Document:

Warrant
Certificate No. ___

    

    NEITHER
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES ISSUABLE UPON
THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH
SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN
EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF
COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE
SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES
LAWS.

    

    
      	
              Effective
      Date: October [   ], 2010

            	
              Void
      After: October [   ],
20__

            

    

    

    INVIVO
THERAPEUTICS HOLDINGS CORP.

    

    WARRANT
TO PURCHASE COMMON STOCK

    

    InVivo Therapeutics Holdings
Corp., a Nevada corporation (the “Company”), for value received
on October [   ], 2010 (the “Effective Date”), hereby
issues to [          ]
(the “Holder” or
“Warrant Holder”) this
Warrant (the “Warrant”)
to purchase [        ]
shares, (each such share as from time to time adjusted as hereinafter provided
being a “Warrant Share”
and all such shares being the “Warrant Shares”) of the
Company’s Common Stock (as defined below), at the Exercise Price (as defined
below), as adjusted from time to time as provided herein, on or before
[   ], 2015 (the “Expiration Date”), all subject
to the following terms and conditions.

     

    As used
in this Warrant, (i) “Business
Day” means any day other than Saturday, Sunday or any other day on which
commercial banks in the City of New York, New York, are authorized or required
by law or executive order to close; (ii) “Common Stock” means the common
stock of the Company, par value $0.00001 per share, including any securities
issued or issuable with respect thereto or into which or for which such shares
may be exchanged for, or converted into, pursuant to any stock dividend, stock
split, stock combination, recapitalization, reclassification, reorganization or
other similar event; (iii) “Exercise Price” means $1.00
per share of Common Stock, subject to adjustment as provided herein; (iv) “Trading Day” means any day on
which the Common Stock is traded (or available for trading) on its principal
trading market; (v) “Affiliate” means any person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, a person, as such terms are used
and construed in Rule 144 promulgated under the Securities Act of 1933, as
amended (the “Securities
Act”) and (vi) “Warrantholders” means the
holder of this Warrant and other warrants of like tenor issued simultaneously
herewith.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              1.

            	
              DURATION
      AND EXERCISE OF WARRANTS

            

    

    

    (a)           Exercise
Period.  The Holder may exercise this Warrant in whole or in
part on any Business Day on or before 5:00 P.M., Eastern Time, on the Expiration
Date, at which time this Warrant shall become void and of no value.

    

    
      	
               
      

            	
              (b)

            	
              Exercise
      Procedures.

            

    

    

    (i)           While
this Warrant remains outstanding and exercisable in accordance with Section
1(a), in addition to the manner set forth in Section 1(b)(ii) below, the Holder
may exercise this Warrant in whole or in part at any time and from time to time
by:

    

    (A)           delivery
to the Company of a duly executed copy of the Notice of Exercise attached as
Exhibit A;

    

    (B)           surrender
of this Warrant to the Secretary of the Company at its principal offices or at
such other office or agency as the Company may specify in writing to the Holder;
and

    

    (C)           payment
of the then-applicable Exercise Price per share multiplied by the number of
Warrant Shares being purchased upon exercise of the Warrant (such amount, the
“Aggregate Exercise
Price”) made in the form of cash, or by certified check, bank draft or
money order payable in lawful money of the United States of America or in the
form of a Cashless Exercise to the extent permitted in Section 1(b)(ii)
below.

    

    (ii)           In
addition to the provisions of Section 1(b)(i) above, if any time after the first
anniversary of the date of the filing of the Current Report on Form 8-K
reporting the reverse merger (the “Merger”) of InVivo Therapeutics Corporation,
and a wholly owned subsidiary of the Company, a registration statement
covering the resale of the Warrant Shares by the Holder is not effective with
the Securities and Exchange Commission (the “SEC”), the Holder may, in its
sole discretion, exercise all or any part of the Warrant in a “cashless” or
“net-issue” exercise (a “Cashless Exercise”) by
delivering to the Company (1) the Notice of Exercise and (2) the original
Warrant, pursuant to which the Holder shall surrender the right to receive upon
exercise of this Warrant, a number of Warrant Shares having a value (as
determined below) equal to the Aggregate Exercise Price, in which case, the
number of Warrant Shares to be issued to the Holder upon such exercise shall be
calculated using the following formula:

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    X           =              Y * (A -
B)

      
   A

    

    with:        
  X
=           the number of
Warrant Shares to be issued to the Holder

    

    
      	
               
      

            	
              Y
      =

            	
              the
      number of Warrant Shares with respect to which the Warrant is being
      exercised

            

    

    

    
      	
               
      

            	
              A
      =

            	
              the
      fair value per share of Common Stock on the date of exercise of this
      Warrant

            

    

    

    B
=            the
then-current Exercise Price of the Warrant

    

    Solely
for the purposes of this paragraph, “fair value” per share of
Common Stock shall mean the average Closing Price (as defined below) per share
of Common Stock for the twenty (20) trading days immediately preceding the date
on which the Notice of Exercise is deemed to have been sent to the
Company.  “Closing
Price” means, for any date, the price determined by the first of the
following clauses that applies:  (a) if the Common Stock is then
listed or quoted on the New York Stock Exchange, the American Stock Exchange,
the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital
Market or any other national securities exchange, the closing price per
share of the Common Stock for such date (or the nearest preceding date) on the
primary eligible market or exchange on which the Common Stock is then listed or
quoted; (b) if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the closing bid price per share of the Common Stock for such date (or the
nearest preceding date) so quoted; or (c) if prices for the Common Stock are
then reported in the “Pink Sheets” published by the National Quotation
Bureau Incorporated (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent closing bid price per share of
the Common Stock so reported.  If the Common Stock is not publicly
traded as set forth above, the “fair value” per share of Common Stock shall be
reasonably and in good faith determined by the Board of Directors of the Company
as of the date which the Notice of Exercise is deemed to have been sent to the
Company.

    

    Notwithstanding
the foregoing, provided that a registration statement covering the resale of the
Warrant Shares by the Holder has (x) been declared effective by the SEC and
(y) remained effective for a period of one year, any Cashless Exercise right
hereunder shall thereupon terminate.

    

    For purposes of Rule 144 promulgated
under the Securities Act, it is intended, understood and acknowledged that the
Warrant Shares issued in a cashless exercise transaction shall be deemed to have
been acquired by the Holder, and the holding period for such shares shall be
deemed to have commenced, on the date this Warrant was originally
issued.

     

    
      
         

      

      
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    (iii)           Upon
the exercise of this Warrant in compliance with the provisions of this Section
1(b), and except as limited pursuant to the last paragraph of Section 1(b)(ii),
the Company shall promptly issue and cause to be delivered to the Holder a
certificate for the Warrant Shares purchased by the Holder.  Each
exercise of this Warrant shall be effective immediately prior to the close of
business on the date (the “Date
of Exercise”) that the conditions set forth in Section 1(b) have been
satisfied, as the case may be.  On the first Business Day following
the date on which the Company has received each of the Notice of Exercise and
the Aggregate Exercise Price (or notice of a Cashless Exercise in accordance
with Section 1(b)(ii)) (the “Exercise Delivery Documents”),
the Company shall transmit an acknowledgment of receipt of the Exercise Delivery
Documents to the Company’s transfer agent (the “Transfer Agent”). On or before the third
Business Day following the date on which the Company has received all of the
Exercise Delivery Documents (the “Share Delivery Date”), the
Company shall (X) provided that the Transfer Agent is participating in The
Depository Trust Company (“DTC”) Fast Automated
Securities Transfer Program, upon the request of the Holder, credit such
aggregate number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with
DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and dispatch by overnight courier to the address as
specified in the Notice of Exercise, a certificate, registered in the Company’s
share register in the name of the Holder or its designee, for the number of
shares of Common Stock to which the Holder is entitled pursuant to such
exercise.  Upon delivery of the Exercise Delivery Documents, the
Holder shall be deemed for all corporate purposes to have become the holder of
record of the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date of delivery of the certificates evidencing
such Warrant Shares.

    

    (iv)           If
the Company shall fail for any reason or for no reason to issue to the Holder,
within three (3) Business Days of receipt of the Exercise Delivery Documents, a
certificate for the number of shares of Common Stock to which the Holder is
entitled and register such shares of Common Stock on the Company’s share
register or to credit the Holder’s balance account with DTC for such number of
shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise of this Warrant, and if on or after such Business Day the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of shares of Common Stock
issuable upon such exercise that the Holder anticipated receiving from the
Company (a “Buy-In”),
then the Company shall, within three (3) Business Days after the Holder’s
request and in the Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point
the Company’s obligation to deliver such certificate (and to issue such shares
of Common Stock) shall terminate, or (ii) promptly honor its obligation to
deliver to the Holder a certificate or certificates representing such shares of
Common Stock and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of shares of Common
Stock, times (B) the closing bid price on the date of
exercise.

    

    (c)           Partial
Exercise.  This Warrant shall be exercisable, either in its
entirety or, from time to time, for part only of the number of Warrant Shares
referenced by this Warrant. If this Warrant is submitted in connection with any
exercise pursuant to Section 1 and the number of Warrant Shares represented by
this Warrant submitted for exercise is greater than the actual number of Warrant
Shares being acquired upon such an exercise, then the
Company shall as soon as practicable and in no event later than five (5)
Business Days after any exercise and at its own expense, issue a new Warrant of
like tenor representing the right to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under this Warrant, less the
number of Warrant Shares with respect to which this Warrant is
exercised.

    
      
         

      

      
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    (d)           Disputes.  In
the case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall promptly issue
to the Holder the number of Warrant Shares that are not disputed and resolve
such dispute in accordance with Section 16.

    

    
      	
              2.

            	
              ISSUANCE
      OF WARRANT SHARES

            

    

    

    (a)           The
Company covenants that all Warrant Shares will, upon issuance in accordance with
the terms of this Warrant, be (i) duly authorized, fully paid and
non-assessable, and (ii) free from all liens, charges and security interests,
with the exception of claims arising through the acts or omissions of any Holder
and except as arising from applicable Federal and state securities
laws.

    

    (b)           The
Company shall register this Warrant upon records to be maintained by the Company
for that purpose in the name of the record holder of such Warrant from time to
time. The Company may deem and treat the registered Holder of this Warrant as
the absolute owner thereof for the purpose of any exercise thereof, any
distribution to the Holder thereof and for all other purposes.

