Document:

GUARANTY

 

This Guaranty (the
“Guaranty”) is made this 4th day of April 2012, by such guarantors listed on the signature pages
hereof (collectively, jointly and severally, “Guarantors,” and each, individually, a “Guarantor”),
in favor of each of the investors listed on the Schedule of Buyers attached to the Securities Purchase Agreement (as defined herein)
(each, individually, a “Buyer” and together with their respective successors, assigns, endorsees and transferees,
the “Buyers”).

 

RECITALS

 

WHEREAS,
pursuant to the Securities Purchase Agreement, dated as of April 3, 2012 (as amended, restated, supplemented, or otherwise
modified from time to time, including all schedules thereto, the “Securities Purchase Agreement”),
by and among Morria Biopharmaceuticals PLC, a public limited company formed under the laws of England and Wales (“Parent”),
and each of the Buyers, Parent has agreed to sell, and Buyers have each agreed to purchase, severally and not jointly,
certain Notes and Warrants; and

 

WHEREAS, each
Guarantor is a direct or indirect wholly-owned Subsidiary of Parent and will receive direct and substantial benefits from the purchase
by Buyers of the Notes and Warrants; and

 

WHEREAS, in
order to induce Buyers to purchase, severally and not jointly, the Notes and Warrants as provided for in the Securities Purchase
Agreement, Guarantors have agreed to jointly and severally guaranty all of Parent’s obligations under and with respect to
the Notes, the Securities Purchase Agreement and the other Transaction Documents.

 

WHEREAS,
in connection herewith, Morria Biopharmaceuticals, Inc. (“Morria Inc.”), Parent and Buyers have entered
into that certain Security Agreement dated as of April 4, 2012 (as amended, restated, supplemented, or otherwise modified from
time to time, including all schedules thereto, the “Security Agreement”), pursuant to which Morria Inc.
and Parent (Morria Inc. and Parent and any other grantor under the Security Agreement, collectively,
“Obligors” and each, individually, an “Obligor”) have granted each of the Buyers
continuing security interests in all assets of each Obligor, as more fully set forth in the Security Agreement.

 

AGREEMENTS

 

NOW, THEREFORE,
for and in consideration of the recitals made above and other good and valuable consideration, the receipt, sufficiency and adequacy
of which are hereby acknowledged, each Guarantor hereby agrees as follows:

 

1.          Definitions.
All capitalized terms used herein that are not otherwise defined herein shall have the meanings given them in the Securities Purchase
Agreement.

 

    	 

    	 

    

 

2.          Guaranteed
Obligations. Guarantors jointly and severally hereby fully, irrevocably and unconditionally
guaranty to Buyers the due and punctual Satisfaction in Full of the Guaranteed Obligations (as defined below). “Guaranteed
Obligations” means, collectively, all of the present and future payment obligations of each Obligor arising under the
Securities Purchase Agreement, any and all Notes payable to Buyer, the Security Agreement, the UK Security Agreement, and the other
Transaction Documents, including, without limitation, reasonable attorneys’ fees and expenses and any interest, fees, or
expenses that accrue after the filing of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part
as a claim in any Insolvency Proceeding. “Insolvency Proceeding” means any proceeding commenced by or against
any Person under any provision of title 11 of the United States Code, as in effect from time to time (the “Bankruptcy
Code”), or under any other state or federal bankruptcy or insolvency law or any equivalent laws in any other jurisdiction,
assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief. 

 

3.          Guarantors’
Representations and Warranties. Each Guarantor represents and warrants to Buyers that
such Guarantor expects to derive substantial benefits from the purchase by Buyers of the Notes and Warrants under the Securities
Purchase Agreement and the other transactions contemplated hereby and by the other Transaction Documents. Buyers may rely conclusively
on a continuing warranty, hereby made, that such Guarantor continues to be benefited by this Guaranty and Buyers shall have no
duty to inquire into or confirm the receipt of any such benefits, and this Guaranty shall be effective and enforceable by Buyers
without regard to the receipt, nature or value of any such benefits.

