Document:

ESCROW
AGREEMENT

 

This
ESCROW AGREEMENT (this “Escrow Agreement”) is made and entered into as of November 11, 2016, by and
among BOCO Silicon Valley, Inc., a California corporation (“Buyer”), STEMCELLS, INC., a Delaware corporation,
(“Seller”) under the Asset Purchase Agreement (as defined below), Continental Stock Transfer & Trust Company,
a New York corporation, as escrow agent (the “Escrow Agent”), Kenneth B. Stratton in his capacity as representative
to the Consultants (as defined herein) (“Consultants’ Representative”), and Alpha Capital Anstalt (“Alpha
Capital”). Buyer and together with Seller, Consultants’ Representative and Alpha Capital are sometimes referred
to individually as “Party” and collectively as the “Parties,” provided that (a) Consultants’
Representative is a Party solely with respect to Sections 3.2 and 4.3, Section 5, Section 6.3, Section 9 and Section 10 and (b)
Alpha Capital is a Party solely with respect to Section 3.2, Sections 5.3(a), 10.2(a), 10.4, 10.3, 10.4, 10.5, 10.7, 10.8, 10.9
and 10.10.

 

WHEREAS,
Buyer and Seller are parties to that certain Asset Purchase Agreement, dated as of November 11, 2016, by and among Buyer, Seller,
STEM CELL SCIENCES HOLDINGS LIMITED, a private limited company registered in Scotland that is a wholly-owned subsidiary of Seller
(“STEMCELLS Holdings”), and STEMCELLS CALIFORNIA, INC., a California corporation that is a wholly-owned subsidiary
of STEMCELL Holdings (as such agreement may be amended, restated or otherwise modified from time to time, the “Asset
Purchase Agreement”).

 

WHEREAS,
Section 1.6(b) of the Asset Purchase Agreement requires Buyer and Seller to enter into this Escrow Agreement;

 

WHEREAS,
pursuant to the terms and conditions of Section 1.6(c) of the Asset Purchase Agreement, on November 10, 2016 (“Funding
Date”) Buyer has agreed to deliver to the Escrow Agent $3,700,000 (the “Escrow Deposit,” and together
with any and all interest and other amounts earned thereon from and after the date hereof and as reduced by any disbursements,
withdrawals or losses on investments, the “Escrow Funds”), which amount shall be held in a segregated account,
to serve as a source of payment of (a) the amounts to Seller pursuant to Section 1.7(d) and Section 8.4(b) of the Asset Purchase
Agreement, (b) the amounts to Buyer pursuant to Section 1.7(e) and Section 7.2(b) of the Asset Purchase Agreement, (c) the amounts
to the individuals whose consulting agreements are described in Section 2.14 of the Sellers Disclosure Schedule (as defined in
the Asset Purchase Agreement) and whose names are set forth in Schedule 1 attached hereto (the “Consultants”),
pursuant to Section 1.7(d) and Section 8.4(b) of the Asset Purchase Agreement (the “Consultants’ Amounts”),
and (d) the amounts, if any, owed to Buyer by Seller pursuant to the payment and indemnification obligations set forth in Article
VIII of the Asset Purchase Agreement; and

 

WHEREAS,
Seller and Alpha Capital are parties to that certain Partial Release of Security Interest, dated November 11, 2016, with respect
to that certain Security Agreement, dated as of August 15, 2016, by and between Seller and Alpha Capital.

 

    	 

    	 

    

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Buyer, Seller, Consultants’ Representative, the Escrow Agent
and Alpha Capital agree as follows:

 

Section
1      Capitalized Terms. Each capitalized
term which is used but not otherwise defined in this Escrow Agreement has the meaning assigned to such term in the Asset Purchase
Agreement; however, the Escrow Agent shall not be responsible for having knowledge of any term not defined within this Escrow
Agreement.

 

Section
2      Appointment of and Acceptance by Escrow
Agent. Buyer and Seller hereby appoint and designate the Escrow Agent to acquire and maintain possession of the Escrow Funds
under the terms and conditions set forth herein and to act as escrow agent for the purposes set forth herein and under the terms
and conditions set forth herein, and the Escrow Agent hereby accepts such appointment and designation under the terms and conditions
set forth herein.

 

Section
3      Receipt of Deposit; Establishment of
Escrow; Interest.

 

3.1       The
Escrow Agent shall hold in escrow, invest and disburse the Escrow Funds in accordance with the terms of this Escrow Agreement.
On the Funding Date, Buyer will deliver the Escrow Deposit to the Escrow Agent, and the Escrow Agent will acknowledge to Buyer
and Seller the Escrow Deposit upon receipt. 

 

3.2       The
Escrow Agent shall establish a segregated account in which to hold the investments in which the Escrow Funds (or any portion thereof)
may, from time to time, be invested (the “Escrow Account”). The Escrow Agent shall also maintain and make available
to Buyer, Seller, Consultants’ Representative and Alpha Capital on a monthly basis, an account statement with respect to
the Escrow Account in form and substance as customarily provided by the Escrow Agent for escrow accounts for which it acts as
escrow agent. The Escrow Agent shall not dispose of the Escrow Funds except as expressly provided for in this Escrow Agreement.

 

Section
4      Investment of the Escrow Funds.

 

4.1       During
the term of this Escrow Agreement, the Escrow Funds shall be invested in an interest-bearing demand deposit account at JPMorgan
Chase Bank, N.A. (“JPMorgan”). Interest-bearing demand deposit accounts have rates of interest or compensation
that may vary from time to time as determined by JPMorgan.

 

4.2       Each
Party acknowledges that it was not offered any investment, tax or accounting advice or recommendation by the Escrow Agent with
regard to any investment and has made an independent assessment of the suitability and appropriateness of an interest-bearing
demand deposit account at JPMorgan. The Escrow Agent shall not have any liability for any loss sustained as a result of the deposit
of the Escrow Funds in an interest-bearing demand deposit account at JPMorgan; provided, that such losses shall not have resulted
from the gross negligence or willful misconduct of the Escrow Agent. The Escrow Agent shall have the right to withdraw funds from
the interest-bearing demand deposit account at JPMorgan in order to provide funds necessary to make required payments under this
Escrow Agreement.

 

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4.3       All
interest or other income earned under this Escrow Agreement shall be allocated to Seller and the Consultants and reported, by
Escrow Agent to the Internal Revenue Service (“IRS”), or any other taxing authority, on IRS Form 1099 or 1042S
(or other appropriate form) as income earned from the Escrow Deposit by Seller and the Consultants whether or not said income
has been distributed during such year. The Parties hereby represent to Escrow Agent that no other tax reporting of any kind is
required given the underlying transaction giving rise to this Escrow Agreement. Consultants’ Representative shall provide
to the Escrow Agent any tax documentation for Consultants’ Representative or any of the Consultants that may be reasonably
requested by the Escrow Agent prior to the Closing Date (and from time to time thereafter if the provided tax documentation expires
or becomes obsolete).

 

Section
5      Payments From the Escrow Funds.

 

5.1       General.
Except as otherwise specifically provided herein, the Escrow Agent shall release the Escrow Funds only pursuant to and in accordance
with: (a) joint written instructions signed by both Seller and Buyer, (b) a copy of a final and non-appealable award, judgment
or order issued by a court of competent jurisdiction adjudicating a dispute with respect to a disputed amount of an indemnification
claim, or (c) a copy of a final decision from an arbitrator in proceedings administered by the China International Economic and
Trade Arbitration Commission pursuant to Section 9.5 of the Asset Purchase Agreement. All disbursements made pursuant to this
Section 5.1 shall be made in accordance with the provisions set forth in Section 5.5 hereto.

 

5.2       Release
to Buyer for Indemnification Claims.

 

(a)       Each
time a BOCO Indemnified Party seeks recovery from the Escrow Funds on or prior to the Escrow Termination Date (as defined below)
for a claim under Article VIII of the Asset Purchase Agreement (an “Indemnification Claim”), such BOCO Indemnified
Party shall deliver a Claim Notice (as defined below) to Seller. “Claim Notice” shall mean a written claim
notice by a BOCO Indemnified Party to Seller making a claim for indemnification against Losses in respect of a claim for indemnification
pursuant to Section 8.2 of the Asset Purchase Agreement in compliance with Article VIII of the Asset Purchase Agreement, which
claim notice sets forth (i) a description, in reasonable detail, of the facts and circumstances by reason of which such claim
is being made, to the extent then known to the BOCO Indemnified Party, and (ii) the amount of the claim for which a BOCO Indemnified
Party is seeking indemnification (the “Claimed Amount”).

 

(b)       Within
thirty (30) calendar days after receipt by Seller and the Escrow Agent of a Claim Notice (the “Response Period”),
Seller shall deliver to the BOCO Indemnified Party and to the Escrow Agent a written response (the “Response Notice”)
in which Seller shall instruct the Escrow Agent either (i) to release Escrow Funds in the full amount of the Claimed Amount to
the BOCO Indemnified Party from the Escrow Account, (ii) to release Escrow Funds equal to part, but not all, of the Claimed Amount
(the “Agreed Amount”) to BOCO Indemnified Party from the Escrow Account or (iii) to release no part of the
Escrow Funds from the Escrow Account to BOCO Indemnified Party in respect of the Claimed Amount. The Claimed Amount (or any part
thereof) that the Escrow Agent is instructed in the Response Notice not to release to BOCO Indemnified Party is herein referred
to as the “Contested Amount.”

 

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(c)       If
Seller delivers a Response Notice instructing the Escrow Agent to release only the Agreed Amount to BOCO Indemnified Party, then
the Escrow Agent shall, promptly following the receipt of such Response Notice, and in any event within three (3) Business Days
of receipt and confirmation pursuant to Section 8 hereto, pay to BOCO Indemnified Party or its designee an amount equal to the
Agreed Amount from the Escrow Account.

 

(d)       If
Seller (i) fails to deliver a Response Notice, or otherwise fails to deliver instructions in a Response Notice with respect to
any Claimed Amount, within the Response Period, in which case all of the Claimed Amount shall constitute a Contested Amount, or
(ii) delivers a Response Notice stating that all or any portion of the Claimed Amount constitutes a Contested Amount, then the
BOCO Indemnified Party shall either (i) agree that the Contested Amount is not required to be paid from the Escrow Funds, in which
case such amount shall no longer be considered a Contested Amount for any purpose under this Agreement or (ii) initiate the dispute
resolution proceedings set forth in Section 9.5 of the Asset Purchase Agreement.

