Document:

VACCINOGEN, INC.

 

AMENDMENT NO. 7 TO

NOTE AND WARRANT PURCHASE AGREEMENT

 

THIS AMENDMENT NO. 7 TO NOTE AND WARRANT
PURCHASE AGREEMENT is dated as of the 1st day of February, 2014, by and between Vaccinogen, Inc., a Maryland corporation (the
“Company”), and The Abell Foundation, Inc., a Maryland corporation (the “Purchaser”).

 

RECITALS

 

Reference is made to that certain Note and
Warrant Purchase Agreement dated October 26, 2011, by and between the Company and the Purchaser, as amended by that certain Amendment
No. 1 to Note and Warrant Purchase Agreement dated February 16, 2012, by and between the Company and the Purchaser (the “First
Amendment”), as further amended by that certain Amendment No. 2 to Note and Warrant Purchase Agreement dated January
16, 2013, by and between the Company and the Purchaser (the “Second Amendment”), as further amended by
that certain Amendment No. 3 to Note and Warrant Purchase Agreement dated April 18, 2013, by and between the Company and the Purchaser
(the “Third Amendment”), as further amended by that certain Amendment No. 4 to Note and Warrant Purchase
Agreement dated May 31, 2013, by and between the Company and the Purchaser (the “Fourth Amendment”),
as further amended by that certain Amendment No. 5 to Note and Warrant Purchase Agreement dated July 31, 2013, by and between the
Company and the Purchaser (the “Fifth Amendment”), and as further amended by that certain Amendment No.
6 to Note and Warrant Purchase Agreement dated as of January 1, 2014, by and between the Company and the Purchaser (the “Sixth
Amendment,” and such Note and Warrant Purchase Agreement, as amended by the First Amendment, the Second Amendment,
the Third Amendment, the Fourth Amendment, the Fifth Amendment and the Sixth Amendment, the “Existing Agreement,”
and the Existing Agreement, as amended by this Amendment No. 7, the “Agreement”), pursuant to which the
Purchaser agreed to purchase from the Company a promissory note dated January 1, 2014, made by the Company to the order of the
Purchaser (the “Existing Note”) in the maximum principal amount of One Million Three Hundred Thirty-One
Thousand Two Hundred Seventeen and 39/100 Dollars ($1,331,217.39) and to purchase the “Warrant” as therein defined
(the “Existing Warrant”). In order to amend the Existing Agreement, inter alia, to extend the
maturity of the Existing Note, and to modify the terms of the Existing Warrant as hereinafter provided, the parties hereto have
entered into this Amendment No. 7.

 

NOW, THEREFORE, in consideration of
the premises and the mutual covenants set forth herein, and such other consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

 

1.All capitalized terms not otherwise
defined herein which are defined in the Agreement shall have the same meanings assigned to them in the Agreement.

 

    	 

    	 

    

 

2.Section 1.2 of the Agreement is hereby
amended to read in its entirety as follows:

 

1.2Sale. Subject to
the terms and conditions hereof, the Purchaser agrees to purchase from the Company, and the Company agrees to sell and issue to
the Purchaser, (i) the Note, and (ii) a warrant which evidences the right of the Purchaser to purchase up to that number of shares
of Common Stock of the Company equal to the sum of (a) $1,100,000 divided by eighty-five percent (85%) of the lowest purchase price
per share of Common Stock sold in the Company’s the Venture Capital Financing (as defined below) plus (b) 300,000 plus (c)
the sum of (i) 60,000 Warrant Shares if the Note remains outstanding in whole or in part on March 1, 2014, (ii) 60,000 Warrant
Shares if the Note remains outstanding in whole or in part on April 1, 2014, (iii) 60,000 Warrant Shares if the Note remains outstanding
in whole or in part on May 1, 2014, (iv) 60,000 Warrant Shares if the Note remains outstanding in whole or in part on June 1, 2014,
(v) 60,000 Warrant Shares if the Note remains outstanding in whole or in part on July 1, 2014, and (vi) 60,000 Warrant Shares if
the Note remains outstanding in whole or in part on July 31, 2014. “Venture Capital Financing” shall mean the
first transaction or series of transactions to occur after October 26, 2011 involving the issuance or sale of additional shares
of capital stock, or securities directly or indirectly convertible or exchangeable for capital stock, of the Company that would
result in at least $35,000,000 in aggregate gross proceeds to the Company, including by way of the conversion of any outstanding
debt.

 

3.All references to (a) “this Agreement”
in the Agreement shall mean the Existing Agreement as amended by this Amendment No. 7, (b) the “Note” in the Agreement
and in the other Transaction Documents shall mean a promissory note in substantially the form attached hereto as Exhibit A
(the “Replacement Note”), which Exhibit shall replace in its entirety Exhibit A to the Agreement,
and (c) the “Warrant” in the Agreement shall mean a warrant to purchase capital stock of the Company in substantially
the form attached hereto as Exhibit B, which Exhibit shall replace in its entirety Exhibit B to the Agreement.

 

4.To induce the Purchaser to enter into
this Amendment No. 7, the Company hereby:

 

(a)represents
and warrants to the Purchaser that (i) the representations and warranties of the Company set forth in Section 3 of the Agreement,
and the representations and warranties of the Company set forth in each of the other Transaction Documents, are true and correct
in all material respects with the same effect as if made on the date hereof (except
that (x) such materiality qualifier shall not be applicable to any representation or warranty that already are qualified or modified
by materiality in the text thereof, and (y) any representation and warranty stated to relate solely to an earlier date shall be
true and correct as of such earlier date), it being understood that all references to “this Agreement” and the “Transaction
Documents” in Section 3 of the Agreement shall include (without limitation) this Amendment No. 7 and the Warrant, respectively,
(ii) after giving effect to the terms of this Amendment No. 7, the Company is in compliance with all the terms and conditions of
the Agreement and the other Transaction Documents, and no Default or Event of Default has occurred and is continuing, and (iii)
as of the date of this Amendment No. 7, (A) the aggregate gross proceeds from the issuance or sale of capital stock of the Company,
or securities directly or indirectly convertible or exchangeable for capital stock of the Company, including by way of conversion
of any outstanding debt, and which is counted towards the Venture Capital Financing amount of $35,000,000, is $7,932,266.50, and
(B) the lowest purchase price per share (after taking into account all discounts and other reductions in purchase price offered
to any purchaser) of the Common Stock of the Company sold in the Venture Capital Financing is $5.35; and 

 

    	- 2 -

    	 

    

 

(b)releases and forever discharges the
Purchaser and the officers, employees and trustees thereof, of and from all manner of actions, causes and causes of action, suits,
debts, sums of money, account reckonings, bonds, bills, specialties, coverages, judgments, executions, claims, and demands whatsoever,
at law or in equity, and particularly, without limiting the generality of the foregoing, all claims relating to the transactions
which are the subject of the Transaction Documents, which the Company and its successors and assigns ever had, now has, or may
have in the future, for, upon or by reason of any matter, cause, or thing, whatsoever occurring prior to the date hereof and/or
arising from facts of which the Company was aware, or reasonably should have been aware, as of the date hereof. Without limitation
of the foregoing, the Company waives any and all defenses, offsets, and counterclaims to the Purchaser’s enforcement of the
Transaction Documents or any action by the Purchaser to foreclose any security interest.

 

5.This Amendment No. 7 shall become effective
on the date upon which the following shall all have occurred:

 

(a)the Purchaser shall have received
each of the following, in form and substance satisfactory to the Purchaser:

 

(i)a copy of this Amendment No. 7,
duly executed and delivered by the Company; and

 

(ii)the Replacement Note, duly executed
and delivered by the Company; and

 

(iii)certificate(s) of the Secretary
of the Company certifying (A) resolutions in form and content satisfactory to the Purchaser authorizing the transactions between
the Company and the Purchaser in connection with this Amendment No. 7, the Replacement Note, the Warrant and ratifying all past
action taken in connection therewith, and (B) the incumbency and signatures of the officers of the Company authorized to execute
this Amendment, the Replacement Note and the Warrant; and

 

(b)the Purchaser shall have executed
and delivered to the Company this Amendment No. 7.