 

4.          Unconditional
Nature. No act or thing need occur to establish any Guarantor’s liability hereunder,
and no act or thing, except Satisfaction in Full of the Guaranteed Obligations (as defined below), shall in any way exonerate any
Guarantor hereunder or modify, reduce, limit or release any Guarantor’s liability hereunder. This is an absolute, unconditional
and continuing guaranty of payment of the Guaranteed Obligations and shall continue to be in force and be binding upon each Guarantor
until Satisfaction in Full of the Guaranteed Obligations. Each Guarantor agrees that this Guaranty is a guaranty of Satisfaction
in Full of the Guaranteed Obligations and not of collection, and that its obligations under this Guaranty shall be primary, absolute
and unconditional.  In addition to the terms set forth herein, it is expressly understood and agreed that, if, at maturity
and at any time during the continuance of an Event of Default (as defined in the Notes), the outstanding amount of the Guaranteed
Obligations under the Transaction Documents (including, without limitation, all accrued interest thereon, all accrued late charges
thereon and all premiums due in respect thereof) is declared to be immediately due and payable, then Guarantors shall, upon notice
of such acceleration, without further demand, pay to each Buyer the entire outstanding portion of the Guaranteed Obligations that
is due and owing to such Buyer.

 

5.          Subrogation.
No Guarantor will exercise or enforce any right of contribution, reimbursement, recourse or subrogation available to such Guarantor
as to any of the Guaranteed Obligations, or against any Person liable therefor, or as to any collateral security therefor, unless
and until Satisfaction in Full of the Guaranteed Obligations.

 

6.          Enforcement
Expenses. Each Guarantor shall pay or reimburse each Buyer for all costs, expenses
and reasonable attorneys’ fees paid or incurred by such Buyer in endeavoring to collect and enforce the Guaranteed Obligations
and in enforcing this Guaranty.

 

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7.          Obligations
Absolute. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute,
independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of
a guarantor or surety other than Satisfaction in Full of the Guaranteed Obligations. In furtherance of the foregoing and without
limiting the generality thereof, each Guarantor agrees that none of its obligations hereunder shall be affected or impaired by
any of the following acts or things (which each Buyer is expressly authorized to do, omit or suffer from time to time, without
consent or approval by or notice to any Guarantor): (a) any acceptance of collateral security, guarantors, accommodation parties
or sureties for any or all of the Guaranteed Obligations; (b) one or more extensions or renewals of the Guaranteed Obligations
(whether or not for longer than the original period) or any modification of the interest rates, maturities, if any, or other contractual
terms applicable to any of the Guaranteed Obligations or any amendment or modification of any of the terms or provisions of any
of the Transaction Documents; (c) any waiver or indulgence granted to Parent or any other Obligor, any delay or lack of diligence
in the enforcement of the Guaranteed Obligations, or any failure to institute proceedings, file a claim, give any required notices
or otherwise protect any of the Guaranteed Obligations; (d) any full or partial release of, compromise or settlement with,
or agreement not to sue, Parent, any other Obligor or any other Person liable in respect of any of the Guaranteed Obligations;
(e) any release, surrender, cancellation or other discharge of any evidence of the Guaranteed Obligations or the acceptance
of any instrument in renewal or substitution therefor; (f) any failure to obtain collateral security (including rights of
setoff) for the Guaranteed Obligations, or to see to the proper or sufficient creation and perfection thereof, or to establish
the priority thereof, or to preserve, protect, insure, care for, exercise or enforce any collateral security; or any modification,
alteration, substitution, exchange, surrender, cancellation, termination, release or other change, impairment, limitation, loss
or discharge of any collateral security; (g) any collection, sale, lease or disposition of, or any other foreclosure or enforcement
of or realization on, any collateral security; (h) any assignment, pledge or other transfer of any of the Guaranteed Obligations
or any evidence thereof; (i) any manner, order or method of application of any payments or credits upon the Guaranteed Obligations;
or (j) a Buyer not being a Permitted Secured Party (as defined in the Security Agreement). Each Guarantor waives any and all defenses
and discharges available to a surety, guarantor or accommodation co-obligor.

 