    

    (c)           The
Company will not, by amendment of its certificate of incorporation, by-laws or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all action necessary or appropriate in order to protect the rights of
the Holder to exercise this Warrant, or against impairment of such
rights.

    

    
      	
              3.

            	
              ADJUSTMENTS
      OF EXERCISE PRICE, NUMBER AND TYPE OF WARRANT
  SHARES

            

    

    

    (a)           The
Exercise Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events described in this Section 3; provided, that
notwithstanding the provisions of this Section 3, the Company shall not be
required to make any adjustment if and to the extent that such adjustment would
require the Company to issue a number of shares of Common Stock in excess of its
authorized but unissued shares of Common Stock, less all amounts of Common Stock
that have been reserved for issue upon the conversion of all outstanding
securities convertible into shares of Common Stock and the exercise of all
outstanding options, warrants and other rights exercisable for shares of Common
Stock.  If the Company does not have the requisite number of
authorized but unissued shares of Common Stock to make any adjustment, the
Company shall use its commercially best efforts to obtain the necessary
stockholder consent to increase the authorized number of shares of Common Stock
to make such an adjustment pursuant to this Section 3.

    
      
         

      

      
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    (i)           Subdivision or Combination
of Stock. In case the Company shall at any time subdivide (whether by way
of stock dividend, stock split or otherwise) its outstanding shares of Common
Stock into a greater number of shares, the Exercise Price in effect immediately
prior to such subdivision shall be proportionately reduced and the number of
Warrant Shares shall be proportionately increased, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined (whether by
way of stock combination, reverse stock split or otherwise) into a smaller
number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrant Shares
shall be proportionately decreased.  The Exercise Price and the
Warrant Shares, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described in this Section
3(a)(i).

    

    (ii)           Dividends in Stock,
Property, Reclassification. If at any time, or from time to time, all of
the holders of Common Stock (or any shares of stock or other securities at the
time receivable upon the exercise of this Warrant) shall have received or become
entitled to  receive, without payment therefore:

    

    (A)           any
shares of stock or other securities that are at any time directly or indirectly
convertible into or exchangeable for Common Stock, or any rights or options to
subscribe for, purchase or otherwise acquire any of the foregoing by way of
dividend or other distribution, or

    

    (B)           additional
stock or other securities or property (including cash) by way of spin-off,
split-up, reclassification, combination of shares or similar corporate
rearrangement (other than shares of Common Stock issued as a stock split or
adjustments in respect of which shall be covered by the terms of Section 3(a)(i)
above),

    

    then and
in each such case, the Exercise Price and the number of Warrant Shares to be
obtained upon exercise of this Warrant shall be adjusted proportionately, and
the Holder hereof shall, upon the exercise of this Warrant, be entitled to
receive, in addition to the number of shares of Common Stock receivable
thereupon, and without payment of any additional consideration therefor, the
amount of stock and other securities and property (including cash in the cases
referred to above) that such Holder would hold on the date of such exercise had
such Holder been the holder of record of such Common Stock as of the date on
which holders of Common Stock received or became entitled to receive such shares
or all other additional stock and other securities and
property.  The Exercise Price and the Warrant Shares, as so adjusted,
shall be readjusted in the same manner upon the happening of any successive
event or events described in this Section 3(a)(ii).

     

    
      
         

      

      
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    (iii)           Reorganization,
Reclassification, Consolidation, Merger or
Sale. If any
recapitalization, reclassification or reorganization of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets or other
transaction shall be
effected in such a way that holders of Common Stock shall be entitled to receive
stock, securities, or other assets or property (an “Organic
Change”), then, as a condition of such Organic
Change, lawful and adequate provisions shall be made by the Company whereby the Holder
hereof shall thereafter have the right to purchase and receive (in lieu of the
shares of the Common Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented by this Warrant) such shares of stock,
securities or other assets or property as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore purchasable and receivable assuming the
full exercise of the rights represented by this Warrant. In the event of any
Organic Change, appropriate provision shall be made by the Company with respect
to the rights and interests of the Holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and of the number of shares purchasable and receivable upon the exercise of this
Warrant and registration rights) shall thereafter be applicable, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise hereof. The
Company will not effect any such consolidation, merger or sale unless, prior to
the consummation thereof, the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing such assets shall
assume by written instrument reasonably satisfactory in form and substance to
the Holder executed and mailed or delivered to the registered Holder hereof at the last address of such
Holder appearing on the books of the Company, the obligation to deliver to such
Holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such Holder may be entitled to purchase. If there is an Organic Change, then the
Company shall cause to be mailed to the Holder at its last address as it shall
appear on the books and records of the Company, at least 10 calendar days before
the effective date of the Organic Change, a notice stating the date on which such Organic
Change is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares for securities, cash, or other property delivered upon such Organic Change;
provided, that the failure to mail such notice or any defect therein or in the
mailing thereof shall not affect the validity of the corporate action required
to be specified in such notice.  The Holder is entitled to
exercise this Warrant during the 10-day
period commencing on the date of such notice to the effective date of the event
triggering such notice. In any event, the successor corporation
(if other than the Company) resulting from such consolidation or merger or
the corporation purchasing
such assets shall be deemed to assume such obligation to deliver to such Holder
such shares of stock, securities or assets even in the absence of a written
instrument assuming such obligation to the extent such assumption occurs
by operation of law.

    

    (b)           Certificate as to
Adjustments. Upon the occurrence of each adjustment or readjustment
pursuant to this Section 3, the Company at its expense shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and furnish
to each Holder of this Warrant a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall promptly furnish or cause to be
furnished to such Holder a like certificate setting forth: (i) such adjustments
and readjustments; and (ii) the number of shares and the amount, if any, of
other property which at the time would be received upon the exercise of the
Warrant.

     

    
      
         

      

      
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    (c)           Certain Events. If
any event occurs as to which the other provisions of this Section 3 are not
strictly applicable but the lack of any adjustment would not fairly protect the
purchase rights of the Holder under this Warrant in accordance with the basic
intent and principles of such provisions, or if strictly applicable would not
fairly protect the purchase rights of the Holder under this Warrant in
accordance with the basic intent and principles of such provisions, then the
Company's Board of Directors will, in good faith, make an appropriate adjustment
to protect the rights of the Holder; provided, that no
such adjustment pursuant to this Section 3(c) will increase the Exercise Price
or decrease the number of Warrant Shares as otherwise determined pursuant to
this Section 3.

    

    (d)           Adjustment of Exercise Price
Upon Issuance of Additional Shares of Common Stock.  In the
event the Company shall at any time prior to the Expiration Date issue
Additional Shares of Common Stock, as defined below, without consideration or
for a consideration per share less than the Exercise Price in effect immediately
prior to such issue, then the Exercise Price shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent) determined by
multiplying such Exercise Price by a fraction, (A) the numerator of which shall
be (1) the number of shares of Common Stock outstanding immediately prior to
such issue plus (2) the number of shares of Common Stock which the aggregate
consideration received or to be received by the Company for the total number of
Additional Shares of Common Stock so issued would purchase at such Exercise
Price; and (B) the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock so issued; provided that, (i)
for the purpose of this Section 3(d), all shares of Common Stock issuable upon
conversion or exchange of convertible securities outstanding immediately prior
to such issue shall be deemed to be outstanding, and (ii) the number of shares
of Common Stock deemed issuable upon conversion or exchange of such outstanding
convertible securities shall be determined without giving effect to any
adjustments to the conversion or exchange price or conversion or exchange rate
of such convertible securities resulting from the issuance of Additional Shares
of Common Stock that is the subject of this calculation.  For purposes
of this Warrant, “Additional Shares of Common Stock” shall mean all shares of
Common Stock issued by the Company after the Effective Date (including without
limitation any shares of Common Stock issuable upon conversion or exchange of
any convertible securities or upon exercise of any option or warrant, on an
as-converted basis), other than: (i) shares of Common Stock issued or
issuable upon conversion or exchange of any convertible securities or exercise
of any options or warrants outstanding on the Effective Date; (ii) shares
of Common Stock issued or issuable by reason of a dividend, stock split,
split-up or other distribution on shares of Common Stock that is covered by
Sections 3(a)(i) through 3(a)(iii) above; (iii) shares of Common Stock (or
options with respect thereto) issued or issuable to employees or directors of,
or consultants to, the Company or any of its subsidiaries pursuant to a plan,
agreement or arrangement approved by the Board of Directors of the Company; (iv)
any securities issued or issuable by the Company pursuant to (A) the Company’s
private offering (the “Offering”) of securities pursuant to a Private
Placement  Memorandum, dated as of October 4, 2010 (the “Memorandum”)
and the related Subscription Agreements (the “Subscription Agreement”)
thereunder, (B) the Merger or (C) the transactions contemplated by the
Memorandum and the Merger; (v) securities issued pursuant to acquisitions or
strategic transactions approved by a majority of disinterested directors of the
Company, provided that any such issuance shall only be to a person which is,
itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Company and in which the Company receives
benefits in addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in
securities and (vi) securities issued to financial institutions, institutional
investors or lessors in connection with credit arrangements, equipment
financings or similar transactions approved by a majority of disinterested
directors of the Company.  The provisions of this Section 3(d) shall
not operate to increase the Exercise Price.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    Upon each
adjustment of the Exercise Price pursuant to the provisions of this Section
3(d), the number of Warrant Shares issuable upon exercise of this Warrant shall
be adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares issuable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.

    

    
      	
              4.

            	
              TRANSFERS
      AND EXCHANGES OF WARRANT AND WARRANT
SHARES

            

    

    

    (a)           Registration of Transfers
and Exchanges. Subject to Section 4(c), upon the Holder’s surrender of
this Warrant, with a duly executed copy of the Form of Assignment attached as
Exhibit B, to the
Secretary of the Company at its principal offices or at such other office or
agency as the Company may specify in writing to the Holder, the Company shall
register the transfer of all or any portion of this Warrant. Upon such
registration of transfer, the Company shall issue a new Warrant, in
substantially the form of this Warrant, evidencing the acquisition rights
transferred to the transferee and a new Warrant, in similar form, evidencing the
remaining acquisition rights not transferred, to the Holder requesting the
transfer.

    

    (b)           Warrant Exchangeable for
Different Denominations. The Holder may exchange this Warrant for a new
Warrant or Warrants, in substantially the form of this Warrant, evidencing in
the aggregate the right to purchase the number of Warrant Shares which may then
be purchased hereunder, each of such new Warrants to be dated the date of such
exchange and to represent the right to purchase such number of Warrant Shares as
shall be designated by the Holder. The Holder shall surrender this Warrant with
duly executed instructions regarding such re-certification of this Warrant to
the Secretary of the Company at its principal offices or at such other office or
agency as the Company may specify in writing to the Holder.