 

(e)       The
Escrow Agent shall only release and deliver any portion of a Contested Amount to BOCO Indemnified Party in accordance with (i)
joint written instructions signed by both Buyer and Seller or (ii) a final decision from an arbitrator in proceedings administered
by the China International Economic and Trade Arbitration Commission pursuant to Section 9.5 of the Asset Purchase Agreement which
identifies all or a portion of the Contested Amount as being owed to the BOCO Indemnified Party. The Escrow Agent shall be entitled
to conclusively rely on the opinion of counsel that the arbitration award is final and binding pursuant to Section 9.5 of the
Asset Purchase Agreement. Upon receipt of such joint written instruction or such final arbitration award, as the case may be,
the Escrow Agent shall pay to such BOCO Indemnified Party promptly, and in any event within three (3) Business Days of receipt
and confirmation pursuant to Section 5 hereto, an amount from the Escrow Funds equal to the lesser of (x) the amount required
to be paid to the BOCO Indemnified Party in accordance with the joint written instructions or final arbitration decision and (y)
the remaining amount of the Escrow Funds. In the event that Seller is the prevailing party in whole or in part in connection with
any such dispute, the portion of the Escrow Funds that was not released to any BOCO Indemnified Party pursuant to this Section
5.2(e) shall no longer be considered a Contested Amount for any purpose under this Agreement and shall remain in the Escrow
Account until released as provided pursuant to Section 5.3.

 

5.3       Release
at Closing; Final Release.

 

(a)       At
least three Business Days prior to the Closing Date, Buyer, Seller and Alpha Capital shall execute and provide to the Escrow Agent
duly executed joint written instructions in the form attached hereto as Schedule 2 (the “Closing Release Instructions”).
Following the receipt of the Closing Release Instructions, the Escrow Agent shall, on the Closing Date, deliver to Seller and
the Consultants as a whole, as further specified in the Closing Payment Instructions, 85% and 15%, respectively, of the Closing
Purchase Price, which shall equal (i) $3,300,000 if the Closing Date is December 1, 2016 or prior thereto or (ii) $3,200,000 if
the Closing Date is after December 1, 2016. All disbursements made pursuant to this Section 5.3(a) shall be made in accordance
with the provisions set forth in Section 5.5 hereto.

 

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(b)       On
the first Business Day following the first anniversary of the Closing Date (the “Escrow Termination Date”),
the Escrow Agent shall deliver to Seller and the Consultants as a whole, 85% and 15%, respectively, of the amount of all of the
then remaining Escrow Funds in the Escrow Account less the aggregate amount of all Unresolved Claims (as defined below), with
the 15% of the amount of such Escrow Funds distributed by the Escrow Agent to the Consultants in accordance with Schedule 3
hereto (the “Consultants’ Distribution Allocation”). All disbursements made pursuant to this Section
5.3(b) shall be made in accordance with the provisions set forth in Section 5.5 hereto.

 

(c)       If,
on or prior to 11:59 PM (New York time) on the day immediately preceding the Escrow Termination Date, a BOCO Indemnified Party
has delivered a Claim Notice that has not been resolved as of the Escrow Termination Date in accordance with Article VIII and
Section 9.5 of the Asset Purchase Agreement (each, an “Unresolved Claim”), then the Escrow Agent shall retain
in the Escrow Account an amount of Escrow Funds equal to the aggregate amount of the Claimed Amounts for all Unresolved Claims
for which the BOCO Indemnified Parties are seeking indemnification until such Unresolved Claims have been resolved in accordance
with Article VIII and Section 9.5 of the Asset Purchase Agreement. Following the resolution of each Unresolved Claim in accordance
with Article VIII and Section 9.5 of the Asset Purchase Agreement, the Escrow Agent shall be instructed to release and deliver
from the Escrow Account to Seller and the Consultants as a whole, 85% and 15%, respectively, of the amount of Escrow Funds equal
to the excess, if any, of (i) the amount then remaining in the Escrow Account over (ii) the aggregate amount of the Claimed Amounts
for all Unresolved Claims that remain outstanding following the resolution of such Unresolved Claim, with the 15% of the amount
of such Escrow Funds distributed to the Consultants by the Escrow Agent in accordance with the Consultants’ Distribution
Allocation. When all Unresolved Claims have been resolved in accordance with Article VIII and Section 9.5 of the Asset Purchase
Agreement, the Escrow Agent shall release and deliver from the Escrow Account to Seller and the Consultants as a whole, 85% and
15%, respectively, of the amount of all of the then remaining Escrow Funds which had been retained with respect to such Unresolved
Claims and not applied in payment thereof, with the 15% of the amount of such Escrow Funds distributed to the Consultants by the
Escrow Agent in accordance with the Consultants’ Distribution Allocation. All disbursements made pursuant to this Section
5.3(c) shall be made in accordance with the provisions set forth in Section 5.5 hereto.

 

5.4       Release
to Buyer.

 

(a)       If
the Closing has not occurred in accordance with the Asset Purchase Agreement on or before December 1, 2016 and Buyer has notified
the Escrow Agent and Seller of such event, then on the 10th day following such notice, the Escrow Agent shall deliver to Buyer
an amount equal to $100,000 from the Escrow Account pursuant to Section 1.7(d) of the Asset Purchase Agreement, unless Seller
shall have, in good faith, disputed in writing to the Escrow Agent and Buyer during the 10-day period after receipt of notice
from Buyer regarding the failure of the Closing to occur on or before December 1, 2016. If Seller does submit such a dispute in
writing prior to the end of such 10-day period, Buyer shall either (i) agree that such amount is not required to be paid to Buyer
pursuant to this Escrow Agreement or (B) initiate the dispute resolution proceedings set forth in Section 9.5 of the Asset Purchase
Agreement.

 

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(b)       If
the Asset Purchase Agreement is terminated pursuant to Section 7.1 of the Asset Purchase Agreement and Buyer has notified the
Escrow Agent and Seller of such event, then on the 10th day following such notice, the Escrow Agent shall deliver to Buyer all
of the then remaining funds in the Escrow Account pursuant to Section 7.2(b) of the Asset Purchase Agreement, unless Seller shall
have, in good faith, disputed in writing to the Escrow Agent and Buyer during the 10-day period after receipt of notice from Buyer
regarding the termination of the Asset Purchase Agreement. If Seller does submit such a dispute in writing prior to the end of
such 10-day period, Buyer shall either (A) agree that such remaining funds are not required to be paid to Buyer pursuant to this
Escrow Agreement or (B) initiate the dispute resolution proceedings set forth in Section 9.5 of the Asset Purchase Agreement.

 

5.5       Payment
to be Made in Immediately Available Funds. Any payments required to be made to Buyer or its designee pursuant to this Section
5 shall be made by wire transfer of immediately available funds to an account designated by Buyer in writing to the Escrow
Agent. Any payments required to be made to Seller or its designee pursuant to this Section 5 shall be made by wire transfer
of immediately available funds to an account designated by Seller in writing to the Escrow Agent. Any payments required to be
made to a Consultant or his or her respective designee pursuant to this Section 5 shall be made, at the discretion of Consultants’
Representative, (i) by wire transfer of immediately available funds to an account designated by Consultants’ Representative
in writing to the Escrow Agent or (ii) by check payable to the name, and mailed by the Escrow Agent via a nationally recognized
overnight courier service to the address, in each case designated by Consultants’ Representative in writing to the Escrow
Agent.

 

Section
6      Liability and Duties of the Escrow
Agent.

 

6.1       The
Escrow Agent’s responsibilities, duties and obligations under this Escrow Agreement shall be determined solely by the express
provisions of this Escrow Agreement which shall be deemed purely ministerial in nature, and no other duties shall be implied,
and the Escrow Agent shall not pay the Escrow Funds, or any portion thereof, except in accordance with the terms of this Escrow
Agreement. The Escrow Agent shall be under no obligation to refer to any documents other than this Escrow Agreement and the instructions
and requests delivered to the Escrow Agent hereunder. The Escrow Agent shall not be obligated to recognize, and shall not have
any liability or responsibility arising under, any agreement to which the Escrow Agent is not a party, even though reference thereto
may be made herein. The Escrow Agent shall neither be responsible for, nor chargeable with, knowledge of, nor have any requirements
to comply with, the terms and conditions of any other agreement, instrument or document, other than this Escrow Agreement, between
or among Buyer and Seller in connection herewith, if any, including, without limitation, the Asset Purchase Agreement, nor shall
the Escrow Agent be required to determine if any person has complied with any such agreements, nor shall any additional obligations
of the Escrow Agent be inferred from the terms of such agreements, even though reference thereto may be made in this Escrow Agreement.
In the event of any conflict between the terms and provisions of this Escrow Agreement relating to the rights or obligations of
the Escrow Agent, those of the Asset Purchase Agreement, any schedule or exhibit attached to the Asset Purchase Agreement or any
other agreement among Buyer and Seller, the terms and conditions of this Escrow Agreement shall prevail. The Escrow Agent shall
have no duty to solicit any payments which may be due it or the Escrow Account, nor shall the Escrow Agent have any duty or obligation
to make any formulaic calculations of any kind hereunder.

 

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6.2       The
Escrow Agent, including its officers, directors, employees and agents, shall not be liable to anyone whomsoever by reason of any
error of judgment or for any act done or step taken or omitted by the Escrow Agent, or for any mistake of fact or law or anything
which the Escrow Agent may do or refrain from doing in connection herewith, in good faith, unless caused by or arising out of
the Escrow Agent’s (or any of its directors, officers, agents or employees) gross negligence, fraud or willful misconduct.
The Escrow Agent may consult with counsel of its own choice and shall have full and complete authorization and protection for
any action taken or suffered by the Escrow Agent hereunder in accordance with the opinion of such counsel. Buyer and Seller shall
jointly and severally indemnify and hold the Escrow Agent and its affiliates and their respective successors, assigns, directors,
agents and employees (collectively, the “Indemnitees”) from and against any and all actual and direct losses,
damages, claims, liabilities, penalties, judgments, settlements, litigation, investigations, costs or expenses (including, without
limitation, the reasonable fees and expenses of outside counsel) (collectively “Damages”) to the extent arising
out of (a) the Escrow Agent’s (i) performance of this Escrow Agreement in compliance with the terms hereof, (ii) tax reporting
or withholding in respect of all amounts held in the Escrow Account, or (iii) enforcement of any rights or remedies under or in
connection with this Escrow Agreement, in each case of clause (i), (ii) or (iii), except to the extent that such Damages are finally
adjudicated by a court of competent jurisdiction to have been primarily caused by the gross negligence, fraud or willful misconduct
of any Indemnitee, or (b) the Escrow Agent’s following any joint written instructions or other joint written directions
from Buyer and Seller, except to the extent that its following any such instruction or direction is expressly forbidden by the
terms hereof. Such indemnification shall survive the Escrow Agent’s resignation or removal, or the termination of this Escrow
Agreement. For the avoidance of doubt, Consultants’ Representative, shall not have any obligation under this Escrow Agreement
to indemnify the Escrow Agent or any other Indemnitee for any Damage.

 

6.3       This
Escrow Agreement is a personal one, the Escrow Agent’s duties hereunder being only to Buyer, Seller, Consultants’
Representative and the Consultants, and their respective successors and permitted assigns, and to no other person whomsoever.

 

6.4       The
Escrow Agent may rely or act upon joint written instructions bearing a signature or signatures properly believed by the Escrow
Agent to be genuine of Buyer and Seller.

