Systems are subject to extensive
government regulations related to development, testing, manufacturing and commercialization in the United States and other countries.
The determination of when and whether a product is ready for large scale purchase and potential use will be made by the government
through consultation with a number of governmental agencies, including the FDA, the National Institutes of Health, and the Centers
for Disease Control and Prevention. Some of our product candidates are in the clinical stages of development and have not received
required regulatory approval from the FDA for the esophageal or lung applications we hope to commercially market. The process of
obtaining and complying with the FDA and other governmental regulatory approvals and regulations is costly, time consuming, uncertain
and subject to unanticipated delays. Despite the time and expense incurred, regulatory approval is never guaranteed. We also are
subject to the following risks and obligations, among others:

 

	·	The FDA may refuse to approve an application if they believe that applicable regulatory criteria are not satisfied;

 

	·	The FDA may require additional testing for safety and effectiveness;

 

	·	The FDA may interpret data from pre-clinical testing and clinical trials in different ways than us;

 

	·	If regulatory approval of a product is granted, the approval may be limited to specific indications or limited with respect to its distribution; and

 

	·	The FDA may change their approval policies and/or adopt new regulations.

 

    	 

    	 

    

 

Failure to comply with these or other regulatory
requirements of the FDA may subject us to administrative or judicially imposed sanctions, including:

 

	·	Warning letters;

 

	·	Civil penalties;

 

	·	Criminal penalties;

 

	·	Injunctions;

 

	·	Product seizure or detention;

 

	·	Product recalls; and

 

	 ·	Total or partial suspension of production.

 

In addition, on March 23, 2010, President
Obama signed into law, the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education and Reconciliation
Act of 2010 (collectively, the “health care reform laws”), which cause substantial changes to the existing system for
paying for health care in the U.S. While the health care reform laws do not directly prohibit or reduce reimbursement for our products,
the laws grant various governmental agencies the authority to monitor health care reimbursement by governmental payers and implement
cost-containment measures in order to reduce the overall cost of health care items and services over the next ten years. If legislative
or administrative changes to U.S. or international reimbursement practices reduce reimbursement for our products, or if future
products that we develop do not ultimately qualify for reimbursement, we may experience an adverse impact on demand for such products
and the prices that customers are willing to pay for them. This, in turn, would adversely affect our business, financial condition
and results of operations.

 

Our business will be subject to heightened scrutiny by
governmental agencies because of new fraud detection and prevention oversight measures that are part of the health care reform
laws. 

 

The new health care reform laws include a number of changes
to federal law and enforcement activities intended to detect and prevent fraud by medical device manufacturers and other health
care providers. For example, beginning in 2013 our business will be subject to new regulations on transparency and disclosure,
particularly relating to company ownership, finances and transactions with health care providers such as hospitals and physicians.
Our disclosures under these regulations will be available for public inspection. We may also be subject to screening requirements,
such as licensure checks, unscheduled and unannounced site visits, database checks and other screening measures if certain government
agencies determine there to be a risk of fraud, waste or abuse by suppliers of medical devices. Additionally, we may be required
to implement more aggressive compliance and ethics programs and adopt stricter standards for doing business with government health
care programs as a condition of our future enrollment in programs such as Medicare and Medicaid. The specific requirements of the
new compliance and ethics programs have yet to be determined. We will likely have to devote significant resources, including management
attention and financial resources, to ensure compliance with the government’s new fraud-fighting initiatives. Although these
new oversight measures are not effective immediately, we must begin implementing policies now in order to ensure that we satisfy
our obligations as of the effective date. If we fail to meet the new fraud prevention and detection standards, we may be excluded
from participating in government health care programs such as Medicare and Medicaid. If we are unable to participate in government
reimbursement programs, there will be a material adverse effect on our business and results of operations.

 

    	 

    	 

    

 

Delays in successfully completing
our clinical trials could jeopardize our ability to obtain regulatory approval or market our WavSTAT System candidates on a timely
basis.

 

Our business prospects will depend on our
ability to complete clinical trials, obtain satisfactory results, obtain required regulatory approvals and successfully commercialize
our WavSTAT System product candidates. Completion of our clinical trials, announcement of results of the trials and our ability
to obtain regulatory approvals could be delayed for a variety of reasons, including:

 

	·	Unsatisfactory results of any clinical trial;

 

	·	The failure of principal third-party investigators to perform clinical trials on our anticipated schedules; and

 

	·	Different interpretations of pre-clinical and clinical data, which could initially lead to inconclusive results.