8.          Waivers
by Guarantors. Each Guarantor waives any and all defenses, claims, setoffs and discharges
of, and/or against, Parent, or any other Obligor or Person (including, without limitation, Buyer), pertaining to the Guaranteed
Obligations, except the defense of discharge by indefeasible satisfaction and discharge in full. Without limiting the generality
of the foregoing, no Guarantor will assert, plead or enforce against any Buyer any defense of waiver, release, discharge or disallowance
in any Insolvency Proceeding, statute of limitations, res judicata, statute of frauds, anti-deficiency statute, fraud, incapacity,
minority, usury, illegality or unenforceability which may be available to Parent or any other Obligor or Person liable in respect
of any of the Guaranteed Obligations, or any setoff available to any Buyer against Parent or any other such Obligor or Person,
whether or not on account of a related transaction. Each Guarantor expressly agrees that such Guarantor shall be and remain liable
for any deficiency remaining after foreclosure of any mortgage or security interest securing the Guaranteed Obligations, whether
or not the liability of Parent or any other Obligor or Person for such deficiency is discharged pursuant to statute or judicial
decision. The liability of each Guarantor shall not be affected or impaired by, and each Guarantor waives and agrees it shall not
at any time insist upon, plead or in any manner claim or take the benefit of, any voluntary or involuntary liquidation, dissolution,
sale or other disposition of all or substantially all of the assets, marshalling of assets and liabilities, any valuation, appraisal,
stay, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar event or proceeding affecting, Parent or any of its assets. No Guarantor will assert, plead or
enforce against any Buyer any claim, defense or setoff available to such Guarantor against Parent. Each Guarantor waives presentment,
demand for payment, notice of dishonor or nonpayment and protest of any instrument evidencing the Guaranteed Obligations. Buyers
shall not be required first to resort for payment of the Guaranteed Obligations to Parent or any other Person, or their properties,
or first to enforce, realize upon or exhaust any collateral security for the Guaranteed Obligations, before enforcing this Guaranty.

 

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9.          If
Payments Set Aside, etc. If any payment applied by a Buyer to the Guaranteed Obligations
is thereafter set aside, recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy,
insolvency or reorganization of Parent or any other Obligor or Person), the Guaranteed Obligations to which such payment was applied
shall for the purpose of this Guaranty be deemed to have continued in existence, notwithstanding such application, and this Guaranty
shall be enforceable as to such Guaranteed Obligations as fully as if such application had never been made.

 

10.        Additional
Obligation of Guarantors. Each Guarantor’s liability under this Guaranty is
in addition to and shall be cumulative with all other liabilities of such Guarantor to Buyers as guarantor, surety, endorser, accommodation
co-obligor or otherwise of any of the Guaranteed Obligations, without any limitation as to amount.

 

11.        No
Duties Owed by Buyer. Each Guarantor acknowledges and agrees that Buyers (a) have
not made any representations or warranties with respect to, (b) do not assume any responsibility to such Guarantor for, and
(c) have no duty to provide information to such Guarantor regarding, the enforceability of any of the Guaranteed Obligations
or the financial condition of Parent or any other Obligor or Person. Each Guarantor has independently determined the creditworthiness
of Parent and the enforceability of the Guaranteed Obligations and until Satisfaction in Full of the Guaranteed Obligations will
independently, and without reliance on any Buyer, continue to make such determinations.

 

12.        Miscellaneous.

 

(a)          This
Guaranty may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any
signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page 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 signature page were an original thereof. Any party delivering
an executed counterpart of this Guaranty by facsimile or other electronic method of transmission also shall deliver an original
executed counterpart of this Guaranty but the failure to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Guaranty.

 

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(b)          Any
provision of this Guaranty which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision
in any other jurisdiction.

 

(c)          Headings
used in this Guaranty are for convenience only and shall not be used in connection with the interpretation of any provision hereof.

 

(d)          The
pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction
of sentences shall conform thereto.

 

(e)          Unless
the context of this Guaranty or any other Transaction Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes” and “including” are not limiting,
and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this
Guaranty or any other Transaction Document refer to this Guaranty or such other Transaction Document, as the case may be, as a
whole and not to any particular provision of this Guaranty or such other Transaction Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Guaranty unless otherwise specified. Any reference in this Guaranty
or in any other Transaction Document to any agreement, instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). “Satisfaction in Full of the Guaranteed Obligations”
shall mean the indefeasible payment in full in cash and discharge, or other satisfaction in accordance with the terms of the Transaction
Documents and discharge, of all Guaranteed Obligations in full. For the avoidance of doubt, the “Satisfaction in Full of
the Guaranteed Obligations” shall be deemed to have occurred upon the indefeasible payment in full and discharge, or other
satisfaction, of (i) the Notes in accordance with their terms and (ii) all other Guaranteed Obligations as of such date.
Any reference herein to any Person shall be construed to include such Person’s permitted
successors and permitted assigns. 

