Document:

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of January 30, 2014, is by and among Arch Therapeutics, Inc.,
a Nevada corporation (the “Company”), and each of the investors listed on the Schedule of Buyers attached
hereto (individually, a “Buyer” and collectively, the “Buyers”).

 

RECITALS

 

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

 

B.            Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) the aggregate
number of shares of Common Stock (as defined below) set forth opposite such Buyer’s name in column (3) on the Schedule of
Buyers (which aggregate amount for all Buyers shall be 11,400,000 shares of Common Stock and shall collectively be referred to
herein as the “Common Shares”), (ii) warrants to initially acquire up to the aggregate number of additional
shares of Common Stock set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers, in the form attached
hereto as Exhibit A (the “Series A Warrants”) (as exercised, collectively, the “Series
A Warrant Shares”), (iii) warrants to initially acquire up to the aggregate number of additional shares of Common
Stock set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers, in the form attached hereto as Exhibit
B (the “Series B Warrants”) (as exercised, collectively, the “Series B Warrant Shares”)
and (iv) warrants to initially acquire up to the aggregate number of additional shares of Common Stock set forth opposite such
Buyer’s name in column (6) on the Schedule of Buyers, in the form attached hereto as Exhibit C (the “Series
C Warrants”) (as exercised, collectively, the “Series C Warrant Shares”), as determined in
accordance with the terms thereof. “Common Stock” means (i) the Company’s shares of common stock,
$0.001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital
resulting from a reclassification of such common stock.

 

C.            At
the Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit
D (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933
Act and the rules and regulations promulgated thereunder, and applicable state securities laws.

 

D.            The
Series A Warrants, the Series B Warrants and the Series C Warrants are collectively referred to herein as the “Warrants.”
The Series A Warrant Shares, the Series B Warrant Shares and the Series C Warrant Shares are collectively referred to herein as
the “Warrant Shares.” The Common Shares, the Warrants and the Warrant Shares are collectively referred to herein
as the “Securities.”

 

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AGREEMENT

 

NOW, THEREFORE,
in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each Buyer hereby agree as follows:

 

1.           PURCHASE
AND SALE OF COMMON SHARES AND WARRANTS.

 

(a)           Common
Shares and Warrants. Subject to the satisfaction (or waiver) of the conditions
set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer, and each Buyer severally, but not jointly,
shall purchase from the Company on the Closing Date (as defined below), the aggregate number of Common Shares, as is set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers, along with (i) Series A Warrants to initially
acquire up to the aggregate number of Series A Warrant Shares as is set forth opposite such Buyer’s name in column (4) on
the Schedule of Buyers, (ii) Series B Warrants to initially acquire up to the aggregate number of Series B Warrant Shares as is
set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers and (iii) Series C Warrants to initially acquire
up to the aggregate number of Series C Warrant Shares as is set forth opposite such Buyer’s name in column (6) on the Schedule
of Buyers.

 

(b)           Closing.
The closing (the “Closing”) of the purchase of the Common Shares and the Warrants by the Buyers shall occur
at the offices of Greenberg Traurig, LLP, 77 W. Wacker Drive, Suite 3100, Chicago, Illinois 60601. The date and time of the Closing
(the “Closing Date”) shall be 10:00 a.m., New York time, on the first (1st) Business Day on which
the conditions to the Closing set forth in Sections 6 and 7 below are satisfied or waived (or such later date as is mutually agreed
to by the Company and each Buyer). As used herein “Business Day” means any day other than a Saturday, Sunday
or other day on which commercial banks in New York, New York are authorized or required by law to remain closed.

 

(c)           Purchase
Price. The aggregate purchase price for the Common Shares and the Warrants to be
purchased by each Buyer (the “Purchase Price”) shall be the amount set forth opposite such Buyer’s name
in column (7) on the Schedule of Buyers.

 

(d)           Payment
of Purchase Price; Deliveries. On the Closing Date, (i) each Buyer shall pay its respective Purchase Price to the Company
for the Common Shares and the Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Company’s written wire instructions (less, in the case of Cranshire (as defined below), the
amounts withheld pursuant to Section 4(g)) and (ii) the Company shall deliver to each Buyer (A) one or more stock certificates,
free and clear of all restrictive and other legends (except as expressly provided in Section 5(c) hereof), evidencing the number
of Common Shares that such Buyer is purchasing as is set forth opposite such Buyer’s name in column (3) on the Schedule
of Buyers, (B) Series A Warrants pursuant to which such Buyer shall have the right to initially acquire up to the aggregate number
of Series A Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers, (C) Series
B Warrants pursuant to which such Buyer shall have the right to initially acquire up to the aggregate number of Series B Warrant
Shares as is set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers and (D) Series C Warrants pursuant
to which such Buyer shall have the right to initially acquire up to the aggregate number of Series C Warrant Shares as is set
forth opposite such Buyer’s name in column (6) on the Schedule of Buyers, in all cases, duly executed on behalf of the Company
and registered in the name of such Buyer or its designee.