 

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6.5       In
case any property held by the Escrow Agent shall be attached, garnished or levied upon under a court order, or the delivery thereof
shall be stayed or enjoined by a court order, or any writ, order, judgment or decree shall be made or entered by any court, or
any order, judgment or decree shall be made or entered by any court affecting the property deposited under this Escrow Agreement
or any part thereof, the Escrow Agent is hereby expressly authorized, in its sole discretion, to obey and comply with all writs,
orders, judgments or decrees so entered or issued, whether with or without jurisdiction, and in case the Escrow Agent obeys or
complies with any such writ, order, judgment or decree, the Escrow Agent shall not be liable to Buyer or Seller or to any other
person by reason of such compliance in connection with such litigation.

 

6.6       The
Escrow Agent reserves the right to resign at any time by giving written notice of resignation to Buyer and Seller specifying the
effective date thereof. Within thirty (30) days after receiving such notice, Buyer and Seller jointly shall appoint a successor
escrow agent to which the Escrow Agent shall distribute the property then held under this Escrow Agreement, less the Escrow
Agent’s fees, costs and expenses, whereupon the Escrow Agent shall upon such distribution to a successor escrow agent, be
discharged of and from any and all further obligations arising in connection with this Escrow Agreement, except for such liability
and expenses which results from the Escrow Agent’s fraud, gross negligence or willful misconduct. If a successor escrow
agent has not been appointed or has not accepted such appointment by the end of such thirty-day period, the Escrow Agent may apply
to a court of competent jurisdiction for the appointment of a successor escrow agent, and the costs, expenses and reasonable attorneys’
fees which are incurred in connection with such proceeding shall be paid one-half by Buyer and one-half by Seller. Until a successor
escrow agent has accepted such appointment and the Escrow Agent has transferred the Escrow Funds to such successor escrow agent,
the Escrow Agent shall continue to retain and safeguard the Escrow Funds until receipt of a joint written instruction signed by
both Buyer and Seller.

 

6.7       In
the event of any disagreement between Buyer and Seller resulting in adverse claims or demands being made in connection with the
Escrow Funds or in the event that the Escrow Agent is in doubt as to what action it should take hereunder, the Escrow Agent shall
be permitted to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow.

 

6.8       The
Escrow Agent does not have any interest in the Escrow Funds but is serving as escrow holder only and has only possession thereof.
If any payments of income from the Escrow Funds shall be subject to withholding regulations then in force with respect to United
States taxes, Buyer and Seller agree to provide the Escrow Agent with appropriate forms for or with respect to such withholding.
This Section 6.8, Section 6.1 and Section 7 shall survive notwithstanding any termination of this Escrow
Agreement or the Escrow Agent’s resignation.

 

6.9       Seller,
Buyer and Consultants’ Representative have provided the Escrow Agent with their respective fully executed IRS Form W-8,
or W-9, and/or other required documentation requested by the Escrow Agent prior to the date hereof. The Parties each represent
that its correct TIN assigned by the IRS, or any other taxing authority, is set forth in the delivered forms.

 

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Section
7      Compensation of the Escrow Agent.
The Escrow Agent shall be entitled to fees in accordance with the fee schedule attached hereto as Schedule 4. Buyer and
Seller agree the “Base Fee’ (as defined in Schedule 4) shall be paid by that one-half of Buyer and one-half by Seller.
Buyer and Seller agree the “Variable Fee’ (as defined in Schedule 4) shall be paid solely by Seller. Buyer and Seller
shall also pay or reimburse the Escrow Agent upon request for all expenses, disbursements and advances, including, without limitation
reasonable attorney’s fees and expenses, incurred or made by it following the date of this Escrow Agreement in connection
with the performance, modification and termination of this Escrow Agreement, which Buyer and Seller agree shall be paid one-half
by Buyer and one-half by Seller, except for any such expenses incurred solely in connection with the disbursement of the Consultants’
Amounts, which shall be paid entirely by Seller. For the avoidance of doubt, Consultants’ Representative shall not have
any obligation under this Escrow Agreement to pay or reimburse the Escrow Agent any fee, expense, disbursement, advancement or
other amount.

 

Section
8      Funds Transfer Agreement. Any
instructions setting forth, claiming, containing, objecting to, or in any way related to the transfer or distribution of funds,
including but not limited to any such funds transfer instructions that may otherwise be set forth in a written instruction permitted
pursuant to Section 5 of this Escrow Agreement, may, unless such requirement is waived by the Escrow Agent, be given to
the Escrow Agent only by PDF attached to an email, nationally recognized courier service, facsimile and no instruction for or
related to the transfer or distribution of the Escrow Funds, or any portion thereof, shall, unless such requirement is waived
by the Escrow Agent, be deemed delivered and effective unless the Escrow Agent actually shall have received such instruction by
facsimile at the number provided to the Parties by the Escrow Agent in accordance with Section 9. In the event funds transfer
instructions are given (other than in writing at the time of the execution of this Escrow Agreement) by PDF attached to an email,
nationally recognized courier service or facsimile, the Escrow Agent is authorized to seek confirmation of such instructions by
telephone call-back to the person or persons designated on Schedule 5 hereto, and the Escrow Agent may rely upon the confirmations
of anyone purporting to be the person or persons so designated. Each funds transfer instruction shall be executed by an authorized
signatory; a list of such authorized signatories is set forth on Schedule 5. The undersigned is authorized to certify that
the signatories on Schedule 5 are authorized signatories. The persons and telephone numbers for call-backs may be changed
only in writing actually received and acknowledged by the Escrow Agent. The Parties hereto acknowledge that such security procedure
is commercially reasonable. It is understood that the Escrow Agent and the beneficiary’s bank in any funds transfer may
rely solely upon any account numbers or similar identifying number provided by any party hereto to identify (a) the beneficiary,
(b) the beneficiary’s bank or (c) an intermediary bank. The Escrow Agent may apply funds for any payment order it executes
using any such identifying number, even where its use may result in a person other than the beneficiary being paid, or the transfer
of funds to a bank other than the beneficiary’s bank, or an intermediary bank, so designated.

 

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Section
9      Notices. Except for communications
from Buyer, Seller or Consultants’ Representative setting forth, claiming, containing, objecting to, or in any way related
to the transfer or distribution of funds, including but not limited to funds transfer instructions (all of which shall be specifically
governed by Section 8 of this Escrow Agreement), all notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Escrow Agreement will be in writing and will be deemed to have been given upon delivery,
when delivered personally, mailed by certified or registered mail, return receipt requested and postage prepaid, or sent via a
nationally recognized overnight courier, or sent via facsimile, to the recipient with telephonic confirmation by the sending party.
Such notices, demands and other communications will be sent to the address indicated below:

 

	 	If
    to Buyer:	BOCO
    SILICON VALLEY, INC.
	 	 	43152
    Nielson Court
	 	 	Fremont,
    CA 94539
	 	 	Attention:Shirley
    Zhou

 

	 	with
    a copy (which shall not constitute notice) to:
	 	 	 
	 	 	Dentons
    US LLP
	 	 	1221
    Avenue of the Americas
	 	 	New
    York, New York 10020-1089
	 	 	Attention:Peter
    Su, Esq.,
	 	 	Ilan
    Katz, Esq.

 

	 	If
    to Seller:	STEMCELLS,
    INC.
	 	 	39899
    Balentine Drive, Suite 200
	 	 	Newark,
    CA 94560
	 	 	Attention:Kenneth
    Stratton
	 	 	Email:ken.stratton@stemcellsinc.com
	 	 	Tel.:(650)
    670-2282

 

	 	with
    a copy (which shall not constitute notice) to:
	 	 	Ropes
    & Gray LLP
	 	 	36F,
    Park Place
	 	 	1601
    Nanjing Road West
	 	 	Shanghai
    200040, PRC
	 	 	Attention:
    Arthur Mok, Esq.

 

	 	If
    to the Escrow Agent:	Continental
    Stock Transfer & Trust Company
	 	 	17
    Battery Place, 8th Floor
	 	 	New
    York, NY 10004
	 	 	Attention: Accounting
    Department, Escrow Administration
	 	 	Email
    Address: scarter@continentalstock.com

 

	 	If
    to Consultants’ Representative:	Mr.
    Kenneth B. Stratton
	 	 	774
    Knoll Dr.
	 	 	San
    Carlos, CA 94070
	 	 	Email;  Ken_Stratton@sbcglobal.net
	 	 	Tel.:   (650)
    670-2282

 

Any
party may change the address to which notices are to be delivered by giving the other Parties notice in the manner provided in
this Section 9.

 

    	10

    	 

    

 

Section
10     Miscellaneous.

 

10.1       Instructions
by Buyer, Seller and Consultants’ Representative. Any instructions or notice delivered by Buyer, Seller and/or Consultants’
Representative pursuant to this Escrow Agreement shall only be valid if signed by a person listed on Schedule 5 under the
heading of Buyer, Seller or Consultants’ Representative, as applicable.

 

10.2       Entire
Agreement; Assignment.

 

(a)       This
Escrow Agreement and, in regards to the Parties to this Escrow Agreement other than the Escrow Agent, the agreements and documents
referred to herein, contain the entire agreement and understanding among the Parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, whether written or oral, relating to such subject matter in any way. In
regards to the Escrow Agent, this Escrow Agreement contains the entire agreement and understanding among the Parties with respect
to the subject matter hereof.

 

(b)       Except
as otherwise expressly set forth in this Escrow Agreement, this Escrow Agreement may not be assigned by any party (whether by
operation of law or otherwise) without the prior written consent of Buyer, Seller, Consultants’ Representative and the Escrow
Agent (which consent shall not be unreasonably withheld or delayed); provided, however, that Buyer or Seller may
assign any of its rights under this Escrow Agreement to one or more of its Affiliates or to any third party by sale of stock or
operation of law in connection with a bona fide third party merger or sale of substantially all of such Party’s assets
to such third party, provided that any such assignment shall not relieve such Party of any of its obligations hereunder;
and provided, further, that the documentation of any successor or permitted assignee required in accordance with the Patriot
Act (defined below) must be provided to the Escrow Agent prior to any such assignment becoming effective. Any attempted assignment
of this Escrow Agreement not in accordance with the terms of this Section 10.2 shall be void. Any banking association or
corporation into which the Escrow Agent (or substantially all of its escrow business) may be merged, converted or with which the
Escrow Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Escrow
Agent shall be a party, or any banking association or corporation to which all or substantially all of the escrow business of
the Escrow Agent shall be sold or otherwise transferred, shall succeed to all the Escrow Agent’s rights, obligations and
immunities hereunder without the execution or filing of any paper or any further act on the part of any of the Parties, anything
herein to the contrary notwithstanding.

 

10.3       Governing
Law. This Escrow Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise
out of or relate to this Escrow Agreement, or the negotiation, execution or performance of this Escrow Agreement (including any
claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with
this Escrow Agreement or as an inducement to enter into this Escrow Agreement), shall be governed by the internal laws of the
State of New York as applicable to agreements made and to be performed entirely within the State of New York, without regard to
conflict of law principles or rules.