    

    (c)           Restrictions on
Transfers. This Warrant may not be transferred at any time without (i)
registration under the Securities Act or (ii) an exemption from such
registration and a written opinion of legal counsel addressed to the Company
that the proposed transfer of the Warrant may be effected without registration
under the Securities Act, which opinion will be in form and from counsel
reasonably satisfactory to the Company.

    

    (d)           Permitted Transfers and
Assignments.  Notwithstanding any provision to the contrary in
this Section 4, the Holder may transfer, with or without consideration, this
Warrant or any of the Warrant Shares (or a portion thereof) to the Holder’s
Affiliates (as such term is defined under Rule 144 of the Securities Act)
without obtaining the opinion from counsel that may be required by Section
4(c)(ii), provided, that the
Holder delivers to the Company and its counsel certification, documentation, and
other assurances reasonably required by the Company’s counsel to enable the
Company’s counsel to render an opinion to the Company’s Transfer Agent that such
transfer does not violate applicable securities laws.

    
      
         

      

      
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              5.

            	
              MUTILATED
      OR MISSING WARRANT CERTIFICATE

            

    

    

    If this Warrant is mutilated, lost,
stolen or destroyed, upon request by the Holder, the Company will, at its
expense, issue, in exchange for and upon cancellation of the mutilated Warrant,
or in substitution for the lost, stolen or destroyed Warrant, a new Warrant, in
substantially the form of this Warrant, representing the right to acquire the
equivalent number of Warrant Shares; provided, that, as a
prerequisite to the issuance of a substitute Warrant, the Company may require
satisfactory evidence of loss, theft or destruction as well as an indemnity from
the Holder of a lost, stolen or destroyed Warrant.

    

    
      	
              6.

            	
              PAYMENT
      OF TAXES

            

    

    

    The
Company will pay all transfer and stock issuance taxes attributable to the
preparation, issuance and delivery of this Warrant and the Warrant Shares (and
replacement Warrants) including, without limitation, all documentary and stamp
taxes; provided, however, that the
Company shall not be required to pay any tax in respect of the transfer of this
Warrant, or the issuance or delivery of certificates for Warrant Shares or other
securities in respect of the Warrant Shares to any person or entity other than
to the Holder.

    

    7.           FRACTIONAL
WARRANT SHARES

    

    No
fractional Warrant Shares shall be issued upon exercise of this Warrant. The
Company, in lieu of issuing any fractional Warrant Share, shall round up the
number of Warrant Shares issuable to nearest whole share.

    

    
      	
              8.

            	
              NO
      STOCK RIGHTS AND LEGEND

            

    

    

    No holder
of this Warrant, as such, shall be entitled to vote or be deemed the holder of
any other securities of the Company that may at any time be issuable on the
exercise hereof, nor shall anything contained herein be construed to confer upon
the holder of this Warrant, as such, the rights of a stockholder of the Company
or the right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or give or withhold consent to any
corporate action or to receive notice of meetings or other actions affecting
stockholders (except as provided herein), or to receive dividends or
subscription rights or otherwise (except as provide herein).

    

    Each certificate for Warrant Shares
initially issued upon the exercise of this Warrant, and each certificate for
Warrant Shares issued to any subsequent transferee of any such certificate,
shall be stamped or otherwise imprinted with a legend in substantially the
following form:

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    “THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH  RESPECT THERETO
IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN
EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION OF
COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR   APPLICABLE
STATE SECURITIES LAWS.”

    

    
      	
              9.

            	
              REGISTRATION
      RIGHTS

            

    

    

    The Holder shall be entitled to the
registration rights as are contained in the Registration Rights Agreement of
even date herewith, by and among the Company, the Holder and (i) the holders of
warrants of like tenor; and (ii) the subscribers to the
Offering.  

    

    
      	
              10. 

            	
              NOTICES

            

    

    

    All notices, consents, waivers, and
other communications under this Warrant must be in writing and will be deemed
given to a party when (a) delivered to the appropriate address by hand or by
nationally recognized overnight courier service (costs prepaid); (b) sent by
facsimile or e-mail with confirmation of transmission by the transmitting
equipment; (c) received or rejected by the addressee, if sent by certified mail,
return receipt requested, if to the registered Holder hereof; or (d) seven days
after the placement of the notice into the mails (first class postage prepaid),
to the Holder at the address, facsimile number, or e-mail address of the
registered Holder as set forth in the books and records of the Company, or as
otherwise provided by the registered Holder to the Company, or if to the
Company, to it at One Broadway, 14th Floor, Cambridge, Ma. 02142, Attention:
Frank Reynolds, Chief Executive Officer (or to such other address, facsimile
number, or e-mail address as the Holder or the Company as a party may designate
by notice the other party) with a copy to Meister Seelig & Fein LLP, 2 Grand
Central Tower, 140 East 45th Street,
19th
Floor, New York, NY 10017, Attention:  Mitchell L. Lampert,
Esq.

    

    
      	
              11.

            	
              SEVERABILITY

            

    

    

    If a
court of competent jurisdiction holds any provision of this Warrant invalid or
unenforceable, the other provisions of this Warrant will remain in full force
and effect. Any provision of this Warrant held invalid or unenforceable only in
part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.

    

    
      	
              12.

            	
              BINDING
      EFFECT

            

    

    

    This
Warrant shall be binding upon and inure to the sole and exclusive benefit of the
Company, its successors and assigns, the registered Holder or Holders from time
to time of this Warrant and the Warrant Shares.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    
      	
              13.

            	
              SURVIVAL
      OF RIGHTS AND DUTIES

            

    

    

    This
Warrant shall terminate and be of no further force and effect on the earlier of
5:00 P.M., Eastern Time, on the Expiration Date or the date on which this
Warrant has been exercised in full.

    

    
      	
              14.

            	
              GOVERNING
      LAW

            

    

    

    This
Warrant will be governed by and construed under the laws of the State of New
York without regard to conflicts of laws principles that would require the
application of any other law.

    

    
      	
              15.

            	
              DISPUTE
      RESOLUTION

            

    

    

    In the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within two
Business Days of receipt of the Notice of Exercise giving rise to such dispute,
as the case may be, to the Holder. If the Holder and the Company are unable
to agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within three Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within two Business Days, submit via facsimile (a) the disputed determination of
the Exercise Price to an independent, reputable investment bank selected by the
Company and approved by the Holder or (b) the disputed arithmetic calculation of
the Warrant Shares to the Company’s independent, outside accountant. The Company
shall cause at its expense the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the Holder of the results no later than ten (10) Business Days from the
time it receives the disputed determinations or calculations. Such investment
bank’s or accountant’s determination or calculation, as the case may be, shall
be binding upon all parties absent demonstrable error.

    

    
      	
              16.

            	
              NOTICES
      OF RECORD DATE

            

    

    

    Upon (a)
any establishment by the Company of a record date of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution, or right or option to acquire
securities of the Company, or any other right, or (b) any capital
reorganization, reclassification, recapitalization, merger or consolidation of
the Company with or into any other corporation, any transfer of all or
substantially all the assets of the Company, or any voluntary or involuntary
dissolution, liquidation or winding up of the Company, or the sale, in a single
transaction, of a majority of the Company’s voting stock (whether newly issued,
or from treasury, or previously issued and then outstanding, or any combination
thereof), the Company shall mail to the Holder at least ten (10) Business Days,
or such longer period as may be required by law, prior to the record date
specified therein, a notice specifying (i) the date established as the
record date for the purpose of such dividend, distribution, option or right and
a description of such dividend, option or right, (ii) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up, or sale is expected to become effective and (iii) the
date, if any, fixed as to when the holders of record of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, transfer,
consolation, merger, dissolution, liquidation or winding up.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    
      	
              17.

            	
              RESERVATION
      OF SHARES

            

    

    

    The
Company shall reserve and keep available out of its authorized but unissued
shares of Common Stock for issuance upon the exercise of this Warrant, free from
pre-emptive rights, such number of shares of Common Stock for which this Warrant
shall from time to time be exercisable.  The Company will take all
such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation. Without limiting the generality of the foregoing, the Company
covenants that it will use commercially reasonable efforts to take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares upon the exercise
of this Warrant and use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents, including but not limited to consents
from the Company’s stockholders or Board of Directors or any public regulatory
body, as may be necessary to enable the Company to perform its obligations under
this Warrant.

    

    
      	
              18.

            	
              NO
      THIRD PARTY RIGHTS

            

    

    

    This
Warrant is not intended, and will not be construed, to create any rights in any
parties other than the Company and the Holder, and no person or entity may
assert any rights as third-party beneficiary hereunder.

     

    [SIGNATURE
PAGE FOLLOWS]

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of
the date first set forth above.

    

    
      
        
          	
                  INVIVO
      THERAPEUTICS HOLDINGS CORP.

                
	 
      
	
                  By:

                	 
      
	 
      	
                  Name:

                	
                  Frank
      Reynolds

                
	 
      	
                  Title:

                	
                  President
      and Chief Executive
Officer

                

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    NOTICE OF
EXERCISE

    

    (To be
executed by the Holder of Warrant if such Holder desires to exercise
Warrant)

    

    To InVivo
Therapeutics Holdings Corp.:

    

    The
undersigned hereby irrevocably elects to exercise this Warrant and to purchase
thereunder, ___________________ full shares of InVivo Therapeutics Holdings
Corp. common stock issuable upon exercise of the Warrant and delivery
of:

    

    (1)                 $_________
(in cash as provided for in the foregoing Warrant) and any applicable taxes
payable by the undersigned pursuant to such Warrant; and

    

    (2)                 __________
shares of Common Stock (pursuant to a Cashless Exercise in accordance with
Section 1(b)(ii) of the Warrant) (check here if the undersigned desires to
deliver an unspecified number of shares equal the number sufficient to effect a
Cashless Exercise [___]).