 

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2.           BUYER’S
REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally
and not jointly, represents and warrants to the Company with respect to only itself that:

 

(a)           Organization;
Authority. Such Buyer is a natural person or an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization, and has the requisite power, authority and
legal capacity to enter into and to consummate the transactions contemplated by the Transaction Documents (as defined below) to
which it is a party and otherwise to carry out its obligations hereunder and thereunder.

 

(b)           No
Public Sale or Distribution. Such Buyer (i) is acquiring its Common Shares and
Warrants and (ii) upon exercise of its Warrants, will acquire the Warrant Shares issuable upon exercise thereof, in each
case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof
in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however,
by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act. Such Buyer does not presently have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws.

 

(c)           Accredited
Investor Status. Such Buyer is an “accredited investor” as that term
is defined in Rule 501(a) of Regulation D.

 

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

 

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(e)           Information;
Experience. Such Buyer and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer. Such Buyer has had access, and the opportunity, to review the SEC Documents (as defined
below). Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Such Buyer understands
that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. Such
Buyer, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated
the merits and risks of such investment. Such Buyer is able to bear the economic risk of an investment in the Securities and,
at the present time, is able to afford a complete loss of such investment.

 

(f)           No
Governmental Review. Such Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.

 

(g)           Transfer
or Resale. Such Buyer understands and agrees that except as provided in the Registration
Rights Agreement and Section 4(h) hereof: (i) the Securities have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder,
(B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel to such Buyer, in a form
reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance
(which may include customary stockholder representation letters but which shall not include any opinion of counsel from such Buyer)
that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or
a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities
under circumstances in which the seller (or the Person (as defined below) through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the
rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation
to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption
thereunder.

 

(h)           Validity;
Enforcement. If such Buyer is an entity, this Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer, and whether such Buyer is an entity or a natural person, this Agreement
constitutes the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with its terms,
except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

 

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(i)            No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement
and the consummation by such Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational
documents of such Buyer, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which such Buyer is a party or (iii) result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws) applicable to such Buyer, except, in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the ability of such Buyer to perform its obligations hereunder.

 

(j)            Certain
Trading Activities. Such Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding
with such Buyer, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as
defined below) involving the Company’s securities) during the period commencing as of the time that such Buyer was first
contacted by the Company regarding the specific investment in the Company contemplated by this Agreement and ending immediately
prior to the execution of this Agreement by such Buyer. “Short Sales” means all “short sales” as
defined in Rule 200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as amended (the “1934
Act”).

 

3.     
     REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents
and warrants to each of the Buyers that:

 

(a)           Organization
and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly existing and in
good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own
their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to
the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. “Material
Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including
results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary, either individually or taken
as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents or (iii) the authority or ability
of the Company to perform any of its obligations under any of the Transaction Documents. Other than Arch Biosurgery, Inc., a Massachusetts
corporation, the Company has no Subsidiaries. “Subsidiaries” means any Person in which the Company, directly
or indirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (II) controls
or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually
referred to herein as a “Subsidiary.”

 

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(b)           Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter
into and perform its obligations under this Agreement and the other Transaction Documents and to issue the Securities in accordance
with the terms hereof and thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance
of the Common Shares, the issuance of the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable
upon exercise of the Warrants) have been duly authorized by the Company’s board of directors and (other than the filing
with the SEC of one or more Registration Statements (as such term is defined in the Registration Rights Agreement) in accordance
with the requirements of the Registration Rights Agreement, the 8-K Filing (as defined below) and a Form D and any other filings
as may be required by any state securities agencies) no further filing, consent or authorization is required by the Company, its
board of directors or its stockholders or other governing body. This Agreement has been, and the other Transaction Documents will
be prior to the Closing, duly executed and delivered by the Company, and each constitutes the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with its respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights
to indemnification and to contribution may be limited by federal or state securities law. “Transaction Documents”
means, collectively, this Agreement, the Warrants, the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions
(as defined below) and each of the other agreements and instruments entered into or delivered by any of the parties hereto in
connection with the transactions contemplated hereby and thereby, as may be amended from time to time.