 

Our development costs will increase
if we have material delays in any clinical trial or if we need to perform more or larger clinical trials than planned. 

 

If clinical trial delays are significant,
or if any of our WavSTAT System product candidates do not prove to be safe or effective or do not receive required regulatory approvals,
our financial results and the commercial prospects for our product candidates will be harmed. Furthermore, our inability to complete
our clinical trials in a timely manner could jeopardize our ability to obtain regulatory approval.

 

The independent clinical investigators
that we rely upon to conduct our clinical trials may not be diligent, careful or timely, and may make mistakes, in the conduct
of our clinical trials.

 

We depend on independent clinical investigators
to conduct our clinical trials. The investigators are not our employees, and we cannot control the amount or timing of resources
that they devote to our product development programs. If independent investigators fail to devote sufficient time and resources
to our product development programs, or if their performance is substandard, it may delay FDA approval of our products. These independent
investigators may also have relationships with other commercial entities, some of which may compete with us. If these independent
investigators assist our competitors at our expense, it could harm our competitive position.

 

Our product development efforts may
not yield marketable products due to results of studies or trials, failure to achieve regulatory approvals or market acceptance,
proprietary rights of others or manufacturing issues.

 

Our success depends on our ability to successfully
develop and obtain regulatory approval to market new products. We expect that a significant portion of the research that we will
conduct will involve new and unproven technologies. Development of a product requires substantial technical, financial and human
resources even if the product is not successfully completed.

 

Potential products may appear to be promising
at various stages of development yet fail to reach the market for a number of reasons, including the:

 

	·	Lack of adequate quality or sufficient prevention benefit, or unacceptable safety during pre-clinical studies or clinical trials;

 

	·	Failure to receive necessary regulatory approvals;

 

	·	Existence of proprietary rights of third parties; and/or

 

	·	Inability to develop manufacturing methods that are efficient, cost-effective and capable of meeting stringent regulatory standards.

 

    	 

    	 

    

 

Our inability to protect our intellectual
property rights could negatively impact our projected growth and ability to generate revenues and profits, which would have a negative
impact on our business.

 

We rely on a combination of patent, patent
pending, copyright, trademark and trade secret laws, proprietary rights agreements and non-disclosure agreements to protect our
intellectual properties. These measures may not prove to be effective in protecting our intellectual property.

 

In the case of patents, our existing patents
may be invalidated, any patents for which we currently or prospectively apply may not be granted, or any of these patents may not
ultimately provide significant commercial benefits. Further, competing companies may circumvent any patents that we may hold by
developing products which closely emulate but do not infringe our patents. While we currently have and intend to seek patent protection
for our products in selected foreign countries, those patents may not receive the same degree of protection as they would in the
United States. We may not be able to successfully defend our patents and proprietary rights in any action we may file for patent
infringement. Similarly, we may be required to defend litigation involving the patents or proprietary rights of others, or we may
be unable to obtain licenses for these rights. Legal and accounting costs relating to prosecuting or defending patent infringement
litigation may be substantial.

 

We also rely on proprietary designs, technologies,
processes and know-how not eligible for patent protection. Our competitors may independently develop the same or superior designs,
technologies, processes and know-how.

 

While we have and will continue to enter
into proprietary rights agreements with our employees and third parties giving us proprietary rights to certain technology developed
by those employees or parties while engaged by the Company, courts of competent jurisdiction may not enforce those agreements.

 

The patents we own comprise a large
portion of our assets, which could limit our financial viability.

 

The WavSTAT Optical Biopsy System is protected
by 33 issued U.S. patents and approximately 25 international counterpart patents. These patents comprise approximately 38% of our
assets at December 31, 2010. If our existing patents are invalidated or if they fail to provide significant commercial benefits,
it will severely hurt our financial condition, as a significant percentage of our assets would lose their value. Further, since
our patents are amortized over the course of their term until they expire, our assets comprised of patents will systemically be
written down to zero.

 

Legislative actions and potential
new accounting pronouncements are likely to impact our future financial position and results of operations.

 

Compliance with publicly-traded company
regulations adversely impacts our resources. As a publicly-traded company, we are subject to rules and regulations
that increase our legal and financial compliance costs, make some activities more time-consuming and costly, and divert our managements
attention away from the operation of our business. We are obligated to file with the SEC annual and quarterly information and other
reports that are specified in the Exchange Act, and are also subject to other reporting and corporate governance
requirements, including requirements of the Sarbanes-Oxley Act of 2002, and the rules and regulations promulgated thereunder, which
impose significant compliance and reporting obligations upon us. We may not be successful in complying with these obligations,
and compliance with these obligations could be time consuming and expensive. Failure to comply with the additional reporting and
corporate governance requirements could lead to fines, deregistration under the Exchange Act and, in the most egregious cases,
criminal sanctions.