 

    	- 3 -

    	 

    

 

6.The Company and the Purchaser intend
that neither this Amendment No. 7, nor the execution and delivery of this Amendment No. 7, the Replacement Note or any other document
executed and delivered pursuant to or in connection with this Amendment No. 7, shall constitute or be construed to operate as a
novation of the Agreement, the Existing Note, any of the indebtedness of the Company pursuant to the Existing Note, or any lien
or security interest heretofore created pursuant to any of the Transaction Documents. The Company and the Purchaser intend that
by the execution and delivery of this Amendment No. 7 and the Replacement Note certain of the terms of the note and warrant purchases
by the Purchaser shall be modified, restated and replaced in their entireties, but the indebtedness evidenced by the Existing Note
and such liens and security interests heretofore created shall not be extinguished or satisfied. Without limitation of the foregoing,
the Company specifically acknowledges and agrees that (a) the “Note” as defined in the Security Agreement dated as
of October 26, 2011, by and between the Company and the Purchaser (the “Security Agreement”) means the
Replacement Note, (b) the “Obligations” as defined in the Security Agreement (the “Obligations”)
include all indebtedness and liabilities of the Company under the Agreement, under the Replacement Note and under the other Transaction
Documents, (c) the “Collateral” as defined in the Security Agreement (the “Collateral”) secures,
without limitation, the payment and performance all of the Obligations, (d) the Obligations represent debt issued in connection
with an investment in the Company, (e) the Collateral includes the “Collateral” (the “Organon Collateral”)
as defined in that certain New Security Agreement (the “Organon Security Agreement”) made as of October
31, 2007 by and between (i) Intracell Holdings Corporation (predecessor to the Company) and (ii) Organon BioSciences International
B.V. and Organon Teknika Corporation (collectively, “Organon”); provided that the inclusion of such “Collateral”
as defined in the Organon Security Agreement is included specifically subject to any liens or rights arising from the terms of
the Organon Security Agreement, and (f) to the Company’s knowledge there are no liens or security interests in the Collateral
except for the security interest of the Purchaser therein and except for the security interest granted to Organon in the Organon
Collateral pursuant to the Organon Security Agreement.

 

7.The Company agrees to pay all out-of-pocket
expenses incurred by the Purchaser in connection with the preparation, negotiation, execution and delivery of this Amendment No.
7, the Replacement Note and all other documents executed or to be executed in connection herewith, including, without limitation,
the expenses and reasonable fees of its counsel in an amount not to exceed $1,500.

 

8.The Purchaser shall be permitted to
set-off all amounts owed by it to the Company under the Investment Agreement against all amounts owed to it by the Company with
respect to the Note.

 

9.Except as amended hereby, the Agreement
shall remain unchanged, and the Agreement, as so amended, shall continue in full force and effect in accordance with its terms.
The breach by the Company of any representation, warranty, covenant or agreement contained in this Amendment No. 7 shall represent
an Event of Default.

 

    	- 4 -

    	 

    

 

10.This Amendment No. 7 may be executed
in any number of counterparts and by the different parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together constitute one and the same instrument.

 

11.The Recitals hereto and all of the
terms of the Agreement are hereby incorporated into and made a part hereof as though fully set forth herein.

 

12.This Amendment No. 7 shall be governed
by and construed under the laws of the State of Maryland, without regard to the conflicts of laws provisions of the State of Maryland
or any other state. Any suit, action or proceeding instituted by either party hereto with respect to any of the obligations of
other party hereto may be brought in any State or federal court located in the State of Maryland (in addition to such other courts
in which jurisdiction and venue may be appropriate), and each party consents to the in personam jurisdiction of such courts.

 

[SIGNATURES CONTAINED ON THE FOLLOWING PAGE]

 

    	- 5 -

    	 

    

 

IN WITNESS WHEREOF, the parties have
caused this Amendment No. 7 to Note and Warrant Purchase Agreement to be duly executed under seal by their duly authorized
respective officers as of the day and year first above written.

 

	ATTEST/WITNESS:	 	VACCINOGEN, INC.
	 	 	 	 	 
	 	 	By:	/s/ Michael G. Hanna, Jr., Ph.D.	 (SEAL)
	 	 	 	Michael G. Hanna, Jr., Ph.D.
	 	 	 	Chairman and Chief Executive Officer
	 	 	 	 	 
	 	 	By:	/s/ Andrew L. Tussing	 (SEAL)
	 	 	 	Andrew L. Tussing
	 	 	 	President and Chief Operating Officer
	 	 	 	 
	 	 	 	 	 
	 	 	THE ABELL FOUNDATION, INC.
	 	 	 
	 	 	By:	/s/ Robert C. Embry, Jr.	 (SEAL)
	 	 	 	Robert C. Embry, Jr.
	 	 	 	President

 

    	- 6 -

    	 

    

 

EXHIBIT A

 

[Amended and Restated Promissory Note]

 

    	 

    	 

    

 

EXHIBIT B

 

THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY
NOT BE TRANSFERRED UNLESS THE COMPANY HAS RECEIVED A WRITTEN OPINION FROM COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY
STATING THAT SUCH TRANSFER IS BEING MADE IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.

 

VACCINOGEN, INC.

COMMON STOCK PURCHASE WARRANT

 

 

This Common Stock Purchase
Warrant (this “Warrant”) is issued as of this ___
day of ______________________, 201__, by Vaccinogen Inc., a Maryland corporation (the “Company”),
to The Abell Foundation, Inc., a Maryland corporation or permitted successors or assigns (the “Holder”).

 

1.Issuance of
Warrant; Term; Price.

 

1.1Issuance.
Pursuant to the terms of the Note and Warrant Purchase Agreement, dated as of October 26, 2011, between the Company and the Holder
(as the same has been and hereafter may be amended, supplemented or otherwise modified from time to time, the “Note
and Warrant Purchase Agreement”), the Holder made a loan to the Company evidenced by a promissory note in the original
maximum principal amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) dated as of October 26, 2011 (as the same
has been and hereafter may be amended, restated, supplemented or otherwise modified from time to time, the “Note”).
In consideration of the issuance of the Note and the subsequent amendments and restatements thereof, and such other consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company hereby grants to Holder the right to purchase, at any
time and from time to time on and after the date hereof until the Expiration Date (as defined below), up to [______________] fully
paid and nonassessable shares (the “Warrant Shares”) of Common Stock of the Company (the “Common
Stock”) on the terms and subject to the conditions set forth below. [Note: the number of Warrant Shares shall
be equal to the sum of (a) $1,100,000 divided by eighty-five percent (85%) of the lowest purchase price per share of Common Stock
sold in the Company’s the Venture Capital Financing (as defined in the Note and Warrant Purchase Agreement) plus (b) 300,000
plus (c) the sum of (i) 60,000 Warrant Shares if the Note remains outstanding in whole or in part on March 1, 2014, (ii) 60,000
Warrant Shares if the Note remains outstanding in whole or in part on April 1, 2014, (iii) 60,000 Warrant Shares if the Note remains
outstanding in whole or in part on May 1, 2014, (iv) 60,000 Warrant Shares if the Note remains outstanding in whole or in part
on June 1, 2014, (v) 60,000 Warrant Shares if the Note remains outstanding in whole or in part on July 1, 2014, and (vi) 60,000
Warrant Shares if the Note remains outstanding in whole or in part on July 31, 2014.]

 

    	 

    	 

    

 

1.2Term. This
Warrant shall be exercisable at any time and from time to time in whole or in part from the date hereof to the earlier of: (a)
the ten-year anniversary of the date hereof; (b) the sale of all or substantially all of the Company’s assets; and (c) any
merger or consolidation of the Company in which the Company is not the surviving entity and the shareholders then owing a majority
of the outstanding equity interests in the Company no longer own or control a majority of such equity interests (the earlier of
such events being the “Expiration Date”) by delivery to the Company at its principal executive offices
of: (i) this Warrant; (ii) the Purchase Form attached hereto as Exhibit A duly completed and executed; and (iii) payment
in accordance with Section 1.3 below. The Warrant Shares so purchased
shall be issued to the Holder as the record and beneficial owner of such Warrant Shares or to the Holder’s transferee as
designated on the Purchase Form as of the close of business on the date on which this Warrant shall have been surrendered and payment
made for such Warrant Shares as aforesaid.