 

(c)            Issuance
of Securities. The issuance of the Common Shares and the Warrants are duly authorized
and, upon issuance in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and non-assessable
and free from all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof,
with the holders thereof being entitled to all rights accorded to a holder of Common Stock with respect to the Common Shares purchased
by such holder hereunder. As of the Closing, the Company shall have reserved from its duly authorized capital stock not less than
the maximum number of shares of Common Stock issuable upon exercise of the Warrants (without taking into account any limitations
on the exercise of the Warrants set forth therein or any potential future adjustments to the number of Warrant Shares and/or exercise
price therefor as set forth in the Warrants). The issuance of the Warrant Shares is duly authorized, and upon exercise in accordance
with the Warrants, the Warrant Shares, when issued, will be validly issued, fully paid and non-assessable and free from all preemptive
or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof, with the holders thereof being
entitled to all rights accorded to a holder of Common Stock. Subject to the accuracy of the representations and warranties of
the Buyers in this Agreement and the filing with the SEC of a Form D following the Closing, the offer and issuance by the Company
of the Securities is exempt from registration under the 1933 Act.

 

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(d)           No
Conflicts. The execution, delivery and performance of the Transaction Documents
by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Common Shares, the Warrants and Warrant Shares and the reservation for issuance of the Warrant Shares) will
not (i) result in a violation of the Charter (as defined below) (including, without limitation, any certificates of designation
contained therein) or other organizational documents of the Company or any of its Subsidiaries, any capital stock of the Company,
or Bylaws (as defined below), (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a party or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including, without limitation, federal and state securities laws and regulations
and the rules and regulations of the OTCQB tier of the OTC Marketplace (the “Principal Market”)) applicable
to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound
or affected except, in the case of clause (ii) above, for such conflicts, defaults or rights that could not reasonably be expected
to have a Material Adverse Effect.

 

(e)           Consents.
The Company is not required to obtain any consent from, authorization or order of, or make any filing or registration with (other
than the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights
Agreement, the 8-K Filing, and a Form D and any other filings as may be required by any state securities agencies), any court,
governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform
any of its obligations under, or contemplated by, the Transaction Documents, in each case, in accordance with the terms hereof
or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain at or prior
to the Closing have been obtained or effected on or prior to the Closing Date, and neither the Company nor any of its Subsidiaries
are aware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application
or filings contemplated by the Transaction Documents. The Company is not in violation of the requirements of the Principal Market
and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock
therefrom in the foreseeable future.

 

(f)            Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees
that each Buyer is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer or director of the Company or any of
its Subsidiaries, (ii) an “affiliate” (as defined in Rule 144 and determined based on the assumption that only officers,
directors and holders of at least 10% of the Company’s issued and outstanding Common Stock are “affiliates”
without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or
any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges that no Buyer is acting as a financial
advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents
in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such
Buyer’s purchase of the Securities. The Company further represents to each Buyer that the Company’s decision to enter
into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

 

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(g)           No
General Solicitation; Placement Agent’s Fees. Neither the Company, nor any
of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company
shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions
(other than for Persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions contemplated
hereby. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the
offer or sale of the Securities.

 

(h)           No
Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates,
nor any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers
to buy any security, under circumstances that would require registration of the issuance of any of the Securities under the 1933
Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval
of stockholders of the Company under any applicable stockholder approval provisions, including, without limitation, under the
rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or
designated for quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take
any action or steps that would require registration of the issuance of any of the Securities under the 1933 Act or, whether through
integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of
the Company under any applicable stockholder approval provisions.

 

(i)            Dilutive
Effect. The Company understands and acknowledges that the number of Warrant Shares
will increase in certain circumstances. The Company further acknowledges that its obligation to issue the Warrant Shares upon
exercise of the Warrants in accordance with this Agreement and the Warrants is absolute and unconditional, regardless of the dilutive
effect that such issuance may have on the ownership interests of other stockholders of the Company.

 

(j)            Application
of Takeover Protections; Rights Agreement. The Company and its board of directors
have taken all necessary action, if any, in order to render inapplicable any control share acquisition, interested stockholder,
business combination, poison pill (including, without limitation, any distribution under a rights agreement), stockholder rights
plan or other similar anti-takeover provision under the Charter, Bylaws or other organizational documents or the laws of the jurisdiction
of its incorporation or otherwise which is or could become applicable to any Buyer as a result of the transactions contemplated
by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s ownership
of the Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable
any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock
or a change in control of the Company or any of its Subsidiaries.