 

Our products may be subject to recall
or product liability claims.

 

Our WavSTAT System products may be used
in connection with medical procedures in which it is important that those products function with precision and accuracy. If our
products do not function as designed, or are designed improperly, we may be forced by regulatory agencies to withdraw such products
from the market. In addition, if medical personnel or their patients suffer injury as a result of any failure of our products to
function as designed, or an inappropriate design, we may be subject to lawsuits seeking significant compensatory and punitive damages.
Any product recall or lawsuit seeking significant monetary damages may have a material effect on our business and financial condition.

 

    	 

    	 

    

 

We have not paid any cash dividends
and no cash dividends will be paid in the foreseeable future.

 

We do not anticipate paying cash dividends
on our common stock in the foreseeable future, and we cannot assure an investor that funds will be legally available to pay dividends or that even
if the funds are legally available, that the dividends will be paid.

 

RISKS RELATED TO OUR CAPITAL STOCK

 

The application of the “penny
stock” rules could adversely affect the market price of our Common Stock and increase your transaction costs to sell your
stock.

 

As long as the trading price of our Common
Stock is below $5 per share, the open-market trading of our Common Stock will be subject to the “penny stock” rules.
The “penny stock” rules impose additional sales practice requirements on broker-dealers who sell securities to persons
other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make
a special suitability determination for the purchase of securities and have received the purchaser’s written consent to the
transaction before the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the broker-dealer must
deliver, before the transaction, a disclosure schedule prescribed by the SEC relating to the penny stock market. The broker-dealer
also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for
the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks.
These additional burdens imposed on broker-dealers may restrict the ability or decrease the willingness of broker-dealers to sell
our common stock, and may result in decreased liquidity for our common stock and increased transaction costs for sales and purchases
of our common stock as compared to other securities.

 

Our common stock is thinly traded,
so investors may be unable to sell at or near ask prices or at all.

 

Our common stock has historically been
sporadically or “thinly-traded”, meaning that the number of persons interested in purchasing our Common Stock at or
near ask prices at any given time may be relatively small or non-existent. As of December 15, 2011, our average trading volume
per day for the past three months was approximately 109,000 shares a day with a high of 856,500 shares traded and a low of 0 shares
traded per day. This situation is attributable to a number of factors, including the fact that we are a small company which is
relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate
or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be
reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we
became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares
is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will
generally support continuous sales without an adverse effect on share price. A broader or more active public trading market for
our common stock may not develop or be sustained, and current trading levels may not be sustained.

 

The market price for our common
stock is particularly volatile, given our status as a relatively unknown company with a small and thinly-traded public
float, limited operating history and lack of revenues which could lead to wide fluctuations in our share price.

 

The market for our Common Stock is characterized
by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more
volatile than a seasoned issuer for the foreseeable future. In fact, during the 90-day period ended December 15, 2011, the high
and low closing prices of a share of our Common Stock were $0.10 and $0.04, respectively. The volatility in our share price is
attributable to a number of factors. First, as noted above, our stock is sporadically and/or thinly-traded. As a consequence of
this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence
the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event
that a large number of our shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could
better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or “risky” investment
due to our limited operating history and lack of revenues or profits to date and uncertainty of future market acceptance for our
potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most
of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more
quickly and at greater discounts than would be the case with the stock of a seasoned issuer. The following factors may add to the
volatility in the price of our common stock: actual or anticipated variations in our quarterly or annual operating results; acceptance
of our proprietary technology; government regulations, announcements of significant acquisitions, strategic partnerships or joint
ventures; our capital commitments; and additions or departures of our key personnel. Many of these factors are beyond our control
and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions
or projections as to what the prevailing market price for our common stock will be at any time, including as to whether our common
stock will sustain its current market prices, or as to what effect that the sale of shares or the availability of common stock
for sale at any time will have on the prevailing market price.

 

    	 

    	 

    

 

The market for
penny stocks such as ours has been subject to fraud and abuse and may cause our stock price to be more volatile.

 

Shareholders should be aware that, according
to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns
include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
(2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler
room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive
and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities
by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse
of those prices and consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny
stock market. The occurrence of these patterns or practices could increase the volatility of our share price. In addition, potential
dilutive effects of future sales of shares of common stock by shareholders and by the Company, including in this Offering, could
have an adverse effect on the market price of our shares.