    

    The
undersigned requests that certificates for such shares be issued in the name
of:

    

    _________________________________________

    (Please
print name, address and social security or federal employer

    identification
number (if applicable))

    

    _________________________________________

    

    _________________________________________

    

    If the
shares issuable upon this exercise of the Warrant are not all of the Warrant
Shares which the Holder is entitled to acquire upon the exercise of the Warrant,
the undersigned requests that a new Warrant evidencing the rights not so
exercised be issued in the name of and delivered to:

    

    _________________________________________

    (Please
print name, address and social security or federal employer

    identification
number (if applicable))

    

    _________________________________________

    

    _________________________________________

    

                
Name of Holder
(print):       ________________________

                
(Signature):   ___________________________________

                
(By:)  _________________________________________

                
(Title:) ________________________________________

                
Dated:   ________________________________________

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    FORM OF
ASSIGNMENT

    

    FOR VALUE
RECEIVED, ___________________________________ hereby sells, assigns and
transfers to each assignee set forth below all of the rights of the undersigned
under the Warrant (as defined in and evidenced by the attached Warrant) to
acquire the number of Warrant Shares set opposite the name of such assignee
below and in and to the foregoing Warrant with respect to said acquisition
rights and the shares issuable upon exercise of the Warrant:

     

    
      
        
          
            	
                    Name of Assignee

                  	 
      	
                    Address

                  	 
      	
                    Number of Shares

                  
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

          

        

      

    

     

    If the
total of the Warrant Shares are not all of the Warrant Shares evidenced by the
foregoing Warrant, the undersigned requests that a new Warrant evidencing the
right to acquire the Warrant Shares not so assigned be issued in the name of and
delivered to the undersigned.

    

                              
 Name of Holder
(print):       ________________________

                               
(Signature):   ___________________________________

                 
             
(By:)  _________________________________________

            
          
        (Title:)
________________________________________

                             
 
Dated:   ________________________________________SECURITIES
PURCHASE AGREEMENT

    

    THIS SECURITIES PURCHASE AGREEMENT (the
“Agreement”) is made as of the___ day of August, 2010, by and between InVivo
Therapeutics Corporation, a Delaware corporation (the “Company”), and the
investors listed on the Schedule of Investors attached hereto (each an
“Investor” and collectively, the “Investors”).

     

    WITNESSETH:

     

    WHEREAS, the Company desires to sell to
the Investors, and the Investors desire to purchase from the Company, units
comprised of (a) 6% convertible promissory notes in the aggregate principal
amount of up to $500,000 (each a “Note and collectively, the “Notes”), in the
form attached as Exhibit A hereto, and
(b) a warrant (each a “Warrant” and collectively, the “Warrants”), in the form
attached as Exhibit
B hereto, to purchase a number of shares of the Company’s common stock,
$0.001 par value per share (the “Common Stock”) equal to the principal amount of
the Notes divided by the exercise price of $13.7706 per share, pursuant to the
provisions of this Agreement at a purchase price per unit equal to the principal
amount of the Notes included in such unit; and

    

    NOW, THEREFORE, in consideration of the
mutual covenants and agreements set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:

    

    1.        
    Purchase and Sale of Notes
and Warrants.

    

    1.1           Issuance and Sale of Notes
and Warrants. Subject to the terms and conditions of this Agreement, the
Investors severally and not jointly agree to purchase at the Closing (as
hereafter defined), and the Company agrees to issue and sell to the Investors at
the Closing, the amount of Notes and the Warrants based on the purchase price
set forth opposite each Investor’s name on the Signature Page hereto, for an
aggregate purchase price of up to Five Hundred Thousand ($500,000) Dollars (the
“Aggregate Offering Amount”; and the offering of the Notes and Warrants being
offered hereunder referred to as the “Offering”).

    

    1.2           Payment.  The Investor is
enclosing with its delivery of its Signature Page hereto a check payable to, or
will promptly immediately make a wire transfer payment to, “InVivo Therapeutics
Corporation” in the full amount of the purchase price of the Notes and Warrants
being subscribed for (“Purchase Price”).  Wire instructions are as
follows:

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      
        
          	 
      	
                  Domestic Wiring

                
	 
      	 
      
	 
      	
                  Routing:
      026009593

                
	 
      	
                  Account:
      004604684378

                
	 
      	
                  InVivo
      Therapeutics Corporation

                
	 
      	
                  Bank
      of America

                
	 
      	
                  226
      Main St.

                
	 
      	
                  Cambridge,
      MA  02142

                
	 
      	 
      
	 
      	
                  International Wiring

                
	 
      	 
      
	 
      	
                  Routing:
      026009593

                
	 
      	
                  Account:
      004604684378

                
	 
      	
                  InVivo
      Therapeutics Corporation

                
	 
      	
                  One
      Broadway, 14th
      Floor

                
	 
      	
                  Cambridge,
      MA 02142

                
	 
      	
                  CEO
      Name: Francis M Reynolds

                
	 
      	
                   SWIFT
      Code:  BOFAUS3N

                

        

      

    

    

    For both domestic and
international:

    

    FBO:
Investor
Name

    Social Security
Number

    Address

    

    All
payments made by check as provided in Section 1.2 hereof shall be promptly
deposited by the Company or Spencer Trask Ventures, Inc. (in its capacity as the
“Finder”) with the aforementioned bank, and all payments hereunder shall be held
in a non-interest-bearing account (the “Account”) until the earliest to occur of
(a) the Closing (as defined below), (b) the rejection of such proposed
investment by the Company or the Finder and (c) the termination of the Offering
by the Company or the Finder.  

    

    1.3         
Closing.

    

    (a)           The
initial closing of the purchase and sale of Notes and Warrants under this
Agreement (the “Initial Closing”)
shall be held at the offices of the Company, One Broadway, 14th Floor,
Cambridge, MA 02142 (or remotely via the exchange of documents and signatures),
on or before September 30, 2010, subject to the Company’s right to extend the
Offering until October 31, 2010 (the date of the Initial Closing is hereinafter
referred to as the “Initial Closing
Date”). The subsequent closing(s) of the purchase and sale of Notes (up
to Aggregate Offering Amount) and Warrants under this Agreement (the “Subsequent
Closing(s)”) shall take place at a time agreed upon by the Company and
the Finder (the date(s) of the Subsequent Closing(s) is hereinafter referred to
as the “Subsequent
Closing Date(s)”), all of which shall occur in any event no later than
October 31, 2010.  The Investors agree that any additional persons or
entities that acquire Notes and Warrants at any Subsequent Closing shall become
Investors under this Agreement with all rights and obligations attendant
thereto, upon their execution of this Agreement without further action by any
other Investor.  For purposes of this Agreement, the terms “Closing” and “Closing Date”, unless
otherwise indicated, refer to the applicable closing and closing date of the
Initial Closing or the Subsequent Closing(s), as the case may
be.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b)           At
each Closing, the Company shall deliver the Notes and the Warrants to the
Investors against payment of the Purchase Price to the Company as described
above, along with delivery by the Investors of an Accredited Investor
Certification and Investor Profile to the Company.

    

    2.           Representations and
Warranties of the Company.  The Company hereby represents and
warrants to the Investors, except as set forth on a Schedule of Exceptions to
Representations and Warranties attached hereto as Exhibit C (the
“Schedule of Exceptions”), the following:

    

    2.1         Subsidiaries.  The
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, association, or other business entity (as hereinafter
defined) (each, a “Subsidiary” and collectively, the
“Subsidiaries”).  Unless the context requires otherwise, all
references herein to the “Company” shall refer to the Company and its
Subsidiaries. The Company is not a party to any joint venture, partnership, or
similar arrangement.

    

    2.2         Organization, Good Standing,
and Qualification.  The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to carry on its
business as now conducted.  The Subsidiaries are duly organized in
their respective jurisdictions of organization, validly existing and in good
standing in such respective jurisdictions and each has the power and authority
to carry on its respective business as now conducted. The Company and the
Subsidiaries are duly qualified to transact business and are in good standing in
each jurisdiction in which the failure so to qualify would have a Material
Adverse Effect (as hereafter defined) on the Company’s business or
properties.

    

    2.3         Capitalization and Voting
Rights.   The authorized capital stock of the Company
consists of 5,000,000 shares of Common Stock and 510 shares of preferred stock,
$0.001 par value per share (“Preferred Stock”).  As of the date of
this Agreement, there was issued and outstanding (i)1,986,956 shares of Common
Stock; (ii) $2,945,000 principal amount of convertible promissory notes
(“Convertible Notes”) that are convertible into 264,215 shares of common stock;
and (iii) no shares of Preferred Stock.  As of the date of this
Agreement, there were issued and outstanding options (“Options”) to purchase
322,456 shares of Common Stock and no warrants.  It is contemplated
that the Company will be issuing an additional 33,041 options to a CFO it
anticipates hiring during fiscal 2010. All of the issued and outstanding shares
of Common Stock, and all shares of Common Stock that may be issued upon exercise
or conversion of Options, Convertible Notes or Warrants will be (upon issuance
in accordance with their terms), duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights with respect to the transactions
contemplated by this Agreement.  Other than such Options, Convertible
Notes and Outstanding Warrants, there are no outstanding or authorized options,
warrants, rights, agreements or commitments to which the Company is a party or
which are binding upon the Company providing for the issuance or redemption of
any of its capital stock.  There are no outstanding or authorized
stock appreciation, phantom stock or similar rights with respect to the
Company.  The Company and the shareholders of the Company are parties
to a shareholders’ agreement which contains
certain customary rights of first refusal, drag-long and tag-along rights and
super-majority voting requirements amongst the shareholders for approving
certain corporate actions.  All of the issued
and shares of Common Stock were issued in compliance with applicable federal and
state securities laws.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    2.4          Authorization.  All
corporate action on the part of the Company, its officers, directors, and
shareholders necessary for the authorization, execution and delivery of this
Agreement, the Notes and the Warrants (collectively, the “Transaction
Documents”), the performance of all obligations of the Company hereunder and
thereunder and the authorization, issuance (or reservation for issuance) and
delivery of the Notes and the Warrants being sold hereunder and the Common Stock
issuable upon exercise of the Warrants (collectively, the “Securities”), has
been taken or will be taken prior to the Closing, and the Transaction Documents
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Transaction Documents may be limited
by applicable federal or state laws.

    

    2.5          Valid Issuance of Notes,
Warrants and Common Stock.

    

    (a)           The
Notes and the Warrants are being purchased by the Investors hereunder, when
issued, sold, and delivered in accordance with the terms hereof for the
consideration provided for herein, will be duly and validly issued, and, based
in part upon the representations of the Investors in this Agreement, will be
issued in compliance with all applicable federal and state securities
laws.  The equity securities issuable upon exercise of the Warrant
have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Warrant (and upon payment of the exercise price
as required by the Warrant), shall be duly and validly issued, fully paid and
nonassessable, and issued in compliance with all applicable securities laws, as
presently in effect, of the United States and each of the states whose
securities laws govern the issuance of the Warrants hereunder.