 

    	11

    	 

    

 

10.4       Fees
and Expenses. Except as otherwise expressly set forth in this Escrow Agreement, all fees and expenses incurred in connection
with this Escrow Agreement, including, without limitation, the fees and disbursements of counsel, financial advisors and accountants,
shall be paid by the Party incurring such fees or expenses; provided, however, that the Escrow Agent may impose,
charge or pass-through any fees or charges for accounts incurred by it in the performance of its duties under this Escrow Agreement,
including those levied by any governmental authority, which Buyer and Seller agree shall be paid one-half by Buyer and one-half
by Seller.

 

10.5       Construction;
Interpretation. The term “this Escrow Agreement” means this Escrow Agreement together with all schedules, exhibits
and annexes hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms
hereof. The headings contained in this Escrow Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Escrow Agreement. No Party, nor its respective counsel, shall be deemed the drafter of this
Escrow Agreement for purposes of construing the provisions hereof, and all provisions of this Escrow Agreement shall be construed
according to their fair meaning and not strictly for or against any party hereto. Unless otherwise indicated to the contrary herein
by the context or use thereof: (i) the words, “herein,” “hereto,” “hereof” and words of similar
import refer to this Escrow Agreement as a whole, including, without limitation, the schedules, exhibits and annexes, and not
to any particular section, subsection, paragraph, subparagraph or clause contained in this Escrow Agreement; (ii) masculine gender
shall also include the feminine and neutral genders, and vice versa; and (iii) words importing the singular shall also include
the plural, and vice versa.

 

10.6       Parties
in Interest. This Escrow Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective
successors and permitted assigns and nothing in this Escrow Agreement, express or implied, is intend to or shall confer upon any
other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Escrow Agreement.

 

10.7       Severability.
If any provision of this Escrow Agreement for any reason shall be held to be illegal, invalid or unenforceable, such illegality
shall not affect any other provision of this Escrow Agreement, this Escrow Agreement shall be amended so as to enforce the illegal,
invalid or unenforceable provision to the maximum extent permitted by applicable Law, and the Parties shall cooperate in good
faith to further modify this Escrow Agreement so as to preserve to the maximum extent possible the intended benefits to be received
by the Parties.

 

10.8       Counterparts;
Facsimile Signatures. This Escrow Agreement may be executed in one or more counterparts, each of which shall be deemed to
be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature
page to this Escrow Agreement by facsimile or scanned pages shall be effective as delivery of a manually executed counterpart
to this Escrow Agreement.

 

10.9       Waiver
of Jury Trial. Each party hereto hereby waives, to the fullest extent permitted by law, any right to trial by jury of any
claim, demand, action, or cause of action (a) arising under this Escrow Agreement or (b) in any way connected with or related
or incidental to the dealings of the Parties in respect of this Escrow Agreement or any of the transactions related hereto, in
each case, whether now existing or hereafter arising, and whether in contract, tort, equity, or otherwise. Each party hereto hereby
further agrees and consents that any such claim, demand, action, or cause of action shall be decided by court trial without a
jury and that the Parties hereto may file a copy of this Escrow Agreement with any court as written evidence of the consent of
the Parties to the waiver of their right to trial by jury. To the extent that in any jurisdiction either party may now or hereafter
be entitled to claim for itself or its assets, immunity from suit, execution attachment (before or after judgment), or other legal
process, such party shall not claim, and it hereby irrevocably waives, such immunity.

 

    	12

    	 

    

 

10.10       Jurisdiction
and Venue. Each of the Parties (a) submits to the exclusive jurisdiction of any state or federal court sitting in New York,
in any action or proceeding (whether in contract or tort) arising out of or relating to this Escrow Agreement, or the negotiation,
execution or performance of this Escrow Agreement (including any claim or cause of action based upon, arising out of or related
to any representation or warranty made in or in connection with this Escrow Agreement or as an inducement to enter into this Escrow
Agreement), (b) agrees that all such claims in respect of such action or proceeding shall be heard and determined in any such
court and (c) agrees not to bring any such action or proceeding in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that
might be required of any other Parties with respect thereto. Each of the Parties agrees that service of summons and complaint
or any other process that might be served in any action or proceeding may be made on such party by sending or delivering a copy
of the process to the party to be served at the address of the party and in the manner provided for the giving of notices in Section
9. Nothing in this Section 10.10, however, shall affect the right of any party hereto to serve legal process in any
other manner permitted by Law. Each party hereto agrees that a final, non-appealable judgment in any action or proceeding so brought
shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by Law. Buyer and Seller agree
to pursue any redress or recourse in connection with any dispute that is solely and exclusively among themselves (and/or any third
party) without making the Escrow Agent a party to the same. To the extent that in any jurisdiction any of the Parties may now
or hereafter be entitled to claim for itself or its assets, immunity from suit, execution attachment (before or after judgment),
or other legal process, such party shall not claim, and it hereby irrevocably waives, such immunity.

 

10.11       Amendment.
This Escrow Agreement may not be amended or modified, except by a written instrument executed by Buyer, Seller, Consultants’
Representative (solely with respect to provisions that may affect the rights or obligations of the Consultants hereunder), and
the Escrow Agent.

 

10.12       Termination.
This Escrow Agreement shall remain in effect unless and until (a) the Escrow Funds and any interest or other amounts earned thereon
are distributed in full or (b) it is terminated in a written instrument executed by Buyer, Seller and Consultants’ Representative,
in which event, termination shall take effect no later than ten (10) Business Days after notice to the Escrow Agent of such termination.
Termination of this Escrow Agreement shall not impair the obligations of Buyer and Seller set forth in Section 6.1, Section
6.2, Section 6.8 and Section 7 of this Escrow Agreement accruing prior to such termination, which obligations
shall survive such termination.

 

    	13

    	 

    

 

10.13       Limited
Liability. IN NO EVENT SHALL THE ESCROW AGENT, BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT
OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND WHATSOEVER (INCLUDING BUT NOT LIMITED TO LOST PROFITS), EVEN IF THE ESCROW AGENT,
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION.

 

10.14       Force
Majeure. Notwithstanding any other provision of this Escrow Agreement, the Escrow Agent shall not be obligated to perform
any obligation hereunder and shall not incur any liability for the nonperformance of any obligation hereunder to the extent that
the Escrow Agent is delayed in performing, or unable to perform, such obligation because of acts of God, war, terrorism, fire,
floods, strikes, electrical outages, equipment or transmission failures, or other causes reasonably beyond its control.

 

10.15       Patriot
Act Disclosure. Section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) requires Escrow Agent to implement reasonable procedures
to verify the identity of any person that opens a new account with it. Accordingly, each of Buyer and Seller acknowledges that
Section 326 of the USA PATRIOT Act and Escrow Agent’s identity verification procedures require Escrow Agent to obtain information
which may be used to confirm such party’s identity including without limitation name, address and organizational documents
(“identifying information”). Each of Buyer and Seller agrees to provide Escrow Agent with and consent to Escrow Agent
obtaining from third parties any such identifying information required as a condition of opening an account with or using any
service provided by the Escrow Agent.

 

10.16       Consultants’
Representative. Consultants’ Representative may from time to time designate a successor to act as Consultants’
Representative by delivering a written notice to the Escrow Agent, which successor shall be one of the Consultants and subject
to the written approval of Buyer, Seller and the Escrow Agreement, which approval shall not be unreasonably withheld or delayed.
Consultants’ Representative may resign at any time, provided that he or she designates a successor in accordance
with the preceding sentence. In the event that Consultant’s Representative becomes incapacitated and has not designated
a successor in accordance with the first sentence of this Section 10.16, Ian Massey shall be designated as Consultants’
Representative. 

 

*
* * *

 

    	14

    	 

    

 

IN
WITNESS WHEREOF, the Parties have executed this Escrow Agreement on the day and year first above written.

 

	 	BOCO
    SILICON VALLEY, INC.
	 	 	 
	 	By:	/s/
Xiangli Zhou
	 	Name:	Xiangli Zhou
	 	Title:	 CEO/GM

 

	 	STEMCELLS,
    INC.
	 	 	 
	 	By:	/s/
    Ken Stratton
	 	Name:	Ken Stratton
	 	Title:	 President

 

	 	CONTINENTAL
    STOCK TRANSFER & TRUST COMPANY
	 	 	 
	 	By:	/s/
                     
	 	Name:	 
	 	Title:	 

 

	 	kenneth
    b. stratton
	 	in
    his capacity as representative to the Consultants
	 	 	                                  
	 	By:	/s/
Kenneth Stratton

 

	 	Alpha
    Capital Anstalt
	 	solely
    with respect to Section 5.3(a)
	 	 	 
	 	By:	/s/
             
	 	Name:	 
	 	Title:	 

 

    	 

    	 

    

 

SCHEDULE
2

Closing
Release Instructions

 

November
11, 2016

 

Continental
Stock Transfer & Trust Company

17
Battery Place, 8th Floor

New
York, NY 10004

Attention:
Accounting Department, Escrow Administration

Email
Address: scarter@continentalstock.com

 

Re:
Release Instructions / Escrow Account no.

 

Dear
Sir/Madam:

 

We
refer to the Escrow Agreement, made and entered into as of November 11, 2016, by and among BOCO Silicon Valley, Inc., StemCells,
Inc. (“Seller”), Continental Stock Transfer & Trust Company, Kenneth B. Stratton in his capacity as representative
to the Consultants, and Alpha Capital Anstalt. Capitalized terms used but not defined in this letter shall have the meaning as
used in the Escrow Agreement.

 

In
accordance with Section 5.3(a) of the Escrow Agreement, we hereby request you to release the Escrow Funds from the Escrow Account
on date of the Closing Date (the “Closing Date”) as follows:

 

	1.	To
    Seller:

 

	 	a.	Amount
    to Seller: 
	 	 	 
	 	b.	To
    the bank account identified by the following information:

 

	 	 	i.	Bank
    name
	 	 	 	 
	 	 	ii.	Bank
    address
	 	 	 	 
	 	 	iii.	SWIFT
	 	 	 	 
	 	 	iv.	Other
    bank reference number as necessary
	 	 	 	 
	 	 	v.	Correspondent
    banking details (if any)
	 	 	 	 
	 	 	vi.	Account
    number
	 	 	 	 
	 	 	vii.	Beneficiary
    name
	 	 	 	 
	 	 	viii.	Beneficiary
    address

 

    	 

    	 

    

 

2.       To
the Consultants:

 

a.       Total
Amount to the Consultants: 

 

b.       The
Escrow Agent shall mail via a nationally recognized overnight courier service to each Consultant a check in the dollar amount
and to the address, in each case, set forth opposite the name of each such Consultant in the following table:

 

	Name of Consultant	 	If the Closing Date is

    December 1, 2016 or

 prior thereto	 	If the Closing Date is

    after December 1, 2016	 	Address
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Total	 	 	 	 	 	 

 

    	 

    	 

    

 

IN
WITNESS WHEREOF, the undersigned have executed these Closing Release Instructions on the day and year first above written.

 

	 	BOCO
    SILICON VALLEY, INC.
	 	 	 
	 	By:	          
	 	Name:	
	 	Title:	 

 

	 	STEMCELLS,
    INC.
	 	 	                