 

Volatility in our common
stock price may subject us to securities litigation.

 

The market for our common stock is characterized
by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more
volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have sometimes initiated securities class action
litigation against a company following periods of volatility in the market price of its securities. We may in the future be the
target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s
attention and resources.

 

A large number of shares of common
stock are issuable upon exercise of outstanding options and the exercise of these securities could result in the
substantial dilution of the investment of other shareholders in terms of percentage ownership in the Company as well as the book
value of the common stock.

 

As of September 30, 2011, there are outstanding
common stock purchase options entitling the holders to purchase 15,295,000 shares of common stock at a weighted average exercise
price of $0.22 per share (4,662,500 of these shares are exercisable within 60 days of September 30, 2011). The exercise price for
all of the options may be less than the cost to acquire our common stock. In addition, the holders of the common stock purchase
options may sell common stock in tandem with their exercise of those options to finance that exercise, or may resell the shares
purchased in order to cover any income tax liabilities that may arise from their exercise of the options, which could substantially
depress the prevailing market price of our common stock.

 

    	 

    	 

    
 

Our issuance of additional common
stock, or options to purchase our common stock, would dilute the proportionate ownership and voting rights of shareholders.

 

We are entitled under our articles of incorporation
to issue up to 225,000,000 shares of capital stock which includes 175,000,000 shares of common stock, 3,585,000 shares of preferred
stock and 46,415,000 undesignated shares. Our undesignated shares may be designated as in a senior position to our common stock.
After taking into consideration our outstanding common stock at September 30, 2011, we will be entitled to issue up to 18,573,561
additional shares of Common Stock (175,000,000 authorized less 108,041,095 common shares outstanding, 3,585,000 shares for issuance
upon conversion of Preferred Stock, 17,695,000 shares reserved for issuance of stock options, 26,733,498 shares reserved for issuance
of Common Stock purchase warrants and 371,846 shares of Common Stock issued for payment of cumulative preferred dividends) and
up to 46,415,000 shares of undesignated capital stock. Our board of directors may generally issue stock, or options or warrants
to purchase those shares, without further approval by our shareholders based upon such factors as our board of directors may deem
relevant at that time. It is likely that we will be required to issue a large amount of additional securities to raise capital
to further our development. It is also likely that we will be required to issue a large amount of additional securities to directors,
officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants
or under our stock plans. We may not be able to issue additional shares of Common Stock, or options or warrants to purchase those
shares, under circumstances we may deem appropriate at the time.

 

The limitation of monetary liability
of our directors, officers and employees under our articles of incorporation and the indemnification rights of our directors, officers,
consultants and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers,
consultants and employees.

 

Our amended and restated articles of incorporation,
as amended, contain provisions which eliminate the liability of our directors and officers for monetary damages to the Company
and shareholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification
obligations under our agreements with our directors, officers, consultants and employees. The foregoing indemnification obligations
could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors,
officers, consultants and employees, which we may be unable to recoup. These provisions and resultant costs may also discourage
us from bringing a lawsuit against directors, officers, consultants and employees for breaches of their fiduciary duties, and may
similarly discourage the filing of derivative litigation by our shareholders against our directors, officers, consultants and employees
even though such actions, if successful, might otherwise benefit the Company and shareholders.

  

Anti-takeover
provisions may impede the acquisition of the Company.

 

Certain provisions of the Minnesota Business
Corporation Act and other Minnesota laws have anti-takeover effects and may inhibit a non-negotiated merger or other business combination.
These provisions are intended to encourage any person interested in acquiring us to negotiate with, and to obtain the approval
of, our board of directors in connection with such a transaction. However, certain of these provisions may discourage a future
acquisition of the Company, including an acquisition in which the shareholders might otherwise receive a premium for their shares.
As a result, shareholders who might desire to participate in such a transaction may not have the opportunity to do so.

 

RISKS RELATED
TO THIS OFFERING

 

There will be restrictions on resale
of the securities and the shares and there is no assurance of the registration of the securities.

 

None of the
Securities or Shares may be sold unless, at the time of such intended sale, there is a current registration statement covering
the resale of the Securities and Shares or there exists an exemption from registration under the Securities Act, and such Securities
and Shares have been registered, qualified, or deemed to be exempt under applicable securities or “blue sky” laws in
the state of residence of the seller or in the state where sales are being effected. If no registration statement is filed and
declared effective covering the resale of any of the Securities or Shares sold pursuant to this Agreement, investors will be precluded
from disposing of such securities unless such securities may become eligible to be disposed of under the exemptions provided by
Rule 144 under the Securities Act without restriction. If the securities sold pursuant to this Offering
are not registered for resale under the Securities Act, or exempt therefrom, and registered or qualified under applicable securities
or “blue sky” laws, or deemed exempt therefrom, the value of the such securities will be greatly reduced. 