    

    (b)           All
outstanding shares of Common Stock of the Company are duly and validly
authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable federal and state securities
laws.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    2.6           Filings, Consents and
Approvals.  Neither the Company nor any Subsidiary is required
to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) a proper Form D in accordance with Regulation D promulgated under
the Securities Act of 1933, as amended (the “Act”), and applicable Blue Sky
filings and (ii) in all other cases where the failure to obtain such consent,
waiver, authorization or order, or to give such notice or make such filing or
registration could not have or result in, individually or in the aggregate, a
material and adverse effect on the results, operations, properties, prospects or
financial condition of the Company and its Subsidiaries taken as a whole
(“Material Adverse Effect”).

    

    2.7           Litigation.  There
is no action, suit, proceeding, claim or investigation pending or, to the
knowledge of the Company, currently threatened against the Company which
questions the validity of the Transaction Documents, or the right of the Company
to enter into any of them, or to consummate the transactions contemplated hereby
or thereby, or which might result, either individually or in the aggregate, in
any material adverse changes in the assets, condition, affairs, or prospects of
the Company, financially or otherwise, or any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis for
the foregoing, other than a claim by a single holder of $200,000 of Convertible
Notes relating to the Company’s valuation on conversion of his Convertible
Notes.  The foregoing includes, without limitation, actions, pending
or threatened (or any basis therefor known to the Company), involving the prior
employment of any of the Company’s employees, their use in connection with the
Company’s business of any information or techniques allegedly proprietary to any
of their former employers, or their obligations under any agreements with prior
employers.  The Company is not a party or subject to the provisions of
any order, writ, injunction, judgment, or decree of any court or government
agency or instrumentality.

    

    2.8           Compliance with Other
Instruments.  The Company is not in violation or default of any
provisions of its Certificate of Incorporation, as amended to date, or Bylaws
or, to its knowledge, of any instrument, judgment, order, writ, decree,
mortgage, indenture, lease, license or contract to which it is a party or by
which it is bound or, to its knowledge, of any provision of federal, state, or
local statute, rule, or regulation applicable to the Company, except as would
not reasonably be expected, singly or in the aggregate, to have a Material
Adverse Effect.  The execution, delivery, and performance of the
Transaction Documents and the consummation of the transactions contemplated
thereby will not, to the Company’s knowledge, result in any such violation or be
in conflict with or constitute, with or without the passage of time and giving
of notice, either a default under any such provision, instrument, judgment,
order, writ, decree or contract, or an event which results in the creation of
any lien, charge, or encumbrance upon any assets of the Company or the
suspension, revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization, or approval applicable to the Company, its
business or operations, or any of its assets or properties, except as would not
reasonably be expected, singly or in the aggregate, to have a Material Adverse
Effect.

      

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    2.9           Compliance with
Laws.  The conduct of business by the Company and each
Subsidiary as presently and proposed to be conducted is not subject to
continuing oversight, supervision, regulation or examination by any governmental
official or body of the United States or any other jurisdiction wherein the
Company or any Subsidiary conducts or proposes to conduct such business, except
such regulation as is applicable to commercial enterprises
generally.  Neither the Company nor any of the Subsidiaries has
received any notice of any violation of or noncompliance with, any federal,
state, local or foreign laws, ordinances, regulations and orders (including,
without limitation, those relating to environmental protection, occupational
safety and health, federal securities laws, equal employment opportunity,
consumer protection, credit reporting, "truth-in-lending", and warranties and
trade practices) applicable to its business or to the business of any
Subsidiary, the violation of, or noncompliance with, which would have a
materially adverse effect on either the Company's business or operations, or
that of any Subsidiary, and the Company knows of no facts or set of
circumstances which would give rise to such a notice.

    

    2.10.        Insurance.  The
Company has in full force and effect fire and casualty insurance policies, with
extended coverage, sufficient in amount (subject to reasonable deductibles) to
allow it to replace any of its properties that might be damaged or destroyed,
and the Company has insurance against other hazards, risks, and liabilities to
persons and property to the extent and in the manner customary for companies in
similar businesses similarly situated.

    

    3.            
Representations and
Warranties of the Investors.  Each of the Investors, severally
and not jointly, hereby represents and warrants that:

    

    3.1           Authorization.  The
Transaction Documents constitute valid and legally binding obligations of the
Investor enforceable in accordance with their terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws
of general application affecting enforcement of creditors’ rights generally and
(ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.

    

    3.2           Purchase Entirely for Own
Account.  The Securities to be purchased by the Investor will
be acquired for investment for the Investor’s own account and not with a view to
the resale or distribution of any part thereof, and such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same.  Such Investor does not have any contract, undertaking,
agreement, or arrangement with any person to sell, transfer, or grant
participation to any person with respect to any of the
Securities.  Investor represents that it has full power and authority
to enter into this Agreement.

    

    3.3           Disclosure of
Information.  The Investor acknowledges that it has received
all the information that it has requested relating to the Company and the
purchase of the Notes and the Warrants.  The Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the Notes
and the Warrants.  The foregoing, however, does not limit or modify
the representations and warranties of the Company in Section 2 of this
Agreement or the right of the Investor to rely thereon.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    3.4           Investment
Experience.  Investor is an investor in securities of companies
in the development stage and acknowledges that it is able to fend for itself,
can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Securities.  If other than
an individual, Investor also represents it has not been organized for the
purpose of acquiring the Securities.

    

    3.5           Accredited
Investor.  The Investor is an “accredited investor” within the
meaning of Rule 501 of Regulation D of the Securities and Exchange
Commission (the “SEC”), as presently in effect as more particularly specified in
the Accredited Investor Certification and Investor Profile that the Investor is
delivering to the Company prior to the Closing.

    

    3.6           Restricted
Securities.  Investor understands that the Notes and the
Warrants (and the equity securities issuable upon conversion of the Notes and
Common Stock issuable upon exercise of the Warrant) that it is purchasing are
characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering, and that under such laws and applicable regulations
such securities may be resold without registration under the Act, only in
certain limited circumstances.  In this connection, the Investor
represents that it is familiar with SEC Rule 144, as presently in effect,
and understands the resale limitations imposed thereby and by the
Act.

    

    3.7           High Risk and Speculative
Investment.  Investor recognizes that the purchase of
the Notes involves a high degree of risk including, but not limited to, the
following: (a) the Company requires funds in addition to the proceeds to be
derived from the sale of the Notes; (b) an investment in the Company is highly
speculative, and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Notes; (c) the
Subscriber may not be able to liquidate its investment; (d) transferability of
the Notes and the Warrants is extremely limited; (e) in the event of a
disposition, the Investor could sustain the loss of its entire investment; (f)
the Company has not paid any dividends since its inception and does not
anticipate paying any dividends; (g) the Company may issue additional securities
in the future which have rights and preferences that are senior to those of the
Notes, Warrants and the Common Stock; and (h) that the Common Stock may not
successfully become actively traded.  Investor has reviewed the Risk
Factors which are set forth in Schedule 3.7 hereto.

     

    3.8           Use of
Proceeds.  Investor acknowledges and understands that the
proceeds from the sale of the Notes are expected to be used by the Company in
the manner set forth on Schedule 3.8 hereto.

    

    3.9           Fees.  No
Investor will have, as a result of the transactions contemplated by the
Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or any other Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of such Investor.

    

    3.10         Legends.  It
is understood that the certificates evidencing the Notes and the Warrants (and
the equity securities issuable upon conversion and exercise thereof,
respectively) may bear one or all of the following legends:

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE SUBJECT TO
      RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS
      CERTIFICATE.  THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD,
      TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, REASONABLY
      ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT THE PROPOSED
      SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION
      UNDER THE ACT.”

            

    

    

    4.           Conditions of the Investors’
Obligations at Closing.  The obligations of the Investors under
subsection 1.1(a) of this Agreement are subject to the fulfillment on or
before the Closing of each of the following conditions, the waiver of which
shall not be effective against any Investor who does not consent
thereto:

    

    4.1         Representations and
Warranties.  The representations and warranties of the Company
contained in Section 2 hereof shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the date of such Closing.

    

    4.2         Performance.  The
Company shall have performed and complied with all agreements, obligations, and
conditions contained in this Agreement that are required to be performed or
complied with by it on or before the Closing.

    

    4.3         Proceedings and
Documents.  All corporate and other proceedings in connection
with the transactions contemplated at the Closing and all documents incident
thereto shall be reasonably satisfactory in form and substance to the Finder and
counsel to the Finder, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.

    

    4.4         Delivery of Notes and
Warrants.  The Company shall have
delivered the Notes and the Warrants to the Investors, as specified in
Section 1.

    

    5.           Conditions of the Company’s
Obligations at Closing.  The obligations of the Company to the
Investors under this Agreement are subject to the fulfillment on or before any
Closing of each of the following conditions by the Investors:

    

    5.1         Representations and
Warranties.  The representations and warranties of the
Investors contained in Section 3 shall be true on and as of such Closing with
the same effect as though such representations and warranties had been made on
and as of such Closing.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    5.2         Payment of Purchase
Price.  The Investors shall have delivered the purchase price
specified in Section 1.2.

    

    6.           Indemnification.   The
Investors, severally and not jointly, agree to indemnify and hold harmless the
Company, the Finder, and their respective officers, directors, employees,
agents, control persons and affiliates from and against all losses, liabilities,
claims, damages, costs, fees and expenses whatsoever (including, but not limited
to, any and all expenses incurred in investigating, preparing or defending
against any litigation commenced or threatened) based upon or arising out of any
actual or alleged false acknowledgment, representation or warranty, or
misrepresentation or omission to state a material fact, or breach by the
Investor of any covenant or agreement made by the Investor herein or in any
other document delivered in connection with this Agreement.

    

    7.           Miscellaneous.

    

    7.1         Survival of
Warranties.  All of the representations and warranties made
herein shall survive the execution and delivery of this Agreement for a period
of one year.  The Investors are entitled to rely, and the parties
hereby acknowledge that the Investors have so relied, upon the truth, accuracy
and completeness of each of the representations and warranties of the Company
contained herein, irrespective of any independent investigation made by
Investors.  The Company is entitled to rely, and the parties hereby
acknowledge that the Company has so relied, upon the truth, accuracy and
completeness of each of the representations and warranties of the Investors
contained herein, irrespective of any independent investigation made by the
Company.