	 	By:	
	 	Name:	
	 	Title:	 

 

	 	Alpha
    Capital Anstalt
	 	 	               
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	 

    	 

    

 

SCHEDULE
4

Fees

 

The
base fee shall be $400 per month (the “Base Fee”).

 

Each
time a distribution is made to a Consultant, the Escrow Agent shall charge an administration fee of $50.00 per payment (the “Variable
Fee”). For example if an aggregate amount of $495,000 is paid at the Closing to 16 Consultants, a Variable Fee of $800
will be paid to the Escrow Agent for such payments.

 

    	 

    	 

    

 

SCHEDULE
5

 

Telephone
Number(s) for Call-backs and

Person(s) Designated to Give and Confirm Funds Transfer and Other Instructions

 

	If
    to Buyer:
	 	 	 	 	 	 
	 	Name	 	Telephone
    Number	 	Signature
	 	 	 	 	 	 
	1.	Shirley
    Zhou	 	 	 	 
	 	 	 	 	 	 
	2.	 	 	 	 	 

 

	If
    to Seller:
	 	 	 	 	 	 
	1.	Kenneth
    Stratton	 	(650)
    670-2282	 	 
	 	 	 	 	 	 
	2.	George
    Koshy	 	 	 	 
	 	 	 	 	 	 
	3.	 	 	 	 	 
	 	 	 	 	 	 
	4.	 	 	 	 	 

 

	If
    to Consultants’ Representative:
	 	 	 	 	 	 
	1.	Kenneth
    Stratton	 	(650)
    670-2282	 	 
	 	 	 	 	 	 
	2.	Ian
    Massey	 	 	 	 
	 	 	 	 	 	 
	3.	 	 	 	 	 
	 	 	 	 	 	 
	4.	 	 	 	 	 

 

All
funds transfer instructions must include the signature of the person(s) authorizing said funds transfer.CONTRACT
RESEARCH AGREEMENT

 

This
Contract Research Agreement is entered into as of this __ day of _________, 2017 (the “Effective Date”), by and between
The Washington University, a corporation established by special act of the Missouri General Assembly approved February 22, 1853
and acts amendatory thereto, having its principal offices at One Brookings Drive, St. Louis, Missouri 63130 (“University”)
and Microbot Medical Ltd., a company formed under the laws of Israel, with offices at 5 Hamada Street, Yokneam, Israel (the “Company”).

 

WHEREAS,
in the course of their research at University, Drs. James P. (Pat) McAllister II and David D. Limbrick, Jr (hereinafter “the
Principal Investigators”) have developed a method for making Models (as defined below); and

 

WHEREAS,
the Company wishes to have the Principal Investigators and other members of their research teams at University perform certain
services, from time to time, for the Company using the Model (as further defined below, the “Services”); and

 

WHEREAS,
University is willing to perform the Services under the supervision of the Principal Investigators, in accordance with the Workplan
(as defined below), all in accordance with the terms and conditions of this Agreement.

 

NOW,
THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.
       Definitions.

 

Whenever
used in this Agreement with an initial capital letter, the terms defined in this Section 1, whether used in the singular or the
plural, shall have the meanings specified below.

 

1.1.       “Company
Device” shall mean the Company’s proprietary device described in Exhibit A hereto, and any improvements, modifications
and derivatives thereof.

 

1.2.       “Company
Device Results” shall mean Service Results resulting from experiments using shunts containing the Company Device.

 

1.3       “Joint
Inventions” shall mean any and all patentable inventions, other than Model Improvements, obtained or arrived at in the
performance of the Services for which (a) one or more inventor(s) is a member of the University Team and (b) one or more inventor(s)
is an employee or consultant of Company.

 

1.4.       “Model”
shall mean any animal model in which hydrocephalus has been induced experimentally by the University Team. Most likely these
will include pigs, sheep or ferrets at any age.

 

1.5.       “Model
Improvements” shall mean any and all improvements or modifications of the Model generated by members of the University
Team in the performance of the Services, but specifically excluding any improvements or modifications attributable to the Company
Device.

 

1.6.       “Services”
shall mean the services to be performed by the University Team in accordance with the Workplan during the time period set
forth in the Workplan.

 

    	1

    	 

    

 

1.7.       “Services
Results” shall mean any and all data, information and results obtained or arrived at by members of the University Team
in the performance of the Services, other than University Inventions.

 

1.8.       “University
Inventions” shall mean any and all patentable inventions, other than Model Improvements and Joint Inventions, obtained
or arrived at by members of the University Team in the performance of the Services.

 

1.9.       “University
Team” shall mean the Principal Investigators and other members of their research team working under the Principal Investigators’
direction in the performance of the Services.

 

1.10.       “Workplan”
means the written workplan attached hereto as Exhibit B, as may be amended, expanded or supplemented, from time to time, in
accordance with Section 2.1 by the mutual written agreement of the parties.

 

2.       Services.

 

2.1.       Workplans.
From time to time during the term of this Agreement, the parties may decide to amend, expand or supplement the Workplan for
the performance of Services under this Agreement via written amendment. To the extent the terms in a Workplan shall at any time
conflict with the terms of this Agreement, the terms of this Agreement shall control, unless specifically stated otherwise in
the Workplan.

 

2.2.       Delivery
and Use of Company Device. Company shall deliver units of the Company Device to the Principal Investigators in the amounts
and in accordance with the procedures set forth in the Workplan. University shall use the units of the Company Device solely for
the purpose of performing the Services under the Workplan. University shall not reverse engineer the Company Device nor undertake
any additional analyses of the Company Device, including, without limitation, any attempt to determine the composition, design,
structure or properties of the Company Device (except as specifically set forth in the Workplan), without the advance express
written permission of Company. Units of the Company Device shall not be used in humans. University shall not sell or transfer
units of the Company Device to any person other than members of the University Team without Company’s prior written consent.
University shall comply with all applicable laws and regulations in the use of the units of the Company Device. Company’s
transfer of the units Company Device to University shall not constitute a sale thereof or a grant, option or license under any
patent or other rights owned or controlled by Company. Upon completion of the Services, University shall return to Company all
units of the Company Device in its possession or control.

 

2.3.       Performance
of Services. University shall cause the University Team to perform the Services in accordance with the Workplan and state-of-the-art
scientific standards and laboratory practices. The Services will be directed and supervised by the Principal Investigators, who
shall have primary responsibility for the performance of the Services.

 

3.       Fees.
In consideration for the performance of the Services, the Company shall pay University the amounts set forth in the Workplan
in accordance with the time schedule set forth in the Workplan.

 

    	2

    	 

    

 

4.       Reports.
The Principal Investigators shall provide the Company written reports setting forth the Services Results, including raw data
and analyses, in accordance with the schedule set forth in the Workplan.

 

5.       Title.

 

5.1       Service
Results and Joint Inventions. All rights, title and interest in and to the Service Results (other than the Model and Model
Improvements) and Joint Inventions will be jointly owned by the parties. Subject to Sections 5.4 and 6, Company and University
each shall have the full right to practice and to grant licenses under its interest in Joint Inventions (including with respect
to patent rights covering Joint Inventions) without any obligation to seek the consent of the other or to account for any profits
made as a result of any such license.

 

5.2.       Model
and all Model Improvements. All rights, title and interest in and to the Model and all Model Improvements shall be owned solely
and exclusively by University.

 

5.3.       University
Inventions. University grants to Company: (a) a non-exclusive, worldwide, royalty-free, fully paid-up, perpetual and irrevocable,
license (with the right to sublicense through multiple tiers of sublicenses in conjunction with the license of Company intellectual
property or sale of Company products) to use and practice University Inventions (including under any and all patent rights claiming
University Inventions) to develop, have developed, make, use, have made, market, sell, have sold and import the Company Device
or products for the prevention of occlusion and/or reduction of debris or tissue accumulation in shunts and/or shunts incorporating
such prevention devices that rely upon, make use of or are based on the Company Device; and (b) an exclusive option (the “Option”)
to obtain an exclusive, worldwide license, with the right to grant sublicenses, to make, use, sell, have made, have sold, offer
to sell, and import under University’s rights in University Inventions on terms to be negotiated in good faith between the
parties. Company may exercise the Option by sending written notice to University at any time within ninety (90) days following
the receipt of a written disclosure from University describing in detail such University Invention (the “Option Period”).
If, at the end of the Option Period, Company has not exercised the Option, or in the event the Parties fail to reach a mutually
acceptable licensing arrangement within six (6) months after the Option Period, University shall be entitled to negotiate with
a third party for a license to University’s rights in University Inventions.

 

6.       Confidential
Information. 

 

6.1.       Unless
agreed otherwise by the Company in writing, University shall not, during the term of this Agreement and for five (5) years thereafter,
disclose Company Confidential Information (as defined below) other than to members of the University Team or use Company Confidential
Information other than for the purpose of performing the Services. University shall ensure that all members of the University
Team are legally bound by obligations that impose confidentiality and non-use obligations comparable to those set forth in this
Section 6. University shall treat the Company Confidential Information with the same degree of confidentiality as it keeps its
own confidential information, but in all events no less than a reasonable degree of confidentiality. University shall safeguard
any and all copies of the Company Confidential Information against unauthorized disclosure, shall not tamper with, bypass or alter
its security features or attempt to do so, and shall take all reasonable steps to ensure that the provisions of this Agreement
are not violated by any person under University’s control or in University’s service.

 

    	3

    	 

    

 

6.2.       For
purposes of this Agreement, “Company Confidential Information” means proprietary or confidential information relating
to the Company’s scientific, technical, trade or business information relating to the subject matter of this Agreement (including,
without limitation, the technical attributes of Company Device which are not known to the public (“Company Device Information”))
disclosed by or on behalf of the Company to members of the University Team in connection with the Services. Both Parties agree
that in order for written information to be Confidential Information, it must be delivered in written form clearly marked as “Confidential.”
All information, other than Company Device Information, disclosed in oral or some other non-written form must be declared at the
time of delivery to be confidential and must be confirmed and summarized in writing and clearly marked as “Confidential”
within thirty (30) days of disclosure to be Company Confidential Information, provided , however, information that unintentionally
or inadvertently lacks such a legend, or that is disclosed orally or visually which is not subsequently documented, but, by its
nature, is reasonably understood to be Company Confidential Information shall be treated as such by University. Notwithstanding
the foregoing, information disclosed by Company to the University Team as set forth above shall not be deemed Company Confidential
Information to the extent such information: (i) was known to any member of the University Team at the time it was disclosed, as
evidenced by written records at the time of disclosure; (ii) is at the time of disclosure or later becomes publicly known under
circumstances involving no breach of this Agreement; (iii) is lawfully and in good faith made available to a member of the University
Team by a third party who is not subject to obligations of confidentiality to the Company with respect to such information; (iv)
is independently developed by a member of the University Team without the use of or reference to Company Confidential Information,
as demonstrated by documentary evidence; or (v) is required to be disclosed pursuant to a legal order or mandate. University agrees
to keep confidential all Company Device Results until such results are published in accordance with Section 9.