 

(f)          This
Guaranty shall become effective as to each Guarantor upon execution by such Guarantor and delivery to each Buyer, without further
act, condition or acceptance by such Buyer, and shall be binding upon each such Guarantor and the successors and assigns of each
such Guarantor, and shall inure to the benefit of each Buyer and its participants, successors and assigns. This Guaranty may not
be waived, modified, amended, terminated, released or otherwise changed except by a writing signed by each Guarantor and each Buyer.
This Guaranty shall terminate automatically upon the payment in full and discharge, or other satisfaction, of the Notes in accordance
with their terms.

 

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(g)          The
language used in this Guaranty will be deemed to be the language chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any party. For clarification purposes, the Recitals are part of this Guaranty. 

 

(h)          All
dollar amounts referred to in this Guaranty and the other Transaction Documents (as defined in the Securities Purchase Agreement)
are in United States Dollars (“U.S. Dollars”), and all amounts owing under
this Guaranty and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies shall
be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange
Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant
to this Guaranty, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.

 

(i)          Judgment
Currency.

 

(i)          If
for the purpose of obtaining or enforcing judgment against any Guarantor in any court in any jurisdiction it becomes necessary
to convert into any other currency (such other currency being hereinafter in this Section 12(i) referred to as the “Judgment
Currency”) an amount due in U.S. Dollars under this Guaranty or any other Transaction Document, the conversion shall
be made at the Exchange Rate prevailing on the Trading Day (as defined in the Warrant) immediately preceding: (1) the date actual
payment of the amount due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction that
will give effect to such conversion being made on such date or (2) the date on which the foreign court determines, in the case
of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section
12(i)(i) being hereinafter referred to as the “Judgment Conversion Date”).

 

(ii)         If
in the case of any proceeding in the court of any jurisdiction referred to in Section 12(i)(i) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable
party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of U.S. Dollars which could have been purchased
with the amount of Judgment Currency stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment
Conversion Date.

 

(iii)        Any
amount due from any Guarantor under this provision shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of this Guaranty or any other Transaction Document.

 

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(j)          Taxes.

 

(i)           Any
and all payments by any Guarantor hereunder or under any other Transaction Document shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, imposed under any applicable law (collectively referred to as “Taxes”) unless the applicable
Guarantor is required to withhold or deduct any amounts for, or on account of, Taxes pursuant to any applicable law. If such Guarantor
shall be required to withhold or deduct any Taxes from or in respect of any sum payable hereunder to Buyer, (i) the sum payable
shall be increased by the amount by which the sum payable would otherwise have to be increased (the “tax make-whole amount”)
to ensure that after making all required withholdings and deductions (including deductions applicable to the tax make-whole amount)
each Buyer would receive an amount equal to the sum it would have received had no such deductions been made, (ii) such Guarantor
shall make such deductions and (iii) such Guarantor shall pay the full amount withheld or deducted to the relevant governmental
authority within the time required.

 

(ii)          In
addition, each Guarantor agrees to pay to the relevant governmental authority in accordance with applicable law any present or
future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment
made hereunder or in connection with the execution, delivery, registration or performance of, or otherwise with respect to, this
Guaranty and the other Transaction Documents (“Other Taxes”). 

 

(iii)         Each
Guarantor shall deliver to Buyers official receipts, if any, in respect of any Taxes and Other Taxes payable hereunder promptly
after payment of such Taxes and Other Taxes or other evidence of payment reasonably acceptable to Buyer.

 

(iv)         If
a Guarantor fails to pay any amounts in accordance with this Section 12(j), such Guarantor
shall indemnify Buyers within ten (10) calendar days after written demand therefor, for the full amount of any Taxes or Other Taxes,
plus any related interest or penalties, that are paid by Buyers to the relevant governmental authority or other relevant governmental
authority as a result of such failure.

 

(v)          The
obligations of each Guarantor under this Section 12(j) shall survive the termination of this
Guaranty and the Satisfaction in Full of the Guaranteed Obligations.

 

13.         Additional
Guarantors. In accordance with Section 14 of the Note, the Company shall cause each
of its Subsidiaries formed or acquired on or subsequent to the date hereof to become a Guarantor for all purposes of this Guarantee
by executing and delivering an Assumption Agreement in the form of Annex 1
hereto.

 

14.         Notices.
All notices and other communications provided for hereunder shall be given in the form and manner, and delivered to such addresses,
as specified in the Securities Purchase Agreement.