    

    7.2         Successors and
Assigns.  Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties (including transferees of
any Notes sold hereunder or any Common Stock issued upon conversion
thereof).  Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this
Agreement.

    

    7.3         Governing
Law.  This Agreement shall be governed by and construed under
the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York. The parties
hereto (1) agree that any legal suit, action or proceeding arising out of or
relating to this Agreement shall be instituted exclusively in New York State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, (2) waives any objection which the Company
may have now or hereafter to the venue of any such suit, action or proceeding,
and (3) irrevocably consents to the jurisdiction of the New York State Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding.  The
Company further agrees to accept and acknowledge service of any and all process
which may be served in any such suit, action or proceeding in the New York State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York and agrees that service of process upon the
Company mailed by certified mail to the Company's address shall be deemed in
every respect effective service of process upon the Company, in any such suit,
action or proceeding.  THE PARTIES HERETO AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED
HEREBY.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

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

    

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

    

    7.6          Notices.  Unless
otherwise provided, any notice, authorization, request or demand required or
permitted to be given under this Agreement shall be given in writing and shall
be deemed effectively given upon personal delivery to the party to be notified
or three (3) days following deposit with the United States Post Office, by
registered or certified mail, postage prepaid, or two days after it is sent by
an overnight delivery service, or when sent by facsimile with machine
confirmation of delivery addressed as follows:

    

    
      
        
          
            	
                    If
      to the Investors to:

                  
	 
      
	
                    The
      addresses sent forth on the signature pages attached.

                  
	 
      
	
                    If
      to Company, to:

                  
	 
      
	
                    InVivo
      Therapeutics Corporation

                  
	
                    One
      Broadway, 14th Floor

                  
	
                    Cambridge,
      Ma. 02142

                  
	
                    Attention:
      Frank Reynolds, Chief Executive Officer

                  
	
                    Fax:  (617)
      401-3769

                  
	 
      
	
                    With
      a copy to:

                  
	 
      
	
                    Meister
      Seelig & Fein LLP

                  
	
                    Two
      Grand Central Tower

                  
	
                    140
      East 45th
      Street

                  
	
                    New
      York, NY 10017

                  
	
                    Attention:
      Mitchell L. Lampert, Esq.

                  
	
                    Fax:  (212)
      655-3535.

                  

          

        

      

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    Any party
may change its address for such communications by giving notice thereof to the
other parties in conformity with this Section.

    

    7.7           Compensation of
Finder.  The Investor acknowledges that it is aware that the
Finder will receive from the Company, in consideration of its services as Finder
in respect of the transactions contemplated hereby, five-year warrants to
purchase such number of equity securities of the Company as is equal to 20% of
the equity securities into which the Warrants are exercisable, with an exercise
price equal to the exercise price of the Warrants issued to Investors in this
Offering. In addition, upon conversion of the Notes in a Qualified Next Round
Financing (as such term is defined in the Notes), the principal and interest due
under this Note shall be deemed to be an investment in the such financing and
the Finder shall be entitled to receive compensation and expense allowance with
respect to the Notes in the same amount and kind as a Placement Agent is
receiving for funds raised in such financing.

    

    7.8           Transaction Expenses;
Enforcement of Transaction Documents.  The Company and each
Investor shall pay their respective costs and expenses incurred with respect to
the negotiation, execution, delivery and performance of this
Agreement.   If any action at law or in equity is necessary to
enforce or interpret the terms of the Transaction Documents, the prevailing
party shall be entitled to reasonable attorney’s fees, costs, and necessary
disbursements in addition to any other relief to which such party may be
entitled.

    

    7.9           Amendments and
Waivers.  This Agreement may be amended or terminated and the
observance of any term of this Agreement may be waived with respect to all
parties to this Agreement (either generally or in a particular instance and
either retroactively or prospectively), with the written consent of the Company
and the Note Requisite Holders (as defined below).  Notwithstanding
the foregoing, (a) this Agreement may not be amended or terminated and the
observance of any term hereunder may not be waived with respect to any Investor
without the written consent of such Investor unless such amendment, termination
or waiver applies to all Investors in the same fashion and (b) the Schedule of
Investors hereto may be amended by the Company from time to time to add
information regarding additional Investors participating in Subsequent Closings
without the consent of the other parties hereto.  The Company shall
give prompt written notice of any amendment or termination hereof or waiver
hereunder to any party hereto that did not consent in writing to such amendment,
termination or waiver.  Any amendment, termination or waiver affected
in accordance with this Section 7.9 shall be binding on all parties hereto, even
if they do not execute such consent.  No waivers of or exceptions to
any term, condition or provision of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.  Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities are convertible), each future
holder of all such securities, and the Company. For purposes hereof, “Note
Requisite Holder(s)” shall mean holders of Notes representing at least 66% of
the aggregate amount of principal and accrued interest then outstanding under
such Notes.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    7.10           Severability.  If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

    

    7.11           Entire
Agreement.  This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations, or
covenants except as specifically set forth herein or therein.

    

    7.12           Independent Nature of
Investors.  The obligations of each Investor under this
Agreement or other transaction document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any
way for the performance of the obligations of any other Investor under this
Agreement or any other transaction document.  Each Investor shall be
responsible only for its own representations, warranties, agreements and
covenants hereunder.  The decision of each Investor to purchase Notes
and Warrants pursuant to this Agreement has been made by such Investor
independently of any other Investor and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company which may have been made or given by any
other Investor or by any agent or employee of any other Investor, and no
Investor or any of its agents or employees shall have any liability to any other
Investor (or any other person) relating to or arising from any such information,
materials, statements or opinions.  Nothing contained herein or in any
other transaction document, and no action taken by any Investor pursuant hereto
or thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by this
Agreement.  Except as otherwise provided in this Agreement or any
other transaction document, each Investor shall be entitled to independently
protect and enforce its rights arising out of this Agreement or out of the other
transaction documents, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such
purpose.  Each Investor represents and warrants that it has been
represented by its own separate legal counsel in connection with the
transactions contemplated hereby and acknowledges and understands that Meister
Seelig & Fein LLP has served as counsel to the Company only, and the
Investors cannot rely upon Meister Seelig & Fein LLP in any manner with
regard to their decision to participate in the transactions contemplated
hereby.

    

    [Signatures
on page following]

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.

    

    Company:

    

    
      
        
          	
                  INVIVO
      THERAPEUTICS CORPORATION

                	 
      
	 
      	 
      
	
                  By:

                	 
      	 
      
	 
      	
                  Name:
      Frank Reynolds

                	 
      
	 
      	
                  Title:  
      Chief Executive Officer

                	 
      

        

      

    

     

    Investors:

     

    [TO
SIGN AND COMPLETE SIGNATURE PAGE ANNEXED HERETO]

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    By execution and delivery of this
signature page, you are agreeing to become an Investor, as defined in that
certain Securities Purchase Agreement (the “Purchase Agreement”) by and among
InVivo Therapeutics Corp., a Delaware corporation (the “Company”) and the
Investors (as defined in the Purchase Agreement), dated as of August __, 2010,
and acknowledges having read the representations in the Purchase Agreement
section entitled “Representations and Warranties of the Investors,” and hereby
represents that the statements contained therein are complete and accurate with
respect to the undersigned as an Investor.  

    

    
      	
              INVESTOR:

            	 
      	 
      
	 
      	 
      	 
      
	
              Print
      Name: ___________________________

            	 
      	
              Purchase
      Price: $______________________

            
	 
      	 
      	 
      
	
              Signature:_____________________________

            	 
      	
              Date:
      _____________________

            
	 
      	 
      	 
      
	
              Title
      (if entity)__________________________

            	 
      	
              Contact
      Person: _________________________

            
	 
      	 
      	 
      
	
              _____________________________________

            	 
      	
              Telephone
      No. ________________________

            
	
              Street
      Address

            	 
      	 
      
	 
      	 
      	
              E-mail
      Address: _______________________

            
	
              _____________________________________

            	 
      	 
      
	
              Street
      Address – 2nd
      line

            	 
      	
              Soc
      Sec # or Fed ID #___________________

            
	 
      	 
      	 
      
	
              _____________________________________

            	 
      	 
      
	
              City,
      State, Zip

            	 
      	 
      

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    SCHEDULE
OF INVESTORS

    

    [TO BE
COMPLETED BY COMPANY AT EACH CLOSING]

    

    
      
        
          
            
              
                
                  
                    
                      	
                              Name

                            	 	
                              Purchase Price

                            	 	
                              Note Amount

                            	 	
                              Number of

                              Warrants

                            
	 
      	 	 
      	 	 
      	 	 
      
	 
      	 	 
      	 	 
      	 	 
      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    SCHEDULE
3.7

    

    RISK
FACTORS

     

    An
investment in the Notes and Warrants is speculative and illiquid and involves a
high degree of risk, including the risk of a loss of your entire
investment.  You should carefully consider the risks and uncertainties
described below, the risks set forth in our filings with the SEC and the other
information contained in this Agreement before purchasing any Notes and
Warrants.  The risks set forth below are not the only ones facing our
Company.  Additional risks and uncertainties may exist that could also
adversely affect our business, operations and prospects.  If any of
the following risks actually materialize, our business, financial condition,
prospects and/or operations could suffer.  In such event, the value of
the securities you are purchasing could decline, and you could lose all or a
substantial portion of the money that you invest.  No inference should
be drawn as to the magnitude of any particular risk from its position in the
list of risk factors.   As used in these Risk Factors, “we” and
“our” refers to the Company, InVivo Therapeutics Corp., a Delaware
corporation.

     

    RISKS
RELATED TO THE COMPANY AND ITS BUSINESS

    

    Our products
represent new and rapidly evolving technologies

    

    The
Company’s proprietary spinal cord injury treatment technology depends on new,
rapidly evolving technologies and on the marketability and profitability of
InVivo products. Commercialization of the Company’s spinal cord injury treatment
technology could fail for a variety of reasons, both within and outside of its
control.

    

    We
have a history of losses and a deficit net worth

    

    The
Company’s expenses have exceeded its revenues since its formation. It can be
expected that the Company will continue to incur significant operating expenses
and may continue to experience losses in the foreseeable future. As a result,
the Company cannot predict when, if ever, it might achieve profitability and
cannot be certain that it will be able to sustain profitability, if achieved. In
addition, as at June 30, 2010, we had a deficit net worth that may hinder our
ability to receive financing in the future.