 

    	 

    	 

    

 

We
have significant discretion over the use of certain of the net proceeds.

 

Assuming that all of the Securities offered
by this Agreement are sold, the proceeds to us from the sale of the Securities will be approximately $1,500,000 if the Maximum
Offering is sold. A significant portion of the net proceeds of this Offering will be applied to working capital and other general
corporate purposes. Accordingly, our management will have broad discretion as to the application of such proceeds. There can be
no assurance that management’s use of proceeds generated through this Offering will prove optimal or translate into revenue
or profitability for the Company. Investors are urged to consult with their attorneys, accountants and personal investment advisors
prior to making any decision to invest in the Company.

 

The offering price for the securities
has been arbitrarily determined by us.

 

The offering price of
the Securities was arbitrarily determined by us. The price of the Securities does not necessarily bear any relationship to established
valuation criteria such as earnings, book value or assets. Rather, the price of the Securities may be derived as a result of our
negotiations with the investors based upon various factors including prevailing market conditions, our future prospects and our
capital structure. These prices do not necessarily accurately reflect the actual value of the Securities or the price that may
be realized upon disposition of the Securities or the Shares.

 

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

 

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

 

The Securities will be offered by
us on a “Best Efforts” basis, and we may not raise the Minimum or Maximum Offering.

 

We are offering the
Securities on a “best efforts” basis. In a best efforts offering such as this one, there is no assurance that we will
sell the Minimum or Maximum Offering. Accordingly, we may close upon amounts less than the Maximum Offering but not less than the
Minimum Offering, which may not provide us with sufficient funds to fully implement our business plan.

 

Investor
funds will not accrue interest while in escrow prior to closing. 

 

We anticipate that the funds that are delivered
in connection with subscriptions will be held in a non-interest bearing escrow account until the closing of the Offering, if any.
If we terminate the Offering prior to accepting an investor’s subscription, such amount will be returned, without interest
or deduction, to the investor. Investors may not have the use of such funds or receive interest thereon pending the completion
of the Offering.

 

If the Maximum Offering amount is
not raised, it may increase our long-term debt or the amount of additional equity we need to raise. 

 

There is no assurance that the maximum number of Securities
offered in this Offering will be sold. If the Maximum Offering amount is not sold, we may need to incur additional debt or raise
additional equity in order to finance our operations. Increasing the amount of debt will increase our debt service obligations
and make less cash available for distribution to our shareholders. Increasing the amount of additional equity we are required to
raise will further dilute investors participating in this Offering.

 

Your ownership interest is subject
to dilution. 

 

If you purchase Securities in this Offering, you will
experience immediate dilution in the value of your Shares received upon conversion or exercise. In addition, each
investor’s proportionate ownership interest may be diluted when we issue additional shares of our common stock. We may
raise additional capital in the future through additional sales of shares of our common stock, and your percentage interest
in our common stock would be diluted if you do not participate in such additional sales.

 

    	 

    	 

    

 

FORWARD-LOOKING
STATEMENTS

 

We have included in this Agreement, including Exhibit A, certain
forward-looking statements. Such statements can be identified by the use of forward-looking terminology such as “believe,”
“expect,” “may,” “should,” “seek,” “on-track,” “plan,”
“project,” “forecast,” “intend” or “anticipate,” or the negative thereof or comparable
terminology, or by discussions of vision, strategy or outlook, including statements related to revenues and profitability, pricing
and competition, the continued viability of our technology, our growth and expansion plans, including retaining new employees,
compliance with governmental regulations, our intellectual property protection strategies, payment of dividends, the volatility
of our common stock and the market for our common stock, dilution, trading restrictions, use of proceeds and the need for additional
debt or equity funding. You are cautioned that our business and operations are subject to a variety of risks and uncertainties,
many of which are beyond our control and, consequently, our actual results may differ materially from those projected by any forward-looking
statements. See the section titled “Risk Factors” on Exhibit A for information regarding certain important factors
that could cause our actual results to differ materially from those projected in our forward-looking statements. Our forward-looking
statements contained herein speak only as of the date of this Agreement. We make no commitment to revise or update any forward-looking
statements in order to reflect events or circumstances after the date any such statements are made.Exhibit 4.1

 

 

 

THIS WARRANT AND THE SHARES ISSUABLE
UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS WARRANT NOR
ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS,
THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S UNDER SUCH ACT.