 

1.3.Exercise Price.
Subject to adjustment as hereinafter provided, the exercise price (the “Warrant Price”) per share for
which all or any of the Warrant Shares may be purchased pursuant to the terms of this Warrant initially shall be equal to $_______
[Note: the Warrant Price per share shall equal eighty-five percent (85%) of the lowest price per share of the Common Stock issued
in the Venture Capital Financing.] The Warrant Price shall be payable in cash or by certified or official bank check or by
the cancellation of any present or future indebtedness from the Company to the Holder hereof in a dollar amount equal to the purchase
price of the Common Stock for which the consideration is being given, or by surrendering for cancellation shares of capital stock
of the Company which shares have a fair market value equal to the purchase price of Common Stock for which the consideration is
being given.

 

2.Adjustment
of Warrant Price, Number and Kind of Shares. The Warrant Price and the number and kind of securities issuable upon the exercise
of this Warrant shall be subject to adjustment from time to time and the Company agrees to provide notice upon the happening of
certain events as follows.

 

2.1Stock
Dividends Adjustment. In case at any time and from time to time after the date hereof, the holders of the Common Stock of the
Company (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received,
or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without
payment therefor, other additional securities or other property (other than cash) of the Company by way of dividend or distribution,
then and in each case, the Holder shall, upon the exercise hereof, be entitled to receive, in addition to the number of Warrant
Shares receivable thereupon, and without payment of any additional consideration therefor, the amount of such other or additional
securities or other property (other than cash) of the Company which the Holder would hold on the date of such exercise had it been
the holder of record of such Warrant Shares on the date hereof and had thereafter, during the period from the date hereof to and
including the date of such exercise, retained such Warrant Shares and/or all other additional securities or other property receivable
by it as aforesaid during such period, giving effect to all adjustments called for during such period by this Section 2.

 

    	- 2 -

    	 

    

 

2.2Reclassification
or Reorganization Adjustment. In case of any reclassification or change of the outstanding securities of the Company or of
any reorganization of the Company (or any other corporation the stock or securities of which are at the time receivable upon the
exercise of this Warrant) at any time and from time to time after the date hereof, and the Holder, upon the exercise hereof at
any time after the consummation of such reclassification, change or reorganization, shall be entitled to receive, in lieu of the
stock or other securities and property receivable upon the exercise hereof prior to such consummation, the stock or other securities
or property to which the Holder would have been entitled upon such consummation if such holder had exercised this Warrant immediately
prior thereto, all subject to further adjustment as provided in this Section 2.

 

2.3Stock
Splits and Reverse Stock Splits. If at any time and from time to time after the date hereof, the Company shall subdivide or
otherwise change its outstanding shares of Common Stock into a greater number of shares, the Warrant Price in effect immediately
prior to such subdivision shall thereby be proportionately reduced and the number of shares receivable upon exercise of this Warrant
shall thereby be proportionately increased; and, conversely, if at any time and from time to time after the date hereof, the outstanding
number of shares of Common Stock shall be combined or otherwise changed into a smaller number of shares, the Warrant Price in effect
immediately prior to such combination shall thereby be proportionately increased and the number of shares receivable upon exercise
of this Warrant shall thereby be proportionately decreased.

 

2.4Other
Impairment. The Company will not, by amendment of its articles of incorporation or bylaws 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 of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and conditions and in the taking of all such action as may be necessary or appropriate in order to protect the
rights of the Holder against impairment.

 

3.No Fractional
Shares. No fractional shares of Common Stock will be issued in connection with any subscription hereunder. In lieu of any fractional
shares that would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the fair
market value of one share of Common Stock on the date of exercise, as determined in good faith by the Company’s Board of
Directors.

 

    	- 3 -

    	 

    

 

4.No Shareholder
Rights. This Warrant as such shall not entitle Holder to any of the rights of a shareholder of the Company until the Holder
has exercised this Warrant in accordance with Section 6 hereof.

 

5.Reservation
of Stock. The Company covenants that during the period this Warrant is exercisable, the Company will reserve from its authorized
and unissued Common Stock a sufficient number of shares thereof to provide for the issuance of Warrant Shares or other securities
upon the exercise of this Warrant. The Company agrees that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for Warrant
Shares or other securities upon the exercise of this Warrant.

 

6.Exercise of
Warrant. This Warrant may be exercised by Holder by the surrender of this Warrant at the principal office of the Company, accompanied
by notice of and payment in full of the purchase price of the Warrant Shares the Holder elects to purchase hereunder. As a condition
to the Holder’s exercise of this Warrant, the Holder shall execute any agreement then in effect among the holders of outstanding
shares of capital stock of the Company. This Warrant shall be deemed to have been exercised immediately prior to the close of business
on the date of its surrender for exercise as provided above, and the person entitled to receive the Warrant Shares or other securities
and/or property issuable upon such exercise shall be treated for all purposes as the holder of such Warrant Shares or other securities
of record as of the close of business on such date. As promptly as practicable, the Company shall issue and deliver to the person
or persons entitled to receive the same a certificate or certificates for the number of full Warrant Shares or other securities
issuable upon such exercise, together with cash in lieu of any fraction of a share as provided above. The Warrant Shares or other
securities issuable upon exercise hereof shall, upon their issuance, be fully paid and nonassessable. If this Warrant shall be
exercised in part only, the Company shall, at the time of delivery of the certificate representing the Warrant Shares in respect
of which this Warrant has been exercised, make a notation on this Warrant stating the Warrant Shares with respect to which this
Warrant shall not have been exercised and this Warrant shall then be returned to the Holder.

 

7.Certificate
of Adjustment. Whenever the Warrant Price or number or type of securities issuable upon exercise of this Warrant is adjusted,
as herein provided, the Company shall promptly deliver to the record holder of this Warrant a certificate of an officer of the
Company setting forth the nature of such adjustment and a brief statement of the facts requiring such adjustment.

 

    	- 4 -

    	 

    

 

8.Notice of
Proposed Transfers. This Warrant is transferable by the Holder hereof subject to compliance with this Section 8. Prior to any
proposed transfer of this Warrant or the Warrant Shares received on the exercise of this Warrant (the “Securities”),
unless there is in effect a registration statement under the Securities Act of 1933, as amended (the “Securities Act”),
covering the proposed transfer, the Holder thereof shall give written notice to the Company of such Holder’s intention to
effect such transfer. Each such notice shall describe the manner and circumstances of the proposed transfer in sufficient detail,
and shall, if the Company so requests, be accompanied (except in transactions in compliance with Rule 144) by either: (a) a written
opinion of legal counsel who shall be satisfactory to the Company acting reasonably addressed to the Company and satisfactory in
form and substance to the Company’s counsel acting reasonably, to the effect that the proposed transfer of the Securities
may be effected without registration under the Securities Act; or (b) a “no action” letter from the Securities Exchange
Commission (the “Commission”) to the effect that the transfer of such Securities without registration
will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the Holder
of the Securities shall be entitled to transfer the Securities in accordance with the terms of the notice delivered by the Holder
to the Company; provided, however, no such registration statement or opinion of counsel shall be necessary
for a transfer by a Holder to any affiliate of such Holder for no consideration, if the transferee agrees in writing to be subject
to the terms hereof to the same extent as if such transferee were the original Holder hereunder. Each certificate evidencing the
Securities transferred as above provided shall bear the appropriate restrictive legend set forth above, except that such certificate
shall not bear such restrictive legend if in the opinion of counsel for the Company acting reasonably such legend is not required
in order to establish compliance with any provisions of the Securities Act.