 

7.       Indemnity.

 

7.1       Notwithstanding
the rest of this agreement, Company shall indemnify, defend and hold harmless University, University personnel and representatives,
from and against any liability, cost, expense, damage, deficiency, loss or obligation or any kind or nature (including, without
limitation, reasonable attorney’s fees and other costs and expenses of litigation) resulting from a claim, suit or proceeding
brought by a third party against University to the extent resulting from the use or commercialization of the Services Results
or University Inventions by Company or a Company’s sublicensee (a “Claim”), except (in each case) to the extent
caused by the negligence or willful misconduct of University or anyone on its behalf.

 

7.2       If
University receives notice of any Claim, University shall, as promptly as is reasonably possible, give the Company notice of such
Claim; provided, however, that failure to give such notice promptly shall only relieve the Company of any indemnification obligation
it may have hereunder to the extent such failure diminishes the ability of the Company to respond to or to defend University against
such Claim. University and the Company shall consult and cooperate with each other regarding the response to and the defense of
any such Claim and the Company shall be entitled to assume sole control of the defense and/or represent the interests of University
in respect of such Claim, that shall include the right to select and direct legal counsel and other consultants to appear in proceedings
on behalf of University and propose, accept or reject offers of settlement, all at its sole cost provided that Company shall not
settle a claim which admits fault on behalf of University without University’s prior written consent. Nothing herein shall
prevent University from retaining its own counsel and participating in its own defense at its own cost and expense.

 

    	4

    	 

    

 

8.       Term
and Termination. 

 

8.1.
        The term of this Agreement shall commence on the date first written above and,
unless terminated earlier in accordance with this Section 8, shall continue for a period of two (2) years, unless extended by
the mutual written agreement of the parties.

 

8.2.
       In the event that either party commits a material breach of its obligations under
this Agreement and fails to cure that breach within thirty (30) days after receiving written notice thereof, the other party may
terminate this Agreement immediately upon written notice to the party in breach

 

8.3.       If
either Principal Investigator ceases to supervise the Services, the Company or University may terminate this Agreement upon written
notice to the other party.

 

8.4.       Upon
termination, the parties sole obligations to the other shall be to return all Company Confidential Information and pay any monies
due and owing up to the time of termination for work actually performed and all costs reasonably and properly incurred by the
parties as of the date that termination is effective, including all non-cancelable obligations reasonably and properly entered
into for the purposes of the Services, which may include any non-cancelable University Team salaries, fellowships or post-doctoral
stipends, and other non-cancelable executory obligations reasonably and properly incurred by the parties in furtherance of Services,
subject to the parties taking reasonable steps to mitigate and minimize such costs.

 

8.5.       The
parties’ respective rights, obligations and duties under Sections 4, 5, 6, 7, 8, 9, 10, 11, and 12 , as well as any rights,
obligations and duties which by their nature extend beyond the expiration or termination of this Agreement, shall survive any
expiration or termination of this Agreement.

 

9.
Publications.

 

9.1       Company
acknowledges that the Principal Investigators and University Team have the right and academic duty to publish the Service Results,
and agrees that the University Team will be permitted to present at symposia or professional meetings and to publish in books,
journals, and other media of their choosing, any and all Service Results, University Inventions, Models, and Model Improvements;
provided however, that University shall not disclose Company Confidential Information without the prior written consent of Company.
The University Team will at all times have the first opportunity to publish or present the Service Results, Models, and Model
Improvements subject to Section 9.2; provided however that Company shall be entitled to disclose Services Results and regulatory
and/or patent filings prior to any such publication.

 

9.2       If
University chooses to publish Service Results on its own (i.e. not publish jointly with Company), Company will be furnished a
copy of any proposed publication or a summary of a presentation containing Service Results in advance of submission in the case
of publication and rendering in the case of presentation. Company will have thirty (30) days after receipt to review the copy
or summary for specific matter which is Company Confidential Information and provide University with a written request for removal
or revision. If such a request is received within the thirty days, the Parties will have an additional thirty (30) days (a total
of sixty (60) days) to agree upon removal or revisions to protect the Company Confidential Information. Upon completion of this
publication process or, if applicable, confidentiality is specifically waived under Section 6, University may proceed with publication,
provided that University may not publish or otherwise disclose Company Confidential Information without Company’s express
prior written approval. Company shall not encumber publication by University other than to remove Company Confidential Information.

 

    	5

    	 

    

 

9.3       All
papers and presentations reporting Service Results will contain a dignified statement in a form that is customary and appropriate
in scholarly journals or presentations for acknowledging that financial support for such research was provided by Company.

 

9.4       Company
will not have an opportunity to change, alter or redact the contents of any student thesis, dissertation, or presentation thereof,
provided that no such thesis, dissertation or presentation may contain Company Confidential Information without Company’s
prior written consent.

 

10.       Disclaimer
and Limitation. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, EVERYTHING PROVIDED BY EITHER PARTY UNDER THIS AGREEMENT
IS UNDERSTOOD TO BE EXPERIMENTAL IN NATURE, MAY HAVE HAZARDOUS PROPERTIES, AND IS PROVIDED WITHOUT ANY WARRANTY OF ANY KIND, EXPRESSED
OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR NON-INFRINGEMENT
OF ANY THIRD-PARTY PATENT, TRADEMARK, COPYRIGHT OR ANY OTHER THIRD-PARTY RIGHT. NEITHER PARTY MAKES ANY WARRANTIES REGARDING THE
QUALITY, ACCURACY, COMMERCIAL VIABILITY OR ANY OTHER ASPECT OF ITS PERFORMANCE PURSUANT TO THIS AGREEMENT OR REGARDING THE PERFORMANCE,
VALIDITY, SAFETY, EFFICACY OR COMMERCIAL VIABILITY OF ANYTHING PROVIDED BY IT UNDER THIS AGREEMENT. IN NO EVENT SHALL UNIVERSITY
OR COMPANY BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT,
WHETHER IN BREACH OF CONTRACT, TORT OR OTHERWISE, EVEN IF THE PARTY IS ADVISED OF THE POSSIBLITY OF SUCH DAMAGES. EXCEPT FOR THEIR
RESPECTIVE INDEMNITY OBLIGATIONS AND BREACH OF CONFIDENTIALITY OBLIGATIONS, EACH OF UNIVERSITY’S AND COMPANY’S AGGREGATE
LIABILITY TO THE OTHER UNDER THIS AGREEMENT SHALL NOT EXCEED THE PAYMENTS MADE OR PAYMENTS DUE UNDER THIS AGREEMENT, RESPECTIVELY.

 

11.       Insurance.
The parties shall obtain and maintain an adequate self-insurance or insurance program to protect against potential liabilities
and risk, including coverage for the indemnity obligations herein; provided that Company’s obligations under this Section
11 shall come into effect only if and when the Company commences clinical trials (a) based on Services Results or (b) with a product
developed under the license granted to Company pursuant to Section 5.3. Prior to the first clinical study in humans of a product
developed under the license granted to Company pursuant to Section 5.3, Company shall obtain and maintain product liability insurance
in the amount of $5,000,000 per occurrence and $10,000,000 in the aggregate.

 

12.       Miscellaneous.

 

12.1.       Entire
Agreement. This Agreement is the sole agreement with respect to the subject matter hereof and except as expressly set forth
herein, supersedes all other agreements and understandings between the parties with respect to same.

 

    	6

    	 

    

 

12.2.       Notices.
Unless otherwise specifically provided, all notices required or permitted by this Agreement shall be in writing and may be
delivered personally, or may be sent by facsimile or certified mail, return receipt requested, to the following addresses, unless
the parties are subsequently notified of any change of address in accordance with this Section 9.2:

 

If
to the Company:

 

Microbot
Ltd.

Attention:
Hezi Himelfarb, COO

5
Hamada Street

Yokneam

Israel

 

If
to University:

 

Joint
Research Office of Contracts

Attention:
Megan White

One
Brookings Dr., Campus Box 1054

St.
Louis, MO 63130

 

Copy
to:

 

James
P. McAllister

Department
of Neurosurgery

BJC
Institute of Health

425
S. Euclid, Campus Box 8057

St.
Louis, MO 63110

 

Any
notice shall be deemed to have been received as follows: (i) by personal delivery, upon receipt; (ii) by facsimile, one business
day after transmission or dispatch; (iii) by airmail, seven (7) business days after delivery to the postal authorities by the
party serving notice. If notice is sent by facsimile, a confirming copy of the same shall be sent by mail to the same address.

 

12.3.       Governing
Law and Jurisdiction. This Agreement will be governed by, and construed in accordance with, the substantive laws of the State
of New York, without giving effect to any choice or conflict of law provision, and sole jurisdiction is granted to the competent
court in the City of New York, NY.

 

12.4.       Amendment;
Waiver. This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written
instrument executed by each party or, in the case of waiver, by the party waiving compliance. The delay or failure of any party
at any time or times to require performance of any provisions hereof shall in no manner affect the rights at a later time to enforce
the same. No waiver by either party of any condition or of the breach of any term contained in this Agreement, whether by conduct,
or otherwise, in any one or more instances, shall be deemed to be, or considered as, a further or continuing waiver of any such
condition or of the breach of such term or any other term of this Agreement.

 

    	7

    	 

    

 

12.5.       No
Agency or Partnership.  Nothing contained in this Agreement shall give any party the right to bind another, or be deemed to
constitute either parties as agents for each other or as partners with each other or any third party.

 

12.6.       Force
Majeure. Neither party will be responsible for delays resulting from causes beyond the reasonable control of such party, including
without limitation fire, explosion, flood, war, strike, or riot, provided that the nonperforming party uses commercially reasonable
efforts to avoid or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch
whenever such causes are removed.

 

12.7.       Severability.
 If any provision of this Agreement is or becomes invalid or is ruled invalid by any court of competent jurisdiction or is
deemed unenforceable, it is the intention of the parties that the remainder of this Agreement shall not be affected.

 

12.8.       Names
and Marks. Neither Party may use the trademarks or name of the other Party or its employees for any commercial, advertisement,
or promotional purposes without the prior written consent of the other.

 

12.9.       Assignment.
This Agreement may not be assigned by either party without the consent of the other, which consent shall not be unreasonably
withheld, except that each party may, without such consent, assign this Agreement and the rights, obligations and interests of
such party to any of its affiliates, to any purchaser of all or substantially all of its assets to which the subject matter of
this Agreement relates, or to any successor corporation resulting from any merger or consolidation of such party with or into
such corporation; provided, in each case, that the assignee agrees in writing to be bound by the terms of this Agreement.

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the
date first written above.

 

	Microbot
    Medical Ltd.	 	The
    Washington University 	 
	 	     	 	 	            	 
	By:	/s/
    Harel Gadot	 	By:	/s/ Melanie
    Roewe	 
	Name:	Harel Gadot	 	Name:	Melanie
    Roewe, J.D.	 
	Title:	Chief
Executive Officer	 	Title:	Assistant Vice Chancellor 	 

 

I,
the undersigned, hereby confirm that I have read the Agreement, that its content is acceptable to me and that I will act in accordance
with its terms.