 

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(k)           SEC
Documents; Financial Statements. During the period between June 26, 2013, and the
date hereof, the Company has timely filed all reports, schedules, forms, proxy statements, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the
date hereof and all exhibits and appendices included therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered
to the Buyers or their respective representatives true, correct and complete copies of each of the SEC Documents not available
on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects with the requirements of
the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in
the SEC Documents complied in all material respects with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in
the aggregate). No other information provided by or on behalf of the Company to any of the Buyers which is not included in the
SEC Documents (including, without limitation, information referred to in Section 2(e) of this Agreement) contains any untrue statement
of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading, in the
light of the circumstance under which they are or were made.

 

(l)            Absence
of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K,
except as disclosed in the SEC Documents filed subsequent to such Form 10-K, there has been no material adverse change and no
material adverse development in the business, assets, liabilities, properties, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company or any of its Subsidiaries. Since the date of the Company’s most recent
audited financial statements contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid
any dividends, (ii) sold any assets outside of the ordinary course of business or (iii) made any capital expenditures outside
of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant
to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the
Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company and its
Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions
contemplated hereby to occur at the Closing will not be, Insolvent (as defined below). “Insolvent” means, (I)
with respect to the Company and its Subsidiaries, on a consolidated basis, (i) the present fair saleable value of the Company’s
and its Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’ total
Indebtedness (as defined below), (ii) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and matured or (iii) the Company and its Subsidiaries intend
to incur or believe that they will incur debts that would be beyond their ability to pay as such debts mature; and (II) with respect
to the Company and each Subsidiary, individually, (i) the present fair saleable value of the Company’s or such Subsidiary’s
(as the case may be) assets is less than the amount required to pay its respective total Indebtedness, (ii) the Company or such
Subsidiary (as the case may be) is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured or (iii) the Company or such Subsidiary (as the case may be) intends
to incur or believes that it will incur debts that would be beyond its respective ability to pay as such debts mature. Neither
the Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is not about to engage in any business
or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably small
capital.

 

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(m)          No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability,
development or circumstance has occurred or exists, or could reasonably be expected to occur or exist, with respect to the Company,
any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations (including results
thereof) or condition (financial or otherwise) that (i) would be required to be disclosed by the Company under applicable laws
on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock
to the holders of its Common Stock and which has not been publicly announced, (ii) could have a material adverse effect on any
Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.

 

(n)           Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries
is in violation of any term of or in default under its Charter, any certificate of designation, preferences or rights of any other
outstanding series of preferred stock of the Company or the Bylaws or the organizational charter, certificate of formation or
certificate of incorporation or bylaws or any of the Company’s Subsidiaries. Neither the Company nor any of its Subsidiaries
is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any
of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the
foregoing, except in all cases for possible violations which would not, individually or in the aggregate, have a Material Adverse
Effect. Without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations or
requirements of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting
or suspension of the Common Stock by the Principal Market in the foreseeable future. Since June 26, 2013, (i) the Common Stock
has been listed or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by
the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC or the Principal
Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and each of its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary to conduct their
respective businesses, except where the failure to possess such certificates, authorizations or permits would not have, individually
or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate, authorization or permit.

 

    	10

    	 

    

 

(o)           Foreign
Corrupt Practices. Neither the Company nor any of its Subsidiaries nor any director,
officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment
to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision
of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government official or employee.

 

(p)           Sarbanes-Oxley
Act. The Company and each Subsidiary is in compliance with all applicable requirements
of the Sarbanes-Oxley Act of 2002 and all applicable rules and regulations promulgated by the SEC thereunder.

 

(q)           Transactions
With Affiliates. Except as disclosed in the SEC Documents, none of the officers,
directors, employees or affiliates of the Company or any of its Subsidiaries is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for ordinary course services as employees, officers or directors), including any
contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such officer, director, employee or affiliate or, to the knowledge
of the Company or any of its Subsidiaries, any corporation, partnership, trust or other Person in which any such officer, director,
employee or affiliate has a substantial interest or is an employee, officer, director, trustee or partner.