 

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15.         Governing
Law; Jurisdiction; Service of Process; Jury Trial. All questions concerning the construction,
validity, enforcement and interpretation of this Guaranty shall be governed by the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. Each Guarantor 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,
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 brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper; provided, however, any suit seeking enforcement of this Guaranty may
be brought, at a Buyer’s option, in the courts of any jurisdiction where such Buyer elects to bring such action. Each Guarantor
hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address for such notices to it under this Guaranty and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Without limitation of the foregoing, each Guarantor
hereby irrevocably appoints Parent as such Guarantor’s agent for purposes of receiving and accepting any service of process
hereunder. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

[signature page follows]

 

    	8

    	 

    

 

IN
WITNESS WHEREOF, this Guaranty has been duly executed by each Guarantor as of the date set
forth above.

 

	 	 	 	MORRIA BIOPHARMACEUTICALS INC., a
	 	 	 	Delaware corporation
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	Name:	 
	 	 	 	Title:	 
	 	 	 	 	 
	 	 	 	MORRIA BIOPHARM LTD, an Israeli corporation
	 	 	 	 	 
	 	 	 	By:	 
	 	 	 	Name:	 
	 	 	 	Title:	 
	 	 	 	 	 
	Acknowledged and Agreed:	 	 	 
	 	 	 	 	 
	MORRIA BIOPHARMACEUTICALS PLC, a	 	 	 
	public limited company formed under	 	 	 
	the laws of England and Wales	 	 	 
	 	 	 	 	 
	By:	 	 	 	 
	Name:	 	 	 	 
	Title:	 	 	 	 

 

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Annex 1 to

 

SUBSIDIARY GUARANTY

 

ASSUMPTION AGREEMENT, dated as of ____
__, ______ made by ______________________________, a ______________ corporation (the “Additional Guarantor”),
in favor of the Buyers pursuant to the Purchase Agreement referred to below. All capitalized terms not defined herein shall have
the meaning ascribed to them in such Purchase Agreement.

 

WITNESSETH:

 

WHEREAS, Morria Biopharmaceuticals
PLC, a public limited company formed under the laws of England and Wales (the “Company”),
and the Buyers have entered into a Securities Purchase Agreement, dated as of March ___, 2012 (as amended, supplemented or otherwise
modified from time to time, the “Purchase Agreement”);

 

WHEREAS, in connection
with the Purchase Agreement, the Subsidiaries of the Company (other than the Additional Guarantor) have entered into the Guaranty,
dated as of March ____, 2012 (as amended, supplemented or otherwise modified from time to time, the “Guaranty”)
in favor of the Buyers;

 

WHEREAS, the Purchase
Agreement requires the Additional Guarantor to become a party to the Guaranty; and

 

WHEREAS, the Additional
Guarantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guaranty;

 

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NOW, THEREFORE, IT IS AGREED:

 

1.          Guaranty.
By executing and delivering this Assumption Agreement, the Additional Guarantor, as provided in Section 13 of the Guaranty, hereby
becomes a party to the Guaranty as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor
and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor
thereunder. The information set forth in this Assumption Agreement is hereby added to the information set forth in the Guaranty.
The Additional Guarantor hereby represents and warrants that each of the representations and warranties contained in Section 3
of the Guaranty is true and correct on and as the date hereof as to such Additional Guarantor (after giving effect to this Assumption
Agreement) as if made on and as of such date.

 

2.          Governing
Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK.

 

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IN WITNESS WHEREOF, the undersigned has
caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

 

	 	[ADDITIONALGUARANTOR]
	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	12THIRD AMENDMENT TO CONVERTIBLE NOTES

 

This
THIRD AMENDMENT TO CONVERTIBLE NOTES (this “Amendment”) is made and entered into as of June 27, 2012
by and between Bohai Pharmaceuticals Group, Inc., a Nevada corporation (the “Company”), and Euro Pacific
Capital, Inc. (the “Investor Representative”).