 

9.Replacement
of Warrants. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of the Warrant, and in the case of any such loss, theft or destruction of the Warrant, on delivery of an indemnity
agreement or security satisfactory in form and amount to the Company acting reasonably, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrant if mutilated, the Company will execute
and deliver, in lieu thereof, a new Warrant of like tenor.

 

10.Dividends
and Distributions. So long as any part of this Warrant remains outstanding and unexercised, the Company will, upon the declaration
of a cash dividend upon its Common Stock or other distribution to the holders of its Common Stock and at least ten (10) days prior
to the record date, notify the Holder hereof of such declaration, which notice will contain, at a minimum, the following information:
(a) the date of the declaration of the dividend or distribution; (b) the amount of such dividend or distribution; (c) the record
date of such dividend or distribution; and (d) the payment date or distribution date of such dividend or distribution. The Holder
shall, upon the exercise hereof, be entitled to receive, in addition to the number of shares of Common Stock receivable thereupon,
and without payment of any additional consideration therefor, the amount of such other or additional securities or other property
(other than cash) of the Company which such Holder would hold on the date of such exercise had it been the holder of record of
such Common Stock on the date hereof and had thereafter, during the period from the date hereof to and including the date of such
exercise, retained such shares and/or all other additional securities or other property receivable by it as aforesaid during such
period, giving effect to all adjustments pursuant to Section 2.

 

    	- 5 -

    	 

    

 

11.Miscellaneous.
This Warrant shall be governed by the laws of the State of Maryland. The headings in this Warrant are for purposes of convenience
of reference only, and shall not be deemed to constitute a part hereof. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provisions. All notices and other communications from the Company
to the Holder shall be delivered personally or mailed by first class mail, postage prepaid, or by facsimile to the address or facsimile
number furnished to the Company in writing by the last Holder who shall have furnished an address and facsimile number to the Company
in writing, and if mailed shall be deemed given three days after deposit in the U.S. Mail.

 

12.Taxes.
The Company shall pay all issue taxes and other governmental charges (but not including any income taxes of a Holder) that may
be imposed in respect of the issuance or delivery of the Warrant Shares or any portion thereof.

 

13.Amendment.
Any term of this Warrant may be amended with the written consent of the Company and the Holder. Any amendment effected in accordance
with this Section 13 shall be binding upon the Holder of this Warrant, each future holder of such Warrant, and the Company.

 

14.Remedies.
In the event of any default or threatened default by the Company in the performance of or observance with any of the terms of this
Warrant, it is agreed that remedies at law are not and will not be adequate for the Holder and that such terms may be specifically
enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of
any of the terms hereof or otherwise.

 

15.Facsimile
Signature. This Warrant may be executed by the Company in facsimile or pdf. form and upon receipt by the Holder of such faxed
executed copy of this Warrant, this Warrant shall be binding upon and enforceable against the Company in accordance with its terms.
The Company shall promptly forward to the Holder an original of the facsimile signed copy of this Warrant previously delivered
to Holder.

  

    	- 6 -

    	 

    

 

16.Term. The term of this Warrant
(the “Term”), and the Holder’s right to exercise this Warrant, shall terminate immediately upon the close
of business (5:00 p.m., Eastern Standard Time) on the ten-year anniversary of the date hereof. Upon termination of the Term, the
Holder shall surrender this Warrant to the Company at the Company’s principal place of business.

  

[SIGNATURES CONTAINED ON THE FOLLOWING PAGE]

 

    	- 7 -

    	 

    

 

IN WITNESS WHEREOF, the undersigned officer of the Company has executed this Common Stock Purchase Warrant as of the date first
above written.

 

	 	VACCINOGEN, INC.
	 	 	 
	 	 	 
	 	By: 	 
	 	Name:   	 	Michael G. Hanna, Jr., Ph.D.
	 	Title: 	Chairman and Chief Executive Officer
	 	 	 
	 	By: 	 
	 	Name:	 	Andrew L. Tussing
	 	Title: 	President and Chief Operating Officer

 

    	- 8 -

    	 

    

 

EXHIBIT A

PURCHASE FORM

  

The undersigned pursuant to the provisions
set forth in the attached Warrant (No. ______) hereby irrevocably elects to purchase ____ shares of Warrant Shares covered by such
Warrant and herewith makes payment of __________ representing the full purchase price for such shares of Warrant Shares at the
price per share of Warrant Share provided for in such Warrant.

 

If the shares of Warrant Shares are not
to be issued in the name of the undersigned, the shares of Warrant Shares shall be issued in the names of permitted assigns and
in the number of units as follows:

 

	Name: 	Name:
	 	 
	Address: 	Address:
	 	 
	Tax ID #: 	Tax ID #:
	 	 
	No. of Units: 	No. of Units:
	 	 
	 	 
	Dated:	 
	 	 
	Signature:	 
	 	 
	Print Name:	 
	 	 
	Address:	 

 

    	- 9 -CAPRICOR,
INC.

 

2006
STOCK OPTION PLAN

  

Capricor, Inc., a Delaware corporation (the "Company"),
sets forth herein the terms of its 2006 Stock Option Plan (the "Plan"),
as follows:

 

		1.	PURPOSE

 

The purpose
of the Plan is to advance the interests of the Company by encouraging and enabling selected officers, directors, employees, and
consultants of the Company, upon whose judgment, initiative
and effort the Company is largely dependent for the successful conduct of its business, by giving them an inducement to acquire
a proprietary interest in the Company. Except where the context otherwise requires, the term "Company" shall include
the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue
Code, as amended or replaced from time to time (the "Code"). Stock options granted under the Plan may be non-qualified
stock options or incentive stock options, as provided herein.Those provisions of this Plan which make express reference to
Section 422 of the Code shall apply only to Incentive Stock Options (as that term is defined in this Plan).

 

		2.	DEFINITIONS

 

For
purposes of interpreting the Plan and related documents (including Option Agreements), the following definitions
shall apply:

 

2.1 "Affiliate"
means, with respect to the Company, any company or other trade or business that controls, is controlled by or is under common control
with the Company within the meaning of Rule 405 of Regulation C under the Securities Act, including, without limitation, any Subsidiary.

 

2.2 "Benefit Arrangement"
shall have the meaning set forth in Section 11 hereof.

 

2.3 "Board" means the
Board of Directors of the Company.

  

2.4
"Cause" means, as determined by the Board and unless otherwise provided in an applicable agreement with the Company
or an Affiliate, (i) gross negligence or willful
misconduct in connection with the performance of duties; (ii) conviction of a criminal offense (other than minor traffic offenses);
or (iii) material breach of any term of any employment, consulting or other services, confidentiality, intellectual property or
non-competition agreements, if any, between the Service Provider and the Company or an Affiliate.

 

2.5 "Code"
means the Internal Revenue Code of 1986, as now in effect or as hereafter amended.

 

    	 

    	 

    

 

2.6 "Committee" means the committee selected
by the Board.

 

2.7 "Company" means Capricor, Inc., a Delaware
corporation.

 

2.8 "Corporate Transaction"
means (i) the dissolution or liquidation of the Company or a merger, consolidation, or reorganization of the Company with one or
more other entities in which the Company is not the surviving entity, (ii) a sale of substantially all of the assets of the Company
to another person or entity, or (iii) any transaction (including without limitation a merger or reorganization in which the Company
is the surviving entity) which results in any person or entity (other than persons who are shareholders or Affiliates immediately
prior to the transaction) owning 50% or more of the combined voting power of all classes of stock of the Company.

 

2.9
"Disability" means the Grantee is unable to perform each of the essential duties of such Grantee's position by reason
of a medically determinable physical or mental impairment which is potentially permanent in character or which can be expected
to last for a continuous period of not less than twelve (12) months; provided, however, that, with respect to rules regarding
expiration of an Incentive Stock Option following termination of the Grantee's Service, Disability shall mean the Grantee is unable
to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12)
months.

 

2.10 "Effective Date" means June 28, 2006.

  

2.11 "Exchange Act"
means the Securities Exchange Act of 1934, as now in effect or as hereafter amended.