 

	/s/
    James P. McAllister II 	 	 January
    24, 2017	 
	James
    P. McAllister II, PhD	 	Date	 

 

	/s/
    David D. Limbrick 	 	January
    26, 2017	 
	David
    D. Limbrick, Jr, MD, PhD	 	Date	 

 

    	8

    	 

    

 

Exhibit
A

Company
Device

 

See
following pages

 

    	9

    	 

    

 

SCS
Product Description 

Head
Set Configuration

 

Approvals:

 

	 	 	Name	 	Title	 	Signature	 	Date
	 	 	 	 	 	 	 	 	 
	Author	 	Or
    Samocha	 	Project
    Leader	 	 	 	July
    1, 2016
	 	 	 	 	 	 	 	 	 
	Reviewed	 	Yossi
    Porat	 	S/W
    Engineer	 	 	 	July
    1, 2016
	 	 	 	 	 	 	 	 	 
	Approved
    By	 	Simon
    Sharon	 	COO	 	 	 	July
    1, 2016

 

    	10

    	 

    

 

The
Product

 

The
Microbot SCS device is designed to serve as the ventricular catheter portion of a Cerebrospinal Fluid shunt system. The Microbot
ventricular catheter can connect to valves that are currently on the market. The advantage of the Microbot SCS device is its ability
to maintain CSF flow through the ventricular catheter.

 

As
further described below, the Microbot SCS device incorporates an internal cleaning mechanism embedded in the lumen of the ventricular
catheter. The internal part is comprised of a central shaft with small protrusions (resembling a stalk of wheat), which prevents
cell ingrowth into the catheter perforations using minute vibrational movements. The vibrational action is externally operated
by the patient wearing of a specially designed headset for approximately 5 minute per day. When activated, the headset applies
a small magnetic field, which causes the internal part to vibrate and thereby mechanically keeps tissue from entering the catheter
perforations while maintaining the CSF flow in the ventricular catheter.

 

The
Microbot SCS ventricular catheter consists of a silicone tube with a perforated titanium tip, which connects to a standard shunt
valve at its distal end. The internal cleaning mechanism is embedded in the lumen of the titanium tip.

 

The
internal cleaning mechanism vibrates by means of an induced magnetic field that is externally generated by a user friendly headset
that transmits a magnetic field with a pre-determined frequency and operating sequence protocol. The magnetic field that is created
by the headset externally, is captured by the intermediate flat flexible coil and PCB that are placed just under the patient’s
scalp (in the same location where the valve is currently located). The actuated PCB assembly converts this power to an altering
current which flows through the wires to an internal coil located in the distal end of the catheter’s titanium tube. The
internal coil produces an electromagnetic field which induces small vibrational movement of the internal cleaning mechanism within
the proximal part of the ventricular catheter. The vibrational movement maintains CSF flow in the ventricular catheter by preventing
surrounding tissue from entering the catheter perforations, without interfering with the cerebrospinal fluid (CSF) drainage. The
vibrational movements of the internal part drive out the infiltrating tissue from the catheter perforations.

 

Global
view

 

The
Microbot SCS device is composed of the following main components:

 

	 	1.	Implanted
    Ventricular Catheter with vibrating internal part
	 	 	 
	 	2.	Implanted
    Intermediate Flexible Coil and PCB Assembly
	 	 	 
	 	3.	External
    Head Set Activation Unit

 

The
Microbot SCS device is shown in Figure 1 below.

 

    	11

    	 

    

 

 

Figure
1 - Microbot SCS Device

 

The
ventricular catheter is depicted in Figure 2 and contains:

 

	●	Silicone tube
    with the following components embedded within the silicone:  

 

	 	 	●	Small
    coil
	 	 	 	 
	 	 	●	wires

 

	●	Titanium
    Tip with the vibrating internal part contained within its lumen.

 

    	12

    	 

    

 

 

A
more detailed description of system’s main components is provided below.

 

Detailed
Component Description

 

Silicone
Tube

 

The
silicone tube is constructed from the same material as standard silicone shunts and has similar inner and outer diameters as standard
ventricular catheters. The silicone tube is connected to the titanium tip at the proximal end and to a conventional, commercially
available CSF valve at the distal end. Compatibility with different valve systems will be demonstrated as part of the performance
data. The internal small coil is embedded inside the silicone tube at the proximal end. Electrical wires are embedded in the wall
thickness of the silicone tube (as shown in Figure 2 above) connecting the small coil and the intermediate flat flexible coil
assembly that are implanted under the scalp.

 

Titanium
Tip

 

The
titanium tip is a perforated tube, similar to the standard silicone tips of ventricular catheters, only it is manufactured from
titanium instead of silicone. The titanium tip houses the vibrating internal cleaning mechanism and is designed to allow mobility
while protecting it during implantation of the ventricular catheter. The titanium tip is connected at the distal end to the silicone
tube. The tip may be made of other materials as well.

 

    	13

    	 

    

 

 

Internal
Part and Magnet

 

The
vibrating internal part (Figure 4) is located within the lumen of the titanium tip and maintains CSF flow by using vibrational
movements to prevent the tissue or other cells from entering and accumulating within the catheter perforations. The internal part
resembles a stalk of wheat with small arms or protrusions along a central shaft and has a small neodymium magnet at the end. The
internal part is also manufactured from titanium and the neodymium magnet will either be enclosed in a titanium housing or coated
with a biocompatible material (to be determined). The magnet is located in the internal small coil which is located in the silicone
tube, as shown in Figure 6.

 

 

    	14

    	 

    

 

Figure
5 shows the internal part within the titanium tip.

 

 

Internal
Actuator

 

Figure
6 shows the internal part inside the titanium tip, connected to the silicon tube.

 

 

The
vibration of the internal part is achieved by an altering magnetic field which is generated by an electromagnet (internal small
coil up’on actuating by the external headset). The magnetic field creates a moment on the magnet and causes it to rotate
around its axis. The minute magnet movement causes the internal part to vibrate slightly and mechanically drives out the tissue
or cells from the catheter perforations and thus prevents infiltration and lodging of the tissue in the catheter perforations.
The small coil is manufactured from gold/copper coated with biocompatible material and it is encapsulated inside the silicone
tube.

 

    	15

    	 

    

 

 

Intermediate
Flexible Coil and PCB Assembly

 

The
intermediate flat flexible coil and PCB assembly is implanted under the scalp near the implanted valve. This is a flexible printed
circuit board (PCB) that contains an intermediate coil made of thin gold\copper wires or other material. The entire flexible coil
assembly is encapsulated in silicone such that no internal component comes in contact with human tissue or fluids.

 

The
electromagnetic power that is generated by the external head set unit is induced on the intermediate flexible coil and pcb assembly.
The PCB circuitry converts the power from the headset and generates the power that controls the vibrating internal part. The PCB
also sends and receives sensory data and from, and to, the headset. The flexible coil, PCB assembly and the silicone section that
leads to the PCB are connected to the silicone tube using a miniature connector.

 

External
Head Set Activation Unit

 

The
external head set activation unit is the headset configuration schematically depicted in Figure 7. The headset is worm by the
patient once a day for a predetermined period of time. The head set contains an electromagnet that, when properly placed, is automatically
activated and transforms electromagnetic power on the intermediate flexible coil assembly to create vibration of the internal
part and initiates communication with the implant.

 

    	16

    	 

    

 

 

 

Figure
7 - External Head Set Activation Unit

 

The
head set is pre-adjusted for each patient such that when it is worn, the active area of the head set is positioned proximal to
the implanted flexible coil assembly and the electromagnetic energy is induced on the implanted coil.

 

The
head set contains a rechargeable battery. A charged battery will suffice for several days of operation. A microprocessor with
dedicated embedded software also resides in the headset. The vibration of the internal part is automatically initiated when the
patient places the external head set activation unit on his/her head. The head set activation unit contains a set of LED indicators
and auditory feedback, controlled by the embedded software which provides the patient and physician with treatment information.
The communication with the implant provides the means to receive sensory data from the implant regarding its state including malfunctions
it can experience. The headset has also the ability to upload SW updates to the implant.

 

 

 

Figure
8 – Communication and power scheme

 

The
following indications are provided by the headset:

 

	●	Device
    readiness, including battery state, charging indication, error indication (e.g. hardware failures).
	 	 
	●	Treatment
    start - this indicates proper placement of the headset over the flexible coil.
	 	 
	●	Device
    operation - “treatment in progress” indicates proper functioning of the vibrational movement of the internal part,
    while the headset is placed over the flexible coil.
	 	 
	●	Device
    compliance – indicates user compliance with the treatment regimen.
	 	 
	The
    following functions are enabled using the Headset via a USB port:
	 	 
	●	Charging
    the battery.
	 	 
	●	Retrieving
    treatment history by the physician.

 

    	17

    	 

    

 

Mode
of Operation

 

 

Upon
activation by the user, the external head set activation unit generates an alternating magnetic field, which is induced on the
intermediate implanted flat flexible coil. The magnetic field is induced on the intermediate flexible coil assembly which generates
power for the PCB circuitry within the intermediate flexible coil assembly. The PCB circuitry generates an alternating current
that flows through the electromagnet (small coil) in the proximal ventricular catheter, generating an alternating magnetic field
which in turn generates the moment of the neodymium (Nd) magnet and vibrates the internal part. The vibrations maintain the perforations
in the proximal ventricular catheter clear of cell ingrowth and enable the CSF to flow freely, thus preventing the buildup of
tissue that causes occlusion. The communication between the headset and the implant is based on amplitude modulation..

 

    	18

    	 

    

 

Exhibit
B

Workplan

 

Scope
of Work

 

IN
VIVO TESTS OF THE MICROBOT MEDICAL SCS DEVICE

 

Washington
University School of Medicine and the Saint Louis Children’s Hospital Investigators:

 

James
P. (Pat) McAllister, PhD; Professor

David
D. Limbrick, Jr., MD, PhD: Professor and Chief of Pediatric Neurosurgery

Leandro
Castaneyra Ruiz, PhD: Visiting Researcher and Postdoctoral Fellow

 

The
Microbot device seeks to prevent tissue obstructions from occluding cerebrospinal fluid (CSF) drainage catheters implanted into
the lateral ventricle. Therefore, the experiments will include implantation of these catheters into the lateral ventricle as part
of a CSF drainage system, or shunt. In animals that have developed hydrocephalus a ventricular catheter will be inserted into
the lateral ventricle and attached to a subcutaneous reservoir whose distal catheter will be subcutaneously placed into the peritoneal
cavity. This is the customary design for clinical shunts.

 

The
main objective of this study is to determine the effectiveness of the Microbot Medical SCS Device to prevent obstruction in cerebrospinal
fluid (CSF) catheters in a clinically relevant in vivo model of hydrocephalus. To meet this objective one initial Specific
Aim will be addressed:

 

Aim
1: Determine the effectiveness of a porcine model of hydrocephalus to test the Microbot Medical SCS Device.