 

WHEREAS,
on January 5, 2010, the Company consummated a $12,000,000 financing (the “Offering”) with certain accredited
investors (the “Investors”) whereby the Company issued 6,000,000 units at $2.00 per unit, with each unit
consisting of a $2.00 principal amount, two year convertible note (collectively, as amended, the “Notes”) and
a three year common stock purchase warrant to purchase one share of the Company’s common stock,
par value $0.001 per share (the “Common Stock”) at $2.40 per share, subject to certain conditions (collectively,
the “Warrants”);

 

WHEREAS, pursuant
to Section 2.8 of that certain Securities Purchase Agreement, dated January 5, 2010, between the Company and the Investors (the
“SPA”), each Investor duly appointed the Investor Representative as such Investor’s true and lawful agent
and attorney-in-fact to, among other matters, waive any terms and conditions of the Notes and to be such Investor’s exclusive
representative with respect to any matter, suit, claim, action or proceeding arising with respect to any transaction contemplated
by the Notes and the Warrants (the “Power of Attorney”);

 

WHEREAS, on
December 31, 2011, the Company entered into an amendment to the Notes with the Investor Representative (the “First Amendment”)
which, among other things, extended the maturity date of the Notes from January 5, 2012 to April 5, 2012;

 

WHEREAS, on
May 15, 2012, the Company entered into an second amendment to the Notes with the Investor Representative (the “Second
Amendment”) which, among other things, extended the maturity date of the Notes from April 5, 2012 to October 5, 2012;
and

 

WHEREAS, the
Company and the Investor Representative, exercising the Power of Attorney on behalf of the Investors, desire to further modify
certain provisions of the Notes on the terms set forth herein in order to facilitate the Company’s efforts in exploring various
financing options.

 

NOW, THEREFORE,
in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and pursuant to the applicable provisions of the SPA and the Notes, the parties
hereby agree as follows: 

 

1.          Defined
Terms. All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Notes.

 

2.          Amendments.
The Investor Representative and the Company hereby amend the Notes as follows:

 

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(a)          Section
6(h) of the Notes (Cross Default) is hereby amended and restated in its entirety to be read as follows:

 

“(h)          Cross
Default. There occurs with respect to any agreement, indenture or instrument under which the Company has Indebtedness of $5,000,000
or more in the aggregate: (i) a default with respect to any payment obligation thereunder that then entitles the holder thereof
to declare such Indebtedness to be due and payable prior to its stated maturity, or (ii) any other default thereunder that entitles,
and has caused, the holder thereof to declare such Indebtedness to be due and payable prior to its stated maturity (it being understood
that for purposes of this Note, “Indebtedness” is defined in the same manner as specified in Section 8(a) hereof);
or”

 

(b)          Section
8(a) of the Notes (Indebtedness for Borrowed Money) is hereby deleted in its entirety and is of no further force and effect.

 

(c)          Section
8(d) of the Notes (Liens) is hereby deleted in its entirety and is of no further force and effect.

 

(d)          Section
8(g) of the Notes (Capital Expenditures; Capitalized Lease) is hereby is hereby deleted in its entirety and is of no further force
and effect.

 

3.          Ratification.  Except
as expressly amended by this Amendment, the terms and conditions of the Notes are hereby confirmed and shall remain in full force
and effect without impairment or modification.

 

4.          Power
of Attorney.  The Investor Representative represents and warrants that it has not received any notice regarding,
and is not otherwise aware that any Investor has revoked or modified, or sought or desires to revoke or modify, the Power of Attorney
with respect to such Investor or any Investor.

 

5.          Conflict.  In
the event of any conflict between any Note and this Amendment, the terms of this Amendment shall govern.

 

6.          Binding
Effect.  The parties acknowledge and agree that this Amendment complies with all of the applicable terms and conditions
of the Notes that are necessary to effect an amendment to the Notes and therefore, upon the execution and delivery hereof by the
parties, this Amendment shall have such binding effect.

 

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7.          Governing
Law; Venue.  All questions concerning the construction, validity, enforcement and interpretation of the this Amendment
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 Amendment (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 hereto hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, New York 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 this Amendment), 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. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Amendment and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO
(INCLUDING ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

8.          Counterparts.  This
Amendment may be executed in any number of counterparts and delivered by in email/.pdf format or by facsimile, each of which shall
be deemed to be an original, and all of which taken together shall constitute one and the same instrument. 

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF,
the parties hereto have caused this Third Amendment to be duly executed and delivered on their behalf as of the date first above
written.

 

	 	BOHAI PHARMACEUTICALS GROUP, INC.
	 	 	 
	 	By:	/s/ Hongwei Qu
	 	 	Name:  Hongwei Qu
	 	 	Title:    CEO
	 	 	 
	 	EURO PACIFIC CAPITAL, INC., as Investor

Representative
	 	 	 
	 	By:	/s/ Gordon McBean
	 	 	Name:  Gordon McBean
	 	 	Title:    President

 

    	4

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