 

2.12
"Fair Market Value" means the value of a share of Stock, determined as follows: if on the Grant Date or other determination
date the Stock is listed on an established national or regional stock exchange, is admitted to quotation on The Nasdaq Stock Market,
Inc. or is publicly traded on an established securities market, the Fair Market Value of a share of Stock shall be the closing
price of the Stock on such exchange or in such market (if there is more than one such exchange or market the Board shall determine
the appropriate exchange or market) on the Grant Date or such other determination date (or if there is no such reported closing
price, the Fair Market Value shall be the mean between the highest bid and lowest asked prices or between the high and low sale
prices on such trading day) or, if no sale of Stock is reported for such trading day, on the next preceding day on which any sale
shall have been reported. If the Stock is not listed on such an exchange, quoted on such system or traded on such a market, Fair
Market Value shall be the value of the Stock as determined by the Board in good faith.

 

2.13
"Family Member" means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent,
niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of the Grantee, any person
sharing the Grantee's household (other than a tenant or employee), a trust in which anyone or more of these persons have more
than fifty percent of the beneficial interest, a foundation in which anyone or more of these persons (or the Grantee) control
the management of assets, and any other entity in which one or more of these persons (or the Grantee) own more than fifty percent
of the voting interests.

 

    	Page 2

    	 

    

 

2.14
"Grant Date" means, as determined by the Board or the Committee, the latest to occur of (i) the date as of which
the Board or such Committee approves an Option, (ii) the date on which the recipient of an Option first becomes eligible to receive
an Option under Section 6 hereof, or (iii) such other date as may be specified by the Board or such Committee.

 

2.15 "Grantee" means a person who
receives or holds an Option under the Plan.

  

2.16
"Incentive Stock Option" means an "incentive stock option" within the meaning of Section 422 of the
Code, or the corresponding provision of any subsequently enacted tax statute, as amended from time to time.

  

2.17 "Non-qualified Stock Option" means an
Option that is not an Incentive Stock Option.

  

2.18 "Option" means an option to purchase one
or more shares of Stock pursuant to the Plan.

 

2.19
"Option Agreement" means the written agreement between the Company and a Grantee that evidences and sets out
the terms and conditions of an Option Grant.

  

2.20 "Option Grant" means a grant
of an Option under the Plan.

 

2.21 "Option Price" means the purchase price
for each share of Stock subject to an Option.

 

 

2.22 "Other Agreement" shall have
the meaning set forth in Section 11 hereof.

  

2.23 "Outside Director"means
a member of the Board who is not an officer or employee of the Company.

 

2.24 "Plan"
means this Capricor, Inc. 2006 Stock Option Plan.

  

2.25
"Reporting Person" means a person who is required to file reports under Section 16(a) of the Exchange Act.

 

2.26 "Securities
Act" means the Securities Act of 1933, as now in effect or as hereafter amended.

 

2.27
"Service" means service as an employee, officer,
Outside Director or other Service Provider of the Company or an Affiliate. Unless otherwise stated in the applicable Option Agreement,
a Grantee's change in position or duties shall not result in interrupted or terminated Service,
so long as such Grantee continues to be an employee, officer, Outside Director or other Service Provider of the Company
or an Affiliate. Subject to the preceding sentence, whether a termination of Service shall have occurred for purposes of the Plan
shall be determined by the Board, which determination shall be final, binding and conclusive.

 

    	Page 3

    	 

    

 

2.28 "Service Provider”
means an employee, officer or Outside Director of the Company or an Affiliate, or a consultant or adviser currently providing services
to the Company or an Affiliate.

 

2.29 "Stock" means the common stock of
the Company.

 

2.30 "Subsidiary"
means any "subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code.

 

2.31 "Termination
Date" means the date upon which an Option shall terminate or expire, as set forth in Section 8.3 hereof.

 

2.32
"Ten Percent Stockholder" means an employee who owns more than ten percent (10%) of the total combined voting power
of all classes of outstanding stock of the Company, its parent or any of its Subsidiaries. In determining stock ownership, the
attribution rules of Section 424(d) of the Code shall be applied.

  

		3.	ADMINISTRATION OF THE PLAN

 

3.1. Board

 

The Board shall have such
powers and authorities related to the administration of the Plan as are consistent with the Company’s
certificate of incorporation and by-laws and applicable law. The Board shall have full power
and authority to take all actions and to make all determinations required or provided for under the Plan, any Option or any Option
Agreement, and shall have full power and authority to take all such other actions and make all such other determinations not inconsistent
with the specific terms and provisions of the Plan that the Board deems to be necessary or appropriate to the administration of
the Plan, any Option or any Option Agreement. All such actions and determinations shall be by the affirmative vote of a majority
of the members of the Board present at a meeting or by unanimous consent of the Board executed in writing in accordance with the
Company’s certificate of incorporation and by-laws
and applicable law. The interpretation and construction by the Board of any provision of the Plan,
any Option or any Option Agreement shall be final, binding and conclusive.

 

3.2. Committee.

 

The
Board from time to time may delegate to the Committee such powers and authorities related to the administration and implementation
of the Plan, as set forth in Section 3.1 above and other applicable provisions, as the Board shall determine, consistent with
the certificate of incorporation and by-laws of the Company and applicable law. The Board
may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who
need not be Outside Directors, who may administer the Plan with respect to employees or other Service Providers who are not officers
or directors of the Company, may grant Options under the Plan to such employees or other Service Providers, and may determine
all terms of such Options. In the event that the Plan, any Option or any Option Agreement entered into hereunder provides for
any action to be taken by or determination to be made by the Board, such action may be taken or such determination may be made
by the Committee if the power and authority to do so has been delegated to the Committee by the Board as provided for in this
Section. Unless otherwise expressly determined by the Board, any such action or determination by the Committee shall be final,
binding and conclusive. To the extent permitted by law, the Committee may delegate its authority under the Plan to a member of
the Board.

 

    	Page 4

    	 

    

  

3.3. Terms of Options.

 

Subject
to the other terms and conditions of the Plan, the Board shall have full and final authority to:

 

(i) designate Grantees,

 

(ii) determine the type or types
of Options to be made to a Grantee,

 

(iii) determine the number of shares
of Stock to be subject to an Option,

 

(iv) establish
the terms and conditions of each Option (including, but not limited to, the exercise price of any Option, the nature and duration
of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of
an Option or the shares of Stock subject thereto, and any terms or conditions that may be necessary to qualify Options as Incentive
Stock Options),

 

(v) prescribe the form
of each Option Agreement evidencing an Option, and

 

(vi)
amend, modify, or supplement the terms of any outstanding
Option, subject to Section 8.9. Such authority specifically includes the authority, in order to effectuate the purposes of the
Plan but without amending the Plan, to modify Options to eligible individuals who are foreign nationals or are individuals who
are employed outside the United States to recognize differences in local law, tax policy, or custom.

 

The
Board shall have the right, in its discretion, to grant Options
in substitution or exchange for any other award under
another plan of the Company, any Affiliate, or any business entity to be acquired by the Company or an Affiliate. Shares issued
pursuant to Options granted in substitution for awards held by employees of a business entity acquired by the Company or an Affiliate
shall not count against the shares available for issuance under the Plan. The Company may retain the right in an Option Agreement
to cause a forfeiture of the gain realized by a Grantee on account of actions taken by the Grantee in violation or breach
of or in conflict with any non-competition agreement, any agreement prohibiting solicitation of employees or clients of the Company
or any Affiliate thereof or any confidentiality obligation with respect to the Company or any Affiliate thereof or otherwise in
competition with the Company or any Affiliate thereof, to the extent specified in such Option Agreement applicable to the Grantee.
Furthermore, the Company may annul an Option if the Grantee is an employee of the Company or an Affiliate thereof and is terminated
for Cause as defined in the applicable Option Agreement or the Plan, as applicable. The grant of any Option shall be contingent
upon the Grantee executing the appropriate Option Agreement.

 

    	Page 5

    	 

    

 

3.4. Deferral Arrangement.

 

The Board may permit
or require the deferral of any award payment into a deferred compensation arrangement, subject to such rules and procedures as
it may establish, which may include provisions for the payment or crediting of interest or dividend equivalents, including converting
such credits into deferred Stock equivalents and restricting deferrals to comply with hardship distribution rules affecting 401(k)
plans.