    

    We
have convertible notes outstanding

    

    The
Company has sold $4,181,000 of convertible notes since its inception. The
Company is in the process of seeking conversion of such notes to common stock
and has contacted all of the note holders regarding conversion. As of the date
of this Agreement, holders of $1,236,000 have executed and returned conversion
agreements to the Company, thereby converting such debt obligations to 107,420
shares of common stock. The Company expects most if not all of its remaining
note holders to voluntarily convert their notes to shares of the Company’s
common stock, but there can be no assurance that the Company is correct in its
assessment. Notes which are not voluntarily
converted by the remaining note holders will automatically convert into shares of the Company’s common stock on
or before May 31, 2011 and the Company has no obligation to repay
any principal amounts of such notes but may either pay accrued interest on the
notes in cash or convert such amount into shares of its common stock.   If all of the
notes are converted, the Company will issue an additional 264,215 shares to the
note holders in exchange for such notes.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    We
will be subject to competition from substantial competitors

    

    The
biotechnology industry is subject to intense competition and rapid and
significant technological change. The Company has many potential competitors,
including major drug companies, specialized biotechnology firms, academic
institutions, government agencies and private and public research institutions.
Many of these competitors have significantly greater financial and technical
resources, experience and expertise in research and development, preclinical
testing, designing and implementing clinical trials; regulatory processes and
approvals; production and manufacturing; and sales and marketing of approved
products.

    Principal
competitive factors in the Company’s industry include the quality and breadth of
an organization’s technology; management of the organization and the execution
of the organization’s strategy; the skill and experience of an organization’s
employees and its ability to recruit and retain skilled and experienced
employees; an organization’s intellectual property portfolio; the range of
capabilities, from target identification and validation to drug and device
discovery and development to manufacturing and marketing; and the availability
of substantial capital resources to fund discovery, development and
commercialization activities.

    

    Large and
established companies compete in the biotech market. In particular, these
companies have greater experience and expertise in securing government contracts
and grants to support their research and development efforts, conducting testing
and clinical trials, obtaining regulatory approvals to market products,
manufacturing such products on a broad scale and marketing approved
products.

    

    Smaller
or early-stage companies and research institutions may also prove to be
significant competitors, particularly through collaborative arrangements with
large and established biotech or other companies. The Company will also face
competition from these parties in recruiting and retaining qualified scientific
and management personnel, establishing clinical trial sites and registering
subjects for clinical trials.

    

    In order
to effectively compete, the Company will have to make substantial investments in
development, testing, manufacturing and sales and marketing or partner with one
or more established companies. There is no assurance that the Company will be
successful in gaining significant market share for any of its products. The
Company’s technologies and products also may be rendered obsolete or
noncompetitive as a result of products introduced by its
competitors.

      

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    The
Company may have product liability exposure from the sale of its
products.

    

    The
Company will have exposure to claims for product liability. Products liability
coverage is expensive and sometimes difficult to obtain. The Company may not be
able to obtain or maintain insurance at a reasonable cost. There can be no
assurance that existing insurance coverage will extend to other products in the
future. Any product liability insurance coverage may not be sufficient to
satisfy all liabilities resulting from product liability claims. A successful
claim may prevent the Company from obtaining adequate product liability
insurance in the future on commercially desirable items, if at all. Even if a
claim is not successful, defending such a claim would be time-consuming and
expensive, may damage the Company’s reputation in the marketplace, and would
likely divert management’s attention.

    

    The
near and long-term viability of the Company’s products will depend on its
ability to successfully establish strategic relationships.

    

    The near
and long-term viability of the Company’s product will depend in part on its
ability to successfully establish new strategic collaborations with
biotechnology companies, hospitals, insurance companies and government agencies.
Establishing strategic collaborations is difficult and time-consuming. Potential
collaborators may reject collaborations based upon their assessment of the
Company’s financial, regulatory or intellectual property position. If the
Company fails to establish a sufficient number of collaborations on acceptable
terms, it may not be able to commercialize its products or generate sufficient
revenue to fund further research and development efforts.

    

    Even if
the Company establishes new collaborations, these relationships may never result
in the successful development or commercialization of any product candidates for
several reasons both within and outside of the Company’s control.

    

    Before
the Company could begin commercial manufacturing of any of its product
candidates, the Company and its collaborators must pass a pre-approval
inspection before FDA approval and comply with the FDA’s current Good
Manufacturing Practices. If the Company’s collaborators fail to comply with
these requirements, its product candidates would not be approved. If the
Company’s collaborators fail to comply with these requirements after approval,
the Company would be subject to possible regulatory action and may be limited in
the jurisdictions in which it is permitted to sell products.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    The
Company has been and will continue to be dependent on third-party research
organizations to conduct some of its laboratory testing, animal and human
studies.

    

    The
Company has been and will continue to be dependent on third-party research
organizations to conduct some of its laboratory testing, animal and human
studies. If the Company is unable to obtain any necessary testing services on
acceptable terms, it may not complete its product development efforts in a
timely manner. If the Company relies on third parties for laboratory testing
and/or animal and human studies, it may lose some control over these activities
and become too dependent upon these parties. These third parties may not
complete testing activities on schedule or when the Company requests. The
Company may not be able to secure and maintain suitable research organizations
to conduct its laboratory testing and/or animal and human studies. The Company
is responsible for confirming that each of its clinical trials is conducted in
accordance with its general plan and protocol. Moreover, the FDA and foreign
regulatory agencies require the Company to comply with regulations and
standards, commonly referred to as good clinical practices, for conducting,
recording and reporting the results of clinical trials to assure that data and
reported results are credible and accurate and that the trial participants are
adequately protected. The Company’s reliance on third parties does not relieve
it of these responsibilities and requirements. If these third parties do not
successfully carry out their contractual duties or regulatory obligations or
meet expected deadlines, if the third parties need to be replaced or if the
quality or accuracy of the data they obtain is compromised due to the failure to
adhere to the Company’s clinical protocols or regulatory requirements or for
other reasons, the Company pre-clinical development activities or clinical
trials may be extended, delayed, suspended or terminated, and the Company may
not be able to obtain regulatory approval for its product
candidates.

    

    The
Company will access to a constant, steady, reliable supply of
products.

    

    Completion
of InVivo’s clinical trials and commercialization of InVivo’s products will
require access to, or development of, facilities to manufacture a sufficient
supply of InVivo’s product or other product candidates. If InVivo is unable to
manufacture its products in commercial quantities, then it will need to rely on
third parties. These third-party manufacturers must also receive FDA approval
before they can produce clinical material or commercial products. InVivo’s
product or other of InVivo’s products may be in competition with other products
for access to these facilities and may be subject to delays in manufacture if
third parties give other products greater priority. In addition, InVivo may not
be able to enter into any necessary third-party manufacturing arrangements on
acceptable terms, or on a timely basis. In addition, InVivo would have to enter
into a technical transfer agreement and share its know-how with the third party
manufacturer.

    

    The
Company may rely on third-party suppliers for some its materials.

    

    The
Company may rely on third-party suppliers and vendors for some of the materials
used in the manufacture of InVivo’s product or other of its product candidates.
Any significant problem experienced by one of InVivo’s suppliers could result in
a delay or interruption in the supply of materials to InVivo until such supplier
resolves the problem or an alternative source of supply is located. Any delay or
interruption could negatively affect InVivo’s operations.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    The
Company’s Products and approach to the planned treatment of spinal cord injury
(“SCI”) is new and unproven.

     

    The
Company’s planned products have not been utilized in the past for SCI treatment.
As is typical in the case of a new and rapidly evolving technology or medical
treatment, demand and market acceptance for recently introduced products and
services are subject to a high level of uncertainty and risk.  In
addition, physicians and hospitals will need to establish training and
procedures to utilize and implement the Company’s products. There can be no
assurance that these parties will adopt the Company’s products or that they
develop sufficient training and procedures to utilize the Company’s
products.

    

    The Company’s
ability to sell its products will depend to a large extent upon reimbursement
from health care insurance companies.

    

    The
Company’s successes may depend, in part, on the extent to which reimbursement
for the costs of therapeutic products and related treatments will be available
from third-party payers such as government health administration authorities,
private health insurers, managed care programs, and other organizations. Over
the past decade, the cost of health care has risen significantly, and there have
been numerous proposals by legislators, regulators, and third-party health care
payers to curb these costs. Some of these proposals have involved limitations on
the amount of reimbursement for certain products. Similar federal or state
health care legislation may be adopted in the future and any products that the
Company or its collaborators seek to commercialize may not be considered
cost-effective. Adequate third-party insurance coverage may not be available for
the Company to establish and maintain price levels that are sufficient for
realization of an appropriate return on investment in product
development.

    

    The
manufacture and sale of the Company’s products requires regulatory approval from
the FDA.

    

    The
development, manufacture and marketing of the Company’s products are subject to
government regulation in the United States and other countries. In the United
States and most foreign countries, the Company must complete rigorous
preclinical testing and extensive human clinical trials that demonstrate the
safety and efficacy of a product in order to apply for regulatory approval to
market the product.

    

    The steps
required by the FDA before InVivo’s proposed products may be marketed in the
United States include performance of preclinical (animal and laboratory) tests;
submissions to the FDA of an IDE (Investigational Device Exemption) which must
become effective before human clinical trials may commence; performance of
adequate and well-controlled human clinical trials to establish the safety and
efficacy of the product in the intended target population; performance of a
consistent and reproducible manufacturing process intended for commercial use;
Pre-Market Approval Application (“PMA”); and FDA approval of the PMA before any
commercial sale or shipment of the product.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    The
processes are expensive and can take many years to complete, and the Company may
not be able to demonstrate the safety and efficacy of its products to the
satisfaction of such regulatory authorities. The start of clinical trials can be
delayed or take longer than anticipated for many and varied reasons, many of
which are outside of the Company’s control. Safety concerns may emerge that
could lengthen the ongoing trials or require additional trials to be conducted.
Regulatory authorities may also require additional testing, and the Company may
be required to demonstrate that its proposed products represent an improved form
of treatment over existing therapies, which the Company may be unable to do
without conducting further clinical studies. Moreover, if the FDA grants
regulatory approval of a product, the approval may be limited to specific
indications or limited with respect to its distribution. Expanded or additional
indications for approved devices or drugs may not be approved, which could limit
the Company revenues. Foreign regulatory authorities may apply similar
limitations or may refuse to grant any approval. Consequently, even if the
Company believes that preclinical and clinical data are sufficient to support
regulatory approval for its product candidates, the FDA and foreign regulatory
authorities may not ultimately grant approval for commercial sale in any
jurisdiction. If the Company’s products are not approved, its ability to
generate revenues will be limited and its business will be adversely
affected.