 

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(r)            Equity
Capitalization. As of the date hereof, the authorized capital stock of the Company
consists of (x) 300,000,000 shares of Common Stock, of which 60,145,237 shares are issued and outstanding and 9,825,197 shares
are reserved for issuance pursuant to outstanding Convertible Securities (as defined below) (other than the Common Shares and
the Warrants) and 4,551,985 shares are reserved for issuance for future grants under the Company’s equity incentive plans,
and (y) no shares of preferred stock. No shares of Common Stock are held in treasury. All of such outstanding shares are duly
authorized and have been, or upon issuance will be, validly issued and are fully paid and non-assessable. 18,579,449 shares of
the Company’s issued and outstanding Common Stock on the date hereof are owned by Persons who are “affiliates”
(as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at
least 10% of the Company’s issued and outstanding Common Stock are “affiliates” without conceding that any such
Persons are “affiliates” for purposes of federal securities laws) of the Company or any of its Subsidiaries. To the
Company’s knowledge, except as disclosed in the SEC Documents, no Person owns 10% or more of the Company’s issued
and outstanding shares of Common Stock (calculated based on the assumption that all Convertible Securities, whether or not presently
exercisable or convertible, have been fully exercised or converted (as the case may be) taking account of any limitations
on exercise or conversion (including “blockers”) contained therein without conceding that such identified Person is
a 10% stockholder for purposes of federal securities laws). (i) None of the Company’s or any Subsidiary’s capital
stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company
or any Subsidiary; (ii) except as disclosed in the SEC Documents or on Schedule 3(r), there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional capital
stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock
of the Company or any of its Subsidiaries; (iii) except as disclosed in the SEC Documents, there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company
or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound; (iv) there are no financing
statements securing obligations in any amounts filed in connection with the Company or any of its Subsidiaries; (v) there are
no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their
securities under the 1933 Act (except pursuant to the Registration Rights Agreement); (vi) there are no outstanding securities
or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound
to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of the Securities; (viii) neither the Company nor any Subsidiary
has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; and (ix)
neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC Documents
which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its
Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or would not have a Material Adverse
Effect. The SEC Documents contain true, correct and complete copies of the Company’s Articles of Incorporation, as amended
and as in effect on the date hereof (the “Charter”), and the Company’s bylaws, as amended and as in effect
on the date hereof (the “Bylaws”), and describe in all material respects the terms of or contain materially
true, correct and complete copies of all Convertible Securities.

 

(s)            Indebtedness
and Other Contracts. Except as disclosed on Schedule 3(s), neither the Company nor any of its Subsidiaries, (i) has any
outstanding Indebtedness (as defined below), (ii) is a party to any contract, agreement or instrument, the violation of
which, or default under which, by the other party(ies) to such contract, agreement or instrument could reasonably be expected
to result in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement or
instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the
aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any
Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is expected to have a
Material Adverse Effect. (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness
for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services
(including, without limitation, “capital leases” in accordance with generally accepted accounting principles)
(other than trade payables incurred in the ordinary course of business), (C) all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default
are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement
which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge,
charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights)
owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the
payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means, as to any Person,
any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend
or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole
or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.

 

    	12

    	 

    

 

(t)            Absence
of Litigation. Except as disclosed in the SEC Documents, there is no action, suit,
proceeding, inquiry or investigation before or by the Principal Market, any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries,
the Common Stock or any of the Company’s or its Subsidiaries’ officers or directors which is outside of the ordinary
course of business or individually or in the aggregate material to the Company or any of its Subsidiaries. There has not been,
and to the knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company,
any of its Subsidiaries or any current or former director or officer of the Company or any of its Subsidiaries. The SEC has not
issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the
1933 Act or the 1934 Act.

 

(u)           Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or
applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will be unable to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.

 

    	13

    	 

    

 

(v)           Employee
Relations. Neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreement or employs any member of a union. The Company believes that its and its Subsidiaries’ relations with
their respective employees are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933 Act) or other
key employee of the Company or any of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends
to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such
Subsidiary. No executive officer or other key employee of the Company or any of its Subsidiaries is, or is now expected to be,
in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each
such executive officer or other key employee (as the case may be) does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all federal, state,
local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions
of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

 

(w)          Title.
The Company and its Subsidiaries have good and marketable title in fee simple to all real property, and have good and marketable
title to all personal property, owned by them which is material to the business of the Company and its Subsidiaries, in each case,
free and clear of all mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security
interests and other encumbrances (collectively “Encumbrances”) except such as do not materially affect the
value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any
of its Subsidiaries. Any real property and facilities held under lease by the Company or any of its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company or any of its Subsidiaries.