 

 

 

Warrant Number: WA-2012-___

 

 

 

COMMON STOCK PURCHASE WARRANT

 

THIS CERTIFIES THAT,
for value received, ________________, or his registered assigns, is entitled to purchase from GBS Enterprises Incorporated,
a Nevada corporation (the “Company”), at any time or from time to time during the period specified in Paragraph 2
hereof, ___________________ (____________________) fully paid and nonassessable shares of the Company’s common
stock (the “Common Stock”), at an exercise price per share equal to FIFTY CENTS (USD $0.50) (the “Exercise
Price”). The term “Warrant Shares,” as used herein, refers to the shares of Common Stock purchasable hereunder.

 

This Warrant is subject to the following
terms, provisions, and conditions:

 

1.
  Manner of Exercise; Issuance of Certificates; Payment for Shares. Subject to the provisions hereof, this
Warrant may be exercised by the holder hereof (“Warrantholder”), in whole or in part, by the surrender of this Warrant,
together with a completed exercise agreement in the form attached hereto (the “Exercise Agreement”), to the Company
during normal business hours on any business day at the Company’s principal executive offices (or such other office or agency
of the Company as it may designate by notice to the Warrantholder), and upon the full payment to the Company in cash, by certified
or official bank check or by wire transfer for the account of the Company of the Exercise Price for the Warrant Shares specified
in the Exercise Agreement. The Warrant Shares so purchased shall be deemed to be issued to the Warrantholder hereof or such holder’s
designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered,
the completed Exercise Agreement shall have been delivered, and payment shall have been made for such shares as set forth above.
Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement,
shall be delivered to the Warrantholder within a reasonable time, not exceeding five (5) business days, after this Warrant shall
have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the Warrantholder
and shall be registered in the name of such holder or such other name as shall be designated by such holder. If this Warrant shall
have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery
of such certificates, deliver to the Warrantholder a new Warrant representing the number of shares with respect to which this
Warrant shall not then have been exercised.

 

2.Period of Exercise.
This Warrant is exercisable at any time or from time to time on or after the date on which this Warrant is issued and until
5:00 p.m., New York time on third anniversary of the date of grant (the “Exercise Period”).

 

    	 

    	 

    

 

3.
  Certain Agreements of the Company. The Company hereby covenants and agrees
as follows:

 

(a)Shares to be Fully Paid.
All Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be validly issued, fully paid, and nonassessable
and free from all taxes, liens, and charges with respect to the issue thereof.

 

(b)Reservation of Shares.
During the Exercise Period, the Company shall at all times have authorized, and reserved for the purpose of issuance upon exercise
of this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of this Warrant.

 

(c)Registration of Warrant
Shares. The Company shall promptly prepare and file a Registration Statement on Form S-1 or other applicable form with
the Securities and Exchange Commission to register the Warrant Shares under the Securities Act of 1933, as amended, and shall use
its best efforts to have such Registration Statement or appropriate form, as the case may be, deemed effective by the Securities
and Exchange Commission as soon as practicable and to maintain the effectiveness of the Registration Statement or appropriate form,
as the case may be, until all of the Warrant Shares are sold or no longer necessary, whichever is sooner.

 

(d)Listing. The Company
shall promptly secure the listing of the shares of Common Stock issuable upon exercise of the Warrant upon each national securities
exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of
issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the Company shall so list
on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same
class shall be listed on such national securities exchange or automated quotation system.

 

(e)Certain Actions Prohibited.
The Company will not, by amendment of its charter or through any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions
of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect
the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose
of this Warrant. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares
of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant.

 

(f)Successors and Assigns.
This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation, or acquisition of all or substantially
all the Company’s assets.

 

4.Forced Exercise. The
Warrantholder hereby understands and covenants that in the event the Common Stock of the Company is trading at an average of at
least $3.00 per share for a period of not less than 20 consecutive trading days, the Warrantholder shall be required to fully exercise
this Warrant within ten (10) business days following the 20th trading day. The Warrantholder shall furnish the Company
with a completed and fully executed Form of Exercise Agreement attached to this Warrant and remit the funds pursuant to the Form
of Exercise Agreement and the terms of this Warrant.