 

This
short-term pilot study on 4-10 infant pigs is intended to solve any logistical issues and collect preliminary data before the
long-term efficacy testing begins in Aim 2. In particular, we will determine the extent of ventriculomegaly needed for implantation
of the SCS Device, the time needed prior to implantation, the time required for typical catheter obstruction to occur, the most
effective placement of the extracranial components subcutaneously and externally on the body of the pig, and how catheter obstruction
will be detected. This initial study will lead to a second Specific Aim that will be formulated once Aim 1 is complete; in other
words, once we have optimized the mechanics of catheter positioning (presumably in about 3 animals) we will begin testing different
device activation regimes.

 

Experimental
Design

 

All
of the animal procedures will be reviewed and approved by the Washington University Animal Studies Committee in compliance with
federal regulations.

 

    	19

    	 

    

 

Aim
1: Prior to testing the Microbot device, obstructive hydrocephalus will be induced in 4-10 infant pigs by intracisternal injection
of kaolin. These procedures have been conducted many times by the principal investigators (PIs) and have been shown to be reliable
and cost-effective methods for creating hydrocephalus in experimental animals. We will begin with the following age-based timeline,
with modifications applied as we learn more about the model and the mechanics of implanting the Microbot device:

 

	 	1.	2-weeks
    of age: Kaolin induction of hydrocephalus
	 	 	 
	 	2.	2-4
    weeks of age: 

 

	 	 	a.	Neuroimaging
    – ultrasound, CT or MRI – to determine the size of the cerebral ventricles.
	 	 	 	 
	 	 	b.	Implantation
    of a non-activated Microbot device, which includes

 

	 	 	 	i.	a
    1.5 cm ventricular catheter.
	 	 	 	 	 
	 	 	 	ii.	a
    drainage catheter 11-20 cm long implanted subcutaneously and inserted into the peritoneal cavity.
	 	 	 	 	 
	 	 	 	iii.	a
    10 cm silicone rod attached to a 2cm diameter coil both of which are implanted subcutaneously.

 

	 	 	c.	Attachment
    externally to the body wall of a 3-4 cm receiver coil connected by wires to a 5x5 cm data collection box. A jacket will be
    customized to fit snugly around the animal and hold the equipment in pockets.

 

	 	3.	4-10
    weeks of age: Practical testing of the data collection abilities of the Microbot device and the general effects of CSF drainage
    and obstruction on ventricular size and animal behavior. Most likely these tests will be conducted once a day or as needed
    to determine the feasibility of the animal model. The longer time points will be tested on animals that survived the 10 weeks
    period in order to identify any chronic complications that might affect Aim 2 experiments.
	 	 	 
	 	4.	At
    the termination of the experiment each animal will undergo neuroimaging and intracranial pressure (ICP) measurements

 

Each
animal will be monitored daily for neurological status and general health by Dr. McAllister and his trained personnel, as well
as the veterinary and animal care staff.

 

Aim
2: Following the pilot study to determine the optimal implantation parameters, the ability of the Microbot device to prevent
catheter obstruction will be tested in the groups described above. Initially each group will consist of 5-8 pigs; 5 animals will
be needed for routine statistical analyses so the higher number allows for complications that would remove an animal from the
study. The same estimated timeline and experimental design described in Aim 1 will be used with the exception that:

 

	 	1.	The
    time following implantation for all experimental groups will be extended to at least 12 weeks.
	 	 	 
	 	2.	In
    the Activated Group, the Microbot device will be turned on for the intervals that were determined in Aim 1. This frequency
    will also be determined initially by the in vitro experiments conducted in Dr. Harris’ lab at Wayne State University
    in Detroit.
	 	 	 
	 	3.	Quantitative
    assessments of neurological outcome (balance, motor coordination, irritability, lethargy and other signs that change with
    increased ICP) will be performed on a regular (at least weekly) basis.
	 	 	 
	 	4.	Quantitative
    assessments of catheter patency will be performed on a weekly basis.
	 	 	 
	 	5.	Ventricular
    catheters will be harvested at the end of the experiments and analyzed with routine histology for tissue obstruction.

 

Note
that future work may include autologous blood injections into the lateral ventricles to model post-hemorrhagic hydrocephalus and
test the efficacy of the Microbot device under these clinical conditions.

 

    	20

    	 

    

 

Study
Timeline: We will conduct these experiments as expeditiously as possible, but we anticipate that Aim 1 will be completed in
3-6 months and the comprehensive study will follow.

 

Roles
and Responsibilities:

 

Dr.
McAllister, as Principal Investigator, will oversee and supervise all aspects of this study. In addition, he will perform
all of the surgical procedures, monitor animals frequently, communicate frequently with the veterinary and support staff, supervise
the Research Associate/Postdoctoral Fellow, maintain protocols, and manage funding. He will participate in semi-weekly conference
calls with members of Microbot Medical. This effort will require 50% of his time for the 6-month study period.

 

Dr.
Limbrick, as a pediatric neurosurgeon who specializes in the surgical management of hydrocephalus and current Chief of Pediatric
Neurosurgery at the Washington University School of Medicine and the St. Louis Children’s Hospital, will be a clinical consultant
and co-investigator on this study. He will provide advice on all aspects of the study and occasionally participate in surgery.
This will constitute 5% effort but his salary and benefits will be cost shared by the Washington University School of Medicine.

 

Dr.
Leandro Castaneyra Ruiz, who is currently a postdoctoral fellow in the Limbrick/McAllister lab, will assist in all surgical
procedures and animal monitoring. In addition, he will perform all of the histology conducted on the ventricular catheters and
animal brains. This effort will require 75% of his time.

 

    	21

    	 

    

 

BUDGET
FOR AIM 1

January
1 to June 30, 2017

 

Personnel

 

Dr.
McAllister 50%

$24,384

 

Dr.
Castaneyra Ruiz 75%

$20,063

 

Dr.
Limbrick 5% cost-shared

$0

 

Total
Personnel for 6 months

$44,447

 

Animals

 

	1.	Purchase
    infant pigs @ $180 each x 10
	 	$1,800

 

	2.	Administrative
    fee $25 x 10
	 	$250

 

	3.	Shipping
    - $205/2-3 pigs
	 	$750

 

	4.	Per
    diem - $15.50/d for 10-days postop single housing x 10 =  $930;
	 	 
	 	11-70
    days = $18.19/d double housing x 5 x 60d = $5,457
	 	$6,387

 

	5.	Disposal
    fee = $85/pig x 10
	 	   $850

 

	6.	Veterinary
    consultation & support
	 	$1,000

 

Total
Animals for 6 months 

$11,037

 

Surgery

 

	1.	1st
    surgery (1 hr + 2 hr tech) = $550/pig x 10
	 	$5,500

 

	2.	2nd
    surgery (3 hr + tech) = $870/pig x 10
	 	$8,700

 

    	22

    	 

    

 

Total
Surgery for 6 months

$14,200

 

Neuroimaging

 

	1.	Transport
    $250/2 pigs x 5 x 2 studies
	 	$2,500

 

	2.	CT
    scans $180/h x 20 studies (2 per pig)
	 	$3,600

 

	3.	Veterinary/animal
    care technical support      $150/study x 20
	 	$3,000

 

	4.	Ultrasonography
    $50/study x 20
	 	$1,000

 

Total
Neuroimaging for 6 months

$10,100

 

Histology
and Immunohistochemistry

 

	1.	Reagents,
    fixatives, buffers
	 	$750

 

	2.	Stains
    and antibodies
	 	$3,000

 

	3.	Glass
    slides and coverslips
	 	$750

 

	4.	Digital
    microscopy @ $20/h
	 	$1,000

 

Total
Histology and Immunohistochemistry for 6 months

$5,500

 

	 	 	Total
    Direct Costs
	 	$85,284	 
	 	 	Total
    Indirect Costs @ 50%
	 	$42,642	 
	 	 	Grand
    Total for 6 months
	 	$127,926	 

 

BUDGET
JUSTIFICATION for AIM 1

 

Personnel
– described above in the Scope of Work, Roles and Responsibilities

 

Animals

 

Detailed
expenses are listed in the Budget Aim 1. A maximum of 10 animals has been requested but fewer pigs may be; every effort will be
made to use the minimal number of animals needed to satisfy the objectives.

 

Surgery

 

Two
surgeries will be needed on each animal: the first to induce hydrocephalus and the second to implant the Microbot device. Charges
are based on the current rate to use the operating room and the institutional (IACUC) requirement for a surgical assistant from
the Division of Comparative Medicine) to perform anesthesia and monitor each animal following surgery.

 

    	23

    	 

    

 

Neuroimaging

 

Two
assessments will be needed for each animal: the first just prior to implantation of the Microbot device to determine the extent
of ventriculomegaly and the second just prior to termination of the experiment to determine the effectiveness of the device. As
described under “Animals”, fewer studies may be conducted if the objectives have been met. Furthermore, if ultrasonography
can be shown to accurately determine the extent of ventriculomegaly then the CT scans will not be needed. However, if CT scans
are needed, then transportation and veterinary care expenses will be incurred as required by the IACUC protocol.

 

Histology
and Immunohistochemistry

 

Post-mortem
analyses of the brain will include routine histology and targeted immunohistochemistry to determine (1) the effects of the Microbot
device on the brain as well as (2) the effectiveness of the Microbot device to maintain patency in the catheter. As described
previously, these costs will be reduced if fewer animals are needed.

 

Indirect
Costs

 

These
costs (often termed “F&A”) are determined by the Washington University Joint Research Office for Contracts and
administered through the Office of Sponsored Research Services and Sponsored Projects Accounting. After extensive discussions
between Dr. McAllister and these offices, the rate of 50% of Direct Costs is non-negotiable. Therefore, $42,642 has been added
to the Direct Costs to provide a total budget of $127,926.

 

    	24

    	 

    

 

ACCOUNTING
AND PAYMENT

 

Microbot
will pay WU a total of $127,926 US (inclusive of all and any taxes. Such amount shall be paid on a fixed-price basis and CORPORATION
agrees that WU will retain residual funds, if any, upon completion of the Project. These payments shall be made as set out below:

 

Within
fifteen (15) days of the Effective Date, CORPORATION will pay to WU the sum of $63,963US.

 

Within
fifteen (15) days of after induction of Hydrocephalus in animal, CORPORATION will pay to WU the sum of $51,170.40US.

 

Microbot
will pay the remainder, $12,792.60US, within thirty (30) days of receipt of the Aim 1 Progress Report: Pilot Studies on the Porcine
Model of Hydrocephalus to Test the Microbot Medical SCS Device.

 

Invoices:

 

Invoices,
will be sent to:

Microbot
Medical

5
Hamada Street

Yokneam,
20692

Israel

 

Checks
shall reference WU Contract Number OTM10394 and will be made payable to Washington University in St. Louis and sent to:

 

Washington
University

Sponsored
Projects Accounting

Campus
Box 1034

700
Rosedale Avenue

St.
Louis, MO 63112-1408

FAX
314-935-4309

 

Where
payments are made via wire transfer, CORPORATION agrees to be responsible for fees related to the wire transfer. The wire transfer
information is:

 

    	25

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