  

3.5. No Liability.

 

No member of the Board
or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option or
Option Agreement.

 

		4.	STOCK SUBJECT TO THE PLAN

 

Subject
to adjustment as provided in Section 13 hereof, the number of shares of Stock available for issuance under the Plan shall be one
million (1,000,000) shares. Stock issued or to be issued under the Plan shall be authorized but unissued shares. If any shares
covered by an Option are not purchased or are forfeited, if an Option is settled in cash or if an Option otherwise terminates
without delivery of any Stock subject thereto, then the number of shares of Stock counted against the aggregate number of shares
available under the Plan with respect to such Option shall, to the extent of any such forfeiture, cash payment or termination,
again be available for granting options under the Plan. If the Option Price of any Option granted under the Plan,
the withholding obligation of any Grantee with respect to an Option pursuant to Section 14.3
or any other payment under the Plan is satisfied by tendering shares of Stock to the Company (by either actual delivery or by
attestation) or by withholding shares of Stock, the total number of shares of Stock issued shall be deemed delivered for
purposes of determining the maximum number of shares of Stock available for delivery under the Plan.

 

		5.	EFFECTIVE DATE, DURATION AND AMENDMENTS

 

5.1. Effective Date.

 

The Plan
shall be effective as of the Effective Date, subject to approval of the Plan by the Company’s stockholders within one year
of the Effective Date. Upon approval of the Plan by the stockholders of the Company as set forth above, all Options granted under
the Plan on or after the Effective Date shall be fully effective as if the stockholders of the Company had approved the Plan on
the Effective Date. If the stockholders fail to approve the Plan within one year after the Effective Date, any Options granted
hereunder shall be null and void and of no effect.

 

    	Page 6

    	 

    

 

5.2. Term.

 

The Plan shall terminate
automatically ten (10) years after the Effective Date and may be terminated on any earlier date as provided in Section 5.3.

 

5.3. Amendment and Termination of the Plan

 

The Board may, at any time
and from time to time, amend, suspend, or terminate the Plan as to any shares of Stock as to which Options have not been granted.
An amendment shall be contingent on approval of the Company’s stockholders to the extent stated by the Board or required
by applicable law. In addition, an amendment will be contingent on approval of the Company's stockholders if the amendment would
(i) materially increase the benefits accruing to participants under the Plan, (ii) materially increase the aggregate number of
shares of Stock that may be issued under the Plan, or (iii) materially modify the requirements as to eligibility for participation
in the Plan. No Options shall be granted after termination of the Plan. No amendment, suspension, or termination of the Plan shall,
without the consent of the Grantee, impair rights or obligations under any Option theretofore granted under the Plan.

  

		6.	OPTION ELIGIBILITY AND LIMITATIONS

 

 

6.1. Service Providers; Outside Directors; and
Other Persons

 

Subject
to this Section 6, Options may be granted under the Plan to: (i) any Service Provider to the Company or of any Affiliate,
including any such Service Provider who is an officer or director of the Company, or of any Affiliate, as the Board shall determine
and designate from time to time, (ii) any Outside Director, or (iii) any other individual whose participation in the Plan is determined
to be in the best interests of the Company by the Board.

 

6.2. Successive Grants.

 

An eligible person may
receive more than one Option, subject to such restrictions as are provided herein.

 

6.3. Limitations on Incentive
Stock Options.

 

An
Option shall constitute an Incentive Stock Option only (i) if the Grantee of such Option is an employee of the Company or any
Subsidiary of the Company; (ii) to the extent specifically provided in the related Option Agreement; and (iii) to the extent that
the aggregate Fair Market Value (determined at the time the Option is granted) of the shares of Stock with respect to which all
Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year (under the Plan and
all other plans of the Grantee's employer and its Affiliates) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.

 

    	Page 7

    	 

    

 

6.4. Stand-Alone, Additional, Tandem, and Substitute
Options.

 

Options granted under the
Plan may, in the discretion of the Board, be granted either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Option granted under another plan of the Company, any Affiliate, or any business entity to be acquired by the Company
or an Affiliate, or any oilier right of a Grantee to receive payment from the Company or any Affiliate. Such additional, tandem,
and substitute or exchange Options may be granted at any time. If
an Option is granted in substitution or exchange for another Option, the Board shall require the surrender of such other Option
in consideration for the grant of the new Option. In addition, Options may be granted in lieu of cash compensation, including in
lieu of cash amounts payable under other plans of the Company or any Affiliate.

  

		7.	OPTION AGREEMENT

 

Each Option
granted pursuant to the Plan shall be evidenced by an Option Agreement, in such form or forms as the Board shall from time to time
determine. Option Agreements granted from time to time or at the same time need not contain similar provisions but shall be consistent
with the terms of the Plan. Each Option Agreement shall specify whether such Options are intended to be Non-qualified Stock Options
or Incentive Stock Options, and in the absence of such specification such options shall be deemed Non-qualified Stock Options.

 

		8.	TERMS AND CONDITIONS OF OPTIONS

 

8.1. Option Price

 

The
Option Price of each Option shall be fixed by the Board and stated in the Option Agreement evidencing such Option. The Option
Price of each Option shall be at least the Fair Market Value on the Grant Date of a share of Stock; provided, however, that in
the event that a Grantee is a Ten Percent Stockholder, the Option Price of an Option granted to such Grantee that is intended
to be an Incentive Stock Option shall be not less than 110 percent of the Fair Market Value of a share of Stock on the Grant Date.
In no case shall the Option Price of any Option be less than the par value of a share of Stock.

 

8.2. Vesting.

 

Subject
to Sections 8.3 and 13 hereof, each Option granted under the Plan shall become exercisable at such times and under such conditions
as shall be determined by the Board and stated in the Option Agreement. For purposes of this Section 8.2, fractional numbers of
shares of Stock subject to an Option shall be rounded down to the next nearest whole number.

  

8.3. Term.

 

Each
Option granted under the Plan shall terminate, and all rights to purchase shares of Stock thereunder shall cease, upon the expiration
often (10) years from the date such Option is granted, or under such circumstances and on such date prior thereto as is set forth
in the Plan or as may be fixed by the Board and stated in the Option Agreement relating to such Option (the "Termination
Date"); provided, however,
that in the event that the Grantee is a Ten Percent Stockholder, an Option granted to such
Grantee that is intended to be an Incentive Stock Option shall not be exercisable after the expiration of five years from its
Grant Date.

 

    	Page 8

    	 

    

 

8.4. Termination of Service.

 

Each Option
Agreement shall set forth the extent to which the Grantee shall have the right to exercise the Option following termination of
the Grantee's Service. Such provisions shall be determined in the sole discretion of the Board, need not be uniform among all Options
issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. An
Option that is intended to be an Incentive Stock Option shall no longer exercisable as an Incentive Stock Option ninety
(90) days after the termination of the Grantee's Service.

  

8.5. Limitations on Exercise of Option.

 

Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in whole or in part, prior to the date the Plan is approved
by the stockholders of the Company as provided herein, or after ten (10) years following the Grant Date, or after the occurrence
of an event referred to in Section 13 hereof which results in termination of the Option.

 

8.6. Method of Exercise.

 

An
Option that is exercisable may be exercised by the Grantee’s delivery to the Company of written notice of exercise
on any business day, at the Company’s principal office, on the form specified by the Company. Such notice shall specify the
number of shares of Stock with respect to which the Option is being exercised and shall be accompanied by payment in full of the
Option Price of the shares for which the Option is being exercised.

 

8.7. Rights of Holders of Options

 

Unless otherwise
stated in the applicable Option Agreement, an individual holding or exercising an Option shall have none of the rights of a stockholder
(for example, the right to receive cash or dividend payments or distributions attributable to the subject shares of Stock or to
direct the voting of the subject shares of Stock) until the shares of Stock covered thereby are fully paid and issued to him. Except
as provided in Section 13 hereof, no adjustment shall be made for dividends, distributions or other rights for which the record
date is prior to the date of such issuance.