 

5. Redemption. Throughout
the Exercise Period, the Company shall have the right to redeem this Warrant for $0.05 per Warrant Share. In the event the Company
elects to redeem this Warrant pursuant to this Paragraph 5, the Company shall promptly notify the holder of this Warrant in writing,
and such writing shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail
courier, postage prepaid and addressed, to such holder at the address shown for such holder on the books of the Company, or at
such other address as shall have been furnished to the Company by notice from such holder.

 

    	 

    	 

    

6.Tax Issues.
The issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge to the holder
of this Warrant or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name
other than the holder of this Warrant.

 

7. No Rights or Liabilities
as a Shareholder. This Warrant shall not entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative action by the holder hereof to purchase Warrant Shares,
and no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any liability of such holder
for the Exercise Price or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of
the Company.

 

8. Adjustments in
Exercise Price/Number of Shares 

 

(a) Subdivision of or Combination of Common Stock.
If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or
otherwise) the shares of Common Stock acquirable upon the exercise of this Warrant into a greater number of shares, then, after
the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately
reduced. If the Company at any time combines (by any reverse stock split, recapitalization, reorganization, reclassification or
otherwise) the shares of Common Stock acquirable hereunder into a smaller number of shares, then, after the date of record for
effecting such combination, the Exercise Price in effect immediately prior to such subdivision will be proportionately increased.

 

(b) Adjustment of Number of Shares. Upon each
adjustment of the Exercise Price pursuant to the provision above, the number of shares of Common Stock issuable upon exercise of
this Warrant shall be adjusted by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment
by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.

 

(c)
Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less
than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment
shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.

9. Transfer,
Exchange, and Replacement of Warrant.

 

(a) Restriction on Transfer.
This Warrant and the rights granted to the holder hereof are transferable, in whole or in part, upon surrender of this Warrant,
together with a properly executed assignment in the form attached hereto, at the office or agency of the Company referred to in
Paragraph 10 below, provided, however, that any transfer or assignment shall be subject to the conditions set forth herein.
Until due presentment for registration of transfer on the books of the Company, the Company may treat the registered holder hereof
as the owner and holder hereof for all purposes, and the Company shall not be affected by any notice to the contrary.

 

(b) Warrant Exchangeable
for Different Denominations. This Warrant is exchangeable, upon the surrender hereof by the holder hereof at the office
or agency of the Company referred to in Paragraph 10 below, for new Warrants of like tenor representing in the aggregate the right
to purchase the number of shares of Common Stock which may be purchased hereunder, each of such new Warrants to represent the right
to purchase such number of shares as shall be designated by the holder hereof at the time of such surrender.

 

(c) Replacement of Warrant.
Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant
and, in the case of any such loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form
and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company,
at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

    	 

    	 

    

(d) Cancellation; Payment
of Expenses. Upon the surrender of this Warrant in connection with any transfer, exchange, or replacement as provided in
this Paragraph 9, this Warrant shall be promptly canceled by the Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if any, incurred by the holder or transferees) and charges payable
in connection with the preparation, execution, and delivery of Warrants pursuant to this Paragraph 9.

 

(e) Register.
The Company shall maintain, at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person
in whose name this Warrant has been issued, as well as the name and address of each transferee and each prior owner of this Warrant.

 

(f) Exercise or Transfer Without
Registration. If, at the time of the surrender of this Warrant in connection with any exercise, transfer, or exchange of
this Warrant, this Warrant (or, in the case of any exercise, the Warrant Shares issuable hereunder), shall not be registered under
the Securities Act of 1933, as amended (the “Securities Act”) and under applicable state securities or blue sky laws,
the Company may require, as a condition of allowing such exercise, transfer, or exchange, (i) that the holder or transferee of
this Warrant, as the case may be, furnish to the Company a written opinion of counsel, which opinion and counsel are acceptable
to the Company, to the effect that such exercise, transfer, or exchange may be made without registration under the Securities Act
and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor”
as defined in Rule 501(a) promulgated under the Securities Act; provided that no such opinion, letter or status as an “accredited
investor” shall be required in connection with a transfer pursuant to Rule 144 under the Securities Act. The first holder
of this Warrant, by taking and holding the same, represents to the Company that such holder is acquiring this Warrant for investment
and not with a view to the distribution thereof.