    

    Even if a
product gains regulatory approval, such approval is likely to limit the
indicated uses for which it may be marketed, and the product and the
manufacturer of the product will be subject to continuing regulatory review,
including adverse event reporting requirements and the FDA’s general prohibition
against promoting products for unapproved uses. Failure to comply with any
post-approval requirements can, among other things, result in warning letters,
product seizures, recalls, substantial fines, injunctions, suspensions or
revocations of marketing licenses, operating restrictions and criminal
prosecutions. Any of these enforcement actions, any unanticipated changes in
existing regulatory requirements or the adoption of new requirements, or any
safety issues that arise with any approved products, could adversely affect the
Company’s ability to market products and generate revenues and thus adversely
affect its ability to continue InVivo’s business.

    

    The
Company also may be restricted or prohibited from marketing or manufacturing a
product, even after obtaining product approval, if previously unknown problems
with the product or its manufacture are subsequently discovered and the Company
cannot provide assurance that newly discovered or developed safety issues will
not arise following any regulatory approval. With the use of any treatment by a
wide patient population, serious adverse events may occur from time to time that
initially do not appear to relate to the treatment itself, and only if the
specific event occurs with some regularity over a period of time does the
treatment become suspect as having a causal relationship to the adverse event.
Any safety issues could cause the Company to suspend or cease marketing of its
approved products, possibly subject it to substantial liabilities, and adversely
affect its ability to generate revenues.

      

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    The manufacture
and sale of the Company’s products in foreign jurisdictions will require
regulatory approval from
International Regulatory Agencies.

    

    The
Company intends to also have its product candidates marketed outside the United
States. In order to market products in the European Union and many other
non-U.S. jurisdictions, the Company must obtain separate regulatory approvals
and comply with numerous and varying regulatory requirements. The Company may
not obtain foreign regulatory approvals on a timely basis, if at all. Approval
by the FDA does not ensure approval by regulatory agencies in other foreign
countries or by the FDA. However, a failure or delay in obtaining regulatory
approval in one jurisdiction may have a negative effect on the regulatory
approval process in other jurisdictions, including approval by the FDA. The
failure to obtain regulatory approval in foreign jurisdictions could harm the
Company’s business.

    

    The Company is
subject to various environmental,
health and safety laws.

    

    The
Company is subject to various laws and regulations relating to safe working
conditions, laboratory and manufacturing practices, the experimental use of
animals, emissions and wastewater discharges, and the use and disposal of
hazardous or potentially hazardous substances used in connection with its
research, including infectious disease agents. The Company also cannot
accurately predict the extent of regulations that might result from any future
legislative or administrative action. Any of these laws or regulations could
cause the Company to incur additional expense or restrict its operations.
Compliance with environmental laws and regulations may be expensive, and current
or future environmental regulations may impair the Company’s research,
development or production efforts.

    

    The
Company will depend on its patent portfolio, its licensed technology and other
trade secrets in the conduct of its business and must ensure that it does not
violate the patent or intellectual rights of others.

     

    The
Company’s success in large part depends on its ability to maintain the
proprietary nature of its licensed technology and other trade secrets. To do so,
the Company and its licensors must prosecute and maintain existing patents,
obtain new patents and pursue trade secret and other intellectual property
protection. The Company also must operate without infringing the proprietary
rights of third parties or allowing third parties infringe its rights. The
Company’s research, development and commercialization activities, including any
product candidates or products resulting from these activities, may infringe or
be claimed to infringe patents owned by third parties and to which the Company
does not hold licenses or other rights.  There may be rights that the
Company is not aware of, including applications that have been filed but not
published that, when issued, could be asserted against the Company. These third
parties could bring claims against the Company that would cause it to incur
substantial expenses and, if successful, could cause the Company to pay
substantial damages. Further, if a patent infringement suit were brought against
the Company, it could be forced to stop or delay research, development,
manufacturing or sales of the product or biologic treatment candidate that is
the subject of the suit.

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    In
addition, competitors may infringe the Company’s patents or the patents of its
collaborators or licensors. As a result, the Company may be required to file
infringement claims to counter infringement for unauthorized use. This can be
expensive and time-consuming. In addition, in an infringement proceeding, a
court may decide that a patent owned by the Company is not valid or is
unenforceable, or may refuse to stop the other party from using the technology
at issue on the grounds that the Company’s patents do not cover its technology.
An adverse determination of any litigation or defense proceedings could put one
or more of the Company’s patents at risk of being invalidated or interpreted
narrowly and could put the Company’s patent applications at the risk of not
issuing.

    

    Furthermore,
because of the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of the Company‘s
confidential information could be compromised by disclosure during this type of
litigation.

    

    RISKS
RELATED TO OUR COMMON STOCK AND THE OFFERING

    

    The
Notes will not be registered for resale, and there is no assurance that the
Notes will convert into our equity securities in the future or that any such
equity securities will be subject to unrestricted sale to the public upon
issuance or at a later date.

    

    The Notes
will not be registered for resale and are thus not saleable to the
public.   There is no assurance that the Notes will be converted
into any of our equity securities in the future.  Even if the Notes do
convert into any such equity securities, the equity securities will be
restricted as to resale under the Securities Act of 1933, as amended (the
“Securities Act”).  We cannot assure that any of these equity
securities will be publicly saleable upon issuance or at a later date, whether
pursuant to a valid exemption from the registration requirements under the
Securities Act or pursuant to a valid registration statement.  The
inability to publicly resell the Notes, and possibly the equity securities, upon
conversion, limits or prevents the potential the resell the Notes or the equity
securities, which may be issuable upon conversion of the Notes.

    

    The
shares of Common Stock underlying the Warrants will not be registered and cannot
be sold for at least twelve months after the Warrants are
purchased.

    

    The
ability to sell such shares of Common Stock will depend upon the availability of
an exemption to the requirements of Section 5 of the Securities
Act.  The most commonly utilized exemption is Rule
144.  Under Rule 144, since the warrants contain a cashless exercise
provision, the shares of Common Stock issuable upon exercise of the Warrants may
become eligible for resale 12 months after the date in which the Warrants are
issued, so long as the Company fulfills its current reporting requirements under
the Exchange Act.  After a year, the current information requirement
no longer applies.  Any purchasers which are affiliates of the Company
will be subject to certain other requirements such as volume
limitations.

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    The Notes and Warrants is being
offered on “reasonable efforts, no minimum” basis.

    

    The Notes and Warrants are being offered on a
“reasonable efforts, no minimum” basis.  In this type of offering
where there is no minimum amount necessary to consummate the Offering, there is
no assurance that the maximum offering amount of $300,000 will be
sold.  Accordingly, persons purchasing Notes and Warrants do so
without any assurance that sufficient funds can be raised to satisfy the “Use of
Proceeds” described herein and to otherwise allow the Company to effectuate its
business plan. The failure to raise the Offering Amount will also increase the
need of the Company to obtain additional financing sooner that the approximate
four month estimate that the anticipated proceeds would last in the event the
full $300,000 of securities offered herein are sold.  Such additional
financing may or may not be available at such time on terms satisfactory to us,
if at all.

    

    We
are a controlled company and our majority shareholder may take actions adverse
to the interests of other shareholders

    

    As of
July 30, 2010, Frank Reynolds, our Chief Executive Officer, Robert S. Langer,
Director and Yang D. Teng, one of our founders, beneficially owned approximately
80% of our issued and outstanding common stock. Due to this stock ownership, we
are controlled by these persons.  Due to this voting control of our
common stock, these persons have substantial control over us and have
substantial power to elect directors and to generally approve all actions
requiring the approval of the holders of our voting stock.

    

     An investment in
the Notes and Warrants is speculative and there can be no assurance of any
return on any such investment.

    

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

     

    We
have broad discretion on how we use any proceeds we receive from this
Offering.

     

    Our
management has broad discretion on how to use and spend any proceeds we receive
from this Offering and may use the proceeds in ways that differ from the
proposed uses set forth in this Agreement.  See Schedule 3.8 to this
Agreement.  Our stockholders may not agree with our decision on how to
use such proceeds.  If we fail to spend the proceeds effectively, our
business and financial condition could be harmed and we may need to seek
additional financing sooner than expected.

      

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    The Notes and Warrants may be
purchased by parties
that are related to the Finder and/or our Company.

    

     The Finder and its
respective officers, directors, employees and related parties, and our officers,
directors, employees and related parties (including current shareholders and
related parties of shareholders) may
purchase Notes and Warrants in this Offering. Because there may be substantial purchases by affiliates
of the Company and the Finder (who receives fees and other compensation in connection
with the Offering), no potential investor should place any reliance on the sale of any amount of
the Notes and Warrants as an indication of the merits of the
Offering.  Each investor must make his own investment decision as to
the merits of the Offering.

    

    The purchase price of the Notes and
Warrants and the
Warrant exercise price were determined by the Company and the Finder and may not be indicative of the
Company’s actual value or the fair market
value of the Notes and Warrants.

     

    The
purchase price of the Notes and Warrants were determined following negotiations
with the Finder which took into account, among other things, previous prices of
our Common Stock, our business and growth plans, and other factors that we
deemed relevant.  The purchase price of the Notes and Warrants is not
necessarily related to the asset value, net worth or any other established
criteria of value of the Company.

     

    The Offering has not been reviewed
or approved by regulatory agencies.

    

    The sale
of the Notes and Warrants offered hereby has not been approved or disapproved by
the SEC or any state regulatory agencies, and no regulatory body has passed upon
or endorsed the accuracy, adequacy, or completeness of the information in this
Agreement.  Accordingly, prospective investors must rely on their own
examination of the Agreement and the SEC Reports, including, without limitation,
the merits of, and risks involved in, acquiring the Notes and
Warrants.

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    Schedule
3.8

    

    Use of
Proceeds

    

    The net
proceeds of this Offering, estimated to be $290,000, after deducting expenses of
the Company of up to $10,000, will be used for working capital.

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

    

    NOTE

    

    [ATTACHED
SEPARATELY]

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

    

    WARRANT

    

    [ATTACHED
SEPARATELY]

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    EXHIBIT
C

    

    SCHEDULE
OF EXCEPTIONS

    

    None

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