 

8.8. Delivery of Stock Certificates
or Book Entry.

 

Promptly
after the exercise of an Option by a Grantee and the payment in full of the Option Price, such Grantee shall be entitled to the
issuance of a stock certificate or certificates evidencing his or her ownership of the shares of Stock subject to the Option. Notwithstanding
any other provision of this Plan to the contrary, the Company may elect to satisfy any requirement under this Plan for the delivery
of stock certificates through the use of book-entry.

 

    	Page 9

    	 

    

 

8.9. No Option Repricing.

 

Notwithstanding any other
provision in the Plan to the contrary, the Option Price of an Option may not be amended or modified after the Grant Date, and an
Option may not be surrendered in consideration of or exchanged for cash or a new option having an Option Price below that of the
Option which was surrendered or exchanged without approval of the Company's stockholders.

  

8.10. No Special Employment Right.

 

Nothing
contained in the Plan or in any Option shall confer upon any Grantee any right with respect to the continuation of his or her
employment by the Company or interfere in any way with the right of the Company at any time to terminate such employment "at
will" or to increase or decrease the compensation of the Grantee.

 

8.11. Other Employee Benefits.

 

Except as to plans which by their terms include
such amounts as compensation, the amount of any compensation deemed to be received by an employee as a result of the exercise
of an Option or the sale of shares received upon such exercise will not constitute compensation with respect to which any other
employee benefits of such employee are determined, including, without limitation, benefits under any bonus, pension, profit-sharing,
life insurance, or salary continuation plan, except as otherwise specifically determined by the Board.

 

		9.	TRANSFERABILITY OF OPTIONS

 

9.1. Transferability of Options

 

Except as provided in Section
9.2, during the lifetime of a Grantee, only the Grantee (or, in the event of legal incapacity or incompetency, the Grantee's guardian
or legal representative) may exercise an Option. Except as provided in Section 9.2, no Option shall be assignable or transferable
by the Grantee to whom it is granted, other than by will or the laws of descent and distribution.

 

9.2. Family Transfers.

 

If
authorized in the applicable Option Agreement, a Grantee may transfer, not for value, all or part of an Option which is not an
Incentive Stock Option to any Family Member. For the purpose of this Section 9.2, a "not for value" transfer is a transfer
which is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights; or (iii) a transfer
to an entity in which more than fifty percent of the voting interests are owned by Family Members (or the Grantee) in exchange
for an interest in that entity. Following a transfer under this Section 9.2, any such Option shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer. Subsequent transfers of transferred Options are prohibited
except to Family Members of the original Grantee in accordance with this Section 9.2 or by will or the laws of descent and distribution.
The events of termination of Service of Section 8.4 hereof shall continue to be applied with respect to the original Grantee,
following which the Option shall be exercisable by the transferee only to the extent, and for the periods specified, in Section
8.4.

 

    	Page 10

    	 

    

 

		10.	FORM OF PAYMENT FOR OPTIONS

  

10.1. General Rule.

 

Payment
of the Option Price for the shares purchased pursuant to the exercise of an Option shall be made in cash or in cash equivalents
acceptable to the Company.

  

10.2. Surrender of Stock.

 

To the extent the Option
Agreement so provides, payment of the Option Price for shares purchased pursuant to the exercise of an Option may be made all or
in part through the tender to the Company of shares of Stock, which shares, if acquired from the Company, shall have been held
for at least six (6) months at the time of tender and which shall be valued, for purposes of determining the extent to which the
Option Price has been paid thereby, at their Fair Market Value on the date of exercise.

  

10.3. Cashless Exercise.

 

To the extent the Option
Agreement so provides and subject to compliance with applicable law, payment of the Option Price for shares purchased pursuant
to the exercise of an Option may be made all or in part by delivery (on a form acceptable to the Board) of an irrevocable direction
to a licensed securities broker acceptable to the Company to sell shares of Stock and to deliver all or part of the sales proceeds
to the Company in payment of the Option Price and any withholding taxes described in Section 14.3.

  

10.4. Other Forms of Payment.

 

To the extent the Option
Agreement so provides, payment of the Option Price for shares purchased pursuant to exercise of an Option may be made in any other
form that is consistent with applicable laws, regulations and rules.

  

		11.	PARACHUTE LIMITATIONS

 

Notwithstanding any other
provision of this Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by a Grantee
with the Company or any Affiliate, except an agreement, contract, or understanding between the Grantee and the Company or any
Affiliate that modifies or excludes application of this paragraph (an "Other Agreement"), and notwithstanding any formal
or informal plan or other arrangement for the direct or indirect provision of compensation to the Grantee (including groups or
classes of Grantees or beneficiaries of which the Grantee is a member), whether or not such compensation is deferred, is in cash,
or is in the form of a benefit to or for the Grantee (a "Benefit
Arrangement"), if the Grantee is a "disqualified individual," as defined in Section 280G(c) of the Code, any Option
held by that Grantee and any right to receive any payment or other benefit under this Plan shall not become exercisable or vested
(i) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or
benefits to or for the Grantee under this Plan, all Other Agreements, and all Benefit Arrangements, would cause any payment or
benefit to the Grantee under this Plan to be considered a "parachute payment" within the meaning of Section 280G(b )(2)
of the Code as then in effect (a "Parachute Payment") and (ii) if, as a result of receiving a Parachute Payment, the
aggregate after-tax amounts received by the Grantee from the Company under this Plan, all Other Agreements, and all Benefit Arrangements
would be less than the maximum after tax amount that could be received by the Grantee without causing any such payment or benefit
to be considered a Parachute Payment. In the event that the receipt of any such right to exercise, vesting, payment, or benefit
under this Plan, in conjunction with all other rights, payments, or benefits to or for the Grantee under any Other Agreement or
any Benefit Arrangement would cause the Grantee to be considered to have received a Parachute Payment under this Plan that would
have the effect of decreasing the after-tax amount received by the Grantee as described in clause (ii) of the preceding sentence,
then the Grantee shall have the right, in the Grantee's sole discretion, to designate those rights, payments, or benefits under
this Plan, any Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the payment
or benefit to the Grantee under this Plan be deemed to be a Parachute Payment.

 

    	Page 11

    	 

    

 

		12.	REQUIREMENTS OF LAW

  

12.1. General.

 

The
Company shall not be required to sell or issue any shares of Stock under any Option if the sale or issuance of such shares would
constitute a violation by the Grantee, any other individual exercising an Option, or the Company of any provision of any law or
regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. If
at any time the Company shall determine, in its discretion, that
the listing, registration or qualification of any shares subject to an Option upon any securities exchange or under
any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase
of shares hereunder, no shares of Stock may be issued
or sold to the Grantee or any other individual exercising an Option unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby
shall in no way affect the date of termination of the Option. Specifically, in connection with the Securities Act, upon the exercise
of any Option or the delivery of any shares of Stock underlying an Option, unless a registration statement under such Act
is in effect with respect to the shares of Stock covered by such Option, the Company shall not be required to sell or issue such
shares unless the Board has received evidence satisfactory to it that the Grantee or any other individual exercising an Option
may acquire such shares pursuant to an exemption from registration under the Securities Act. Any determination in this connection
by the Board shall be final, binding, and conclusive. The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause
the exercise of an Option or the issuance of shares of Stock pursuant to the Plan to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the requirement that an Option shall not be exercisable
until the shares of Stock covered by such Option are registered or are exempt from registration, the exercise of such Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration
or the availability of such an exemption.

 

    	Page 12

    	 

    

 

12.2. Rule 16b-3.

 

During
any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of
the Company that Options pursuant to the Plan and the exercise of Options granted hereunder will qualify for the exemption provided
by Rule 16b- 3 under the Exchange Act. To the extent that any provision of the Plan or action by the Board does not comply with
the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Board,
and shall not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its
discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features of,
the revised exemption or its replacement.