 

10.
Notices. All notices, requests, and other communications required or permitted to be given or delivered hereunder to
the holder of this Warrant shall be in writing, and shall be personally delivered, or shall be sent by certified or registered
mail or by recognized overnight mail courier, postage prepaid and addressed, to such holder at the address shown for such holder
on the books of the Company, or at such other address as shall have been furnished to the Company by notice from such holder. All
notices, requests, and other communications required or permitted to be given or delivered hereunder to the Company shall be in
writing, and shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier,
postage prepaid and addressed, to the office of the Company c/o Mr. Joerg Ott, 585 Molly Lane, Woodstock, GA 30189, or at such
other address as shall have been furnished to the holder of this Warrant by notice from the Company. Any such notice, request,
or other communication may be sent by facsimile, but shall in such case be subsequently confirmed by a writing personally delivered
or sent by certified or registered mail or by recognized overnight mail courier as provided above. All notices, requests, and other
communications shall be deemed to have been given either at the time of the receipt thereof by the person entitled to receive such
notice at the address of such person for purposes of this Paragraph 10, or, if mailed by registered or certified mail or with a
recognized overnight mail courier upon deposit with the United States Post Office or such overnight mail courier, if postage is
prepaid and the mailing is properly addressed, as the case may be.

 

 

11.
Governing Law. THIS WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEVADA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT
OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEVADA WITH
RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY
WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS’
FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.

 

    	 

    	 

    

 

12. Miscellaneous.

 

(a) Amendments.
This Warrant and any provision hereof may only be amended by an instrument in writing signed by the Company and the holder hereof.

 

(b) Descriptive Headings.
The descriptive headings of the several paragraphs of this Warrant are inserted for purposes of reference only, and shall not affect
the meaning or construction of any of the provisions hereof.

 

(c) Remedies. The
Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holder, by vitiating the
intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach
of its obligations under this Warrant will be inadequate and agrees, in the event of a breach or threatened breach by the Company
of the provisions of this Warrant, that the holder shall be entitled, in addition to all other available remedies at law or in
equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any
breach of this Warrant and to enforce specifically the terms and provisions thereof, without the necessity of showing economic
loss and without any bond or other security being required.

 

IN WITNESS WHEREOF,
the Company has caused this Warrant to be signed by its duly authorized officer.

 

	 	GBS ENTERPRISES INCORPORATED
	 	 	 
	 	 	 
	 	By:	 
	 	 	Name:  Joerg Ott
	 	 	Title:  Chief Executive Officer and President

 

 

Dated as of March _____, 2012

 

 

 

	REGISTERED WARRANTHOLDER:	_______________
	WARRANT NO.:	WA-2012-___
	WARRANT SHARES:	_______________
	EXERCISE PRICE:	$0.50 PER SHARE

    	 

    	 

    

 

FORM OF EXERCISE AGREEMENT

 

 

Dated: ______________________

 

 

 

To:GBS Enterprises Incorporated

 

 

 

The undersigned, pursuant
to the provisions set forth in Warrant No: WA-2012-____, hereby agrees to purchase ________________ shares of Common Stock
of GBS Enterprises Incorporated covered by such Warrant, at $0.50 per share and makes payment herewith in full therefor
at the price per share provided by such Warrant in cash or by certified or official bank check in the amount of $_______________.
Please issue a certificate or certificates for such shares of Common Stock in the name of and pay any cash for any fractional share
to:

 

 

 

	 	Name:	 
	 	 	 
	 	Signature:	 
	 	 	 
	 	Address:	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	Note:	The above signature should correspond exactly with the name on the face of the within Warrant, if applicable.

 

 

and, if said number of shares of Common
Stock shall not be all the shares purchasable under the within Warrant, a new Warrant is to be issued in the name of said undersigned
covering the balance of the shares purchasable thereunder less any fraction of a share paid in cash.

 

 

    	 

    	 

    

 

FORM OF ASSIGNMENT

 

 

 

FOR VALUE RECEIVED,
the undersigned hereby sells, assigns, and transfers all the rights of the undersigned under the within Warrant, with respect to
the number of shares of Common Stock covered thereby set forth herein below, to:

 

 

	Name of Assignee	Address	No of Shares

 

 

 

 

 

 

, and hereby irrevocably constitutes and
appoints ___________________________________ as agent and attorney-in-fact to transfer said Warrant on the books of the within-named
corporation, with full power of substitution in the premises.

 

 

 

Dated:________ __, 20__

 

 

 

	In the presence of:	 
	 	 	 
	 	Name:	 
	 	 	 
	 	Signature:	 
	 	Title of Signing Officer or Agent (if any):
	 	 	 
	 	Address:	 
	 	 	 
	 	 	 
	 	 	 
	 	Note:	The above signature should correspond exactly with the name on the face of the within Warrant, if applicable.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00202-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00202-of-00352.parquet"}]]