  

12.3. Investment Representations.

 

The
Company may require any person to whom an Option is granted, as a condition of exercising such Option, to give written assurances
in substance and form satisfactory to the Company to the effect that such person is acquiring the Common Stock subject to the
Option for his or her own account for investment and not with any present intention of selling or otherwise distributing the same,
and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities
laws, or with covenants or representations made by the Company in connection with any public offering of its Common Stock.

  

12.4. Restriction on Transfer of
Stock.

 

The certificate
or certificates for Stock issued upon the exercise of an Option shall bear the following legend:

 

"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER APPLICABLE STATE SECURITIES LA WS (THE "STATE LAWS") NOR IS
SUCH REGISTRATION CONTEMPLATED. SUCH SECURITIES MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE
ACT OR THE STATE LAWS OR THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE BOARD OF DIRECTORS
OF THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."

 

    	Page 13

    	 

    

 

		13.	EFFECT OF CHANGES IN CAPITALIZATION

  

13.1. Changes in Stock.

 

If the number of outstanding
shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number or kind of
shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination
of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in
such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of
shares for which grants of Options may be made under the Plan shall be adjusted proportionately and accordingly by the Company.
In addition, the number and kind of shares for which Options are
outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the Grantee immediately following
such event shall, to
the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Options shall not change
the aggregate Option Price payable with respect to shares that are subject to the unexercised portion of an outstanding Option,
but shall include a corresponding proportionate adjustment in the Option Price per share. The conversion of any convertible securities
of the Company shall not be treated as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing,
in the event of any distribution to the Company’s stockholders of securities of any other entity or other assets without
receipt of consideration by the Company, the Company may,
in such manner as the Company deems appropriate, adjust
(i) the number and kind of shares subject to outstanding Options and/or (ii) the exercise price of outstanding Options to reflect
such distribution.

 

		13.2.	Reorganization in Which the Company Is the Surviving
Entity Which does not Constitute a Corporate Transaction.

 

Subject
to Section 13.3 hereof, if the Company shall be the surviving entity in any reorganization, merger, or consolidation of
the Company with one or more other entities which does not constitute a Corporate Transaction, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a holder of the number of shares of Stock subject to
such Option would have been entitled immediately following such reorganization, merger,
or consolidation, with a corresponding proportionate adjustment of the Option Price per share so that the aggregate Option Price
thereafter shall be the same as the aggregate Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger, or consolidation. Subject to any contrary language in an Option Agreement, any restrictions applicable
to such Option shall apply as well to any replacement shares received by the Grantee as a result of the reorganization, merger
or consolidation.

 

    	Page 14

    	 

    

 

13.3. Corporate Transaction.

 

Subject to the exceptions
set forth in the last sentence of this Section 13.3 and the last sentence of Section 13.4 either of the following two actions shall
be taken:

 

(i)
fifteen days prior to the scheduled consummation of a Corporate Transaction, all Options outstanding hereunder shall become immediately
exercisable and shall remain exercisable for a period of fifteen (15)days, or

 

(ii) the
Board may elect, in its sole discretion, to cancel any outstanding Options and payor deliver, or cause to be paid or delivered,
to the holder thereof an amount in cash or securities having a value (as determined by the Board acting in good faith) equal to
the product of the number of shares of Stock subject to the Option (the "Option Shares") multiplied by the amount, if
any, by which (A) the formula or fixed price per share paid to holders of shares of Stock pursuant to such transaction exceeds
(B) the Option Price applicable to such Option.

 

With
respect to the Company's establishment of an exercise window, (i) any exercise of an Option during such fifteen-day period shall
be conditioned upon the consummation of the event and shall be effective only immediately before the consummation of the event,
and (ii) upon consummation of any Corporate Transaction, the Plan and all outstanding but unexercised Options shall terminate.
The Board shall send written notice of an event that will result in such a termination to all individuals who hold Options not
later than the time at which the Company gives notice thereof to its stockholders. This Section 13.3
shall not apply to any Corporate Transaction to the extent that provision is made in writing in connection with such Corporate
Transaction for the assumption or continuation of the Options theretofore granted, or for the substitution for such Options for
new common stock options relating to the stock of a successor entity, or
a parent or subsidiary thereof, with appropriate adjustments as to the number of shares (disregarding any consideration that is
not common stock) and option exercise prices, in which event the Plan and the Options theretofore granted shall continue in the
manner and under the terms so provided.

 

13.4. Adjustments.

 

Adjustments
under this Section 13 related to shares of Stock or securities of the Company shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any
such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to
the nearest whole share. The Board may provide in the Option Agreements at the time of grant, or any time thereafter with the
consent of the Grantee, for different provisions to apply to an Option in place of those described in Sections 13.1, 13.2, and
13.3.

 

13.5. No Limitations on Company.

 

The granting
of Options pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.

 

    	Page 15

    	 

    

 

		14.	GENERAL PROVISIONS

  

14.1. Disclaimer of Rights

 

No provision in the Plan
or in any Option or Option Agreement shall be construed to confer upon any individual the right to remain in the employ or service
of the Company or any Affiliate, or to interfere in any way with any contractual or other right or authority of the Company either
to increase or decrease the compensation or other payments to any individual at any time, or to terminate any employment or other
relationship between any individual and the Company. In addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the applicable Option Agreement, no
Option granted under the Plan shall be affected by any change of duties or position of the Grantee,
so long as such Grantee continues to be a director, officer,
consultant or employee of the Company or an Affiliate. The obligation of the Company to pay
any benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only those amounts described herein,
in the manner and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the Company to transfer
any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any Grantee or beneficiary
under the terms of the Plan.

 

14.2. Nonexclusivity of the Plan

 

Neither
the adoption of the Plan nor the submission of the Plan to the stockholders of the Company for approval shall be construed as
creating any limitations upon the right and authority of the Board to adopt such other incentive compensation arrangements (which
arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual
or particular individuals) as the Board in its discretion determines desirable, including,
without limitation, the granting of stock options otherwise than under the Plan.

 

14.3. Withholding Taxes

 

The
Company or an Affiliate, as the case may be, shall have
the right to deduct from payments of any kind otherwise due to a Grantee any Federal, state,
or local taxes of any kind required by law to be withheld with respect to the vesting of or
other lapse of restrictions applicable to an Option or upon the issuance of any shares of Stock upon the exercise of an Option.
At the time of such vesting, lapse, or exercise, the Grantee
shall pay to the Company or the Affiliate, as the case may be, any
amount that the Company or the Affiliate may reasonably determine to be necessary to satisfy such withholding obligation. Subject
to the prior approval of the Company or the Affiliate, which may be withheld by the Company or the Affiliate, as the case may
be, in its sole discretion, the Grantee may elect to satisfy such obligations, in whole or in part, (i) by causing the Company
or the Affiliate to withhold shares of Stock otherwise issuable to the Grantee or (ii) by delivering to the Company or the Affiliate
shares of Stock already owned by the Grantee. The shares of Stock so delivered or withheld shall have an aggregate Fair
Market Value equal to such withholding obligations. The Fair Market Value of the shares of Stock used to satisfy such withholding
obligation shall be determined by the Company or the Affiliate as of the date that the amount of tax to be withheld is to be determined.
A Grantee who has made an election pursuant to this Section 14.3 may satisfy his or her withholding obligation only with
shares of Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.

 

    	Page 16

    	 

    

 

14.4. Captions

 

The use of captions in
this Plan or any Option Agreement is for the convenience of reference only and shall not affect the meaning of any provision of
the Plan or such Option Agreement.

 

14.5. Other Provisions

 

Each Option granted under
the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Board, in its sole
discretion.

 

14.6. Number And Gender

 

With respect to words used
in this Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, etc., as
the context requires.

 

14.7. Severability

 

If any provision of the
Plan or any Option Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.

 

14.8. Governing Law

 

The
validity and construction of this Plan and the instruments evidencing the Option hereunder shall be governed by the laws of the
State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation
of this Plan and the instruments evidencing the Options granted hereunder to the substantive laws of any other jurisdiction.

  

    	Page 17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00227-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00227-of-00352.parquet"}]]