 

(x)            Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights
or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights,
copyrights, original works, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual
property rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary
to conduct their respective businesses as now conducted and as presently proposed to be conducted. None of the Company’s
or its Subsidiaries’ Intellectual Property Rights that are necessary to conduct their respective businesses as now conducted
and as presently proposed to be conducted have expired, terminated or been abandoned, or are expected to expire, terminate or
be abandoned, within three years from the date of this Agreement. The Company has no knowledge of any infringement by the Company
or any of its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made or brought,
or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its Subsidiaries
regarding their Intellectual Property Rights. The Company is not aware of any facts or circumstances which might give rise to
any of the foregoing infringements or claims, actions or proceedings. The Company and each of its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.

 

    	14

    	 

    

 

(y)           Environmental
Laws. The Company and its Subsidiaries (i) are in compliance with all Environmental
Laws (as defined below), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license
or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect. “Environmental Laws” means all federal,
state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans
or regulations issued, entered, promulgated or approved thereunder.

 

(z)        
  Subsidiary Rights. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on,
all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.

 

(aa)       
 Tax Status. The Company and each of its Subsidiaries (i) has timely made or
filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction
to which it is subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith
and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for
any such claim. The Company is not operated in such a manner as to qualify as a passive foreign investment company, as
defined in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”).

 

(bb)        Internal
Accounting and Disclosure Controls. Except as disclosed in the SEC Documents, including without limitation in Item 9A of the
Company’s most recently filed Annual Report on Form 10-K, the Company and each of its Subsidiaries maintains internal control
over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, including that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to
assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization
and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference. Except as disclosed in the SEC Documents, including
without limitation in Item 9A of the Company’s most recently filed Annual Report on Form 10-K, the Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer
or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure.
Except as disclosed in the SEC Documents, including without limitation in Item 9A of the Company’s most recently filed Annual
Report on Form 10-K, neither the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant
or other Person relating to any potential material weakness or significant deficiency in any part of the internal controls over
financial reporting of the Company or any of its Subsidiaries.

 

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(cc)         Off
Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship
between the Company or any of its Subsidiaries and an unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise could be reasonably likely to have
a Material Adverse Effect.

 

(dd)         Investment
Company Status. The Company is not, and upon consummation of the sale of the Securities
will not be, an “investment company,” an affiliate of an “investment company,” a company controlled by
an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter”
for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

 

(ee)         Acknowledgement
Regarding Buyers’ Trading Activity. It is understood and acknowledged by the Company that, except as expressly provided
by this Agreement, (i) following the public disclosure of the transactions contemplated by the Transaction Documents in accordance
with the terms thereof, none of the Buyers have been asked by the Company or any of its Subsidiaries to agree, nor has any Buyer
agreed with the Company or any of its Subsidiaries, to desist from effecting any transactions in or with respect to (including,
without limitation, purchasing or selling, long and/or short) any securities of the Company, or “derivative” securities
based on securities issued by the Company or to hold any of the Securities for any specified term; (ii) any Buyer, and counterparties
in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short”
position in the Common Stock which was established prior to such Buyer’s knowledge of the transactions contemplated by the
Transaction Documents; and (iii) each Buyer shall not be deemed to have any affiliation with or control over any arm’s length
counterparty in any “derivative” transaction. The Company further understands and acknowledges that, following the
public disclosure of the transactions contemplated by the Transaction Documents pursuant to Section 4(i) and except as expressly
provided in this Agreement, one or more Buyers may engage in hedging and/or trading activities at various times during the period
that the Securities are outstanding, including, without limitation, during the periods that the value and/or number of Warrant
Shares deliverable with respect to the Securities are being determined and such hedging and/or trading activities, if any, can
reduce the value of the existing stockholders’ equity interest in the Company both at and after the time the hedging and/or
trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities, to
the extent not prohibited by this Agreement, do not constitute a breach of this Agreement or any other Transaction Document or
any of the documents executed in connection herewith or therewith.

 

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(ff)      
   Manipulation of Price. Neither the Company nor any of its
Subsidiaries has, and, to the knowledge of the Company, no Person acting on their behalf has, directly or indirectly, (i)
taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of the
Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased,
or paid any compensation for soliciting purchases of, any of the Securities or (iii) paid or agreed to pay to any Person any
compensation for soliciting another to purchase any other securities of the Company or any of its Subsidiaries.

 

(gg)         U.S.
Real Property Holding Corporation. Neither the Company nor any of its Subsidiaries
is, or has ever been, and so long as any of the Securities are held by any of the Buyers, shall become, a U.S. real property holding
corporation within the meaning of Section 897 of the Code, and the Company and each Subsidiary shall so certify upon any Buyer’s
request.

 

(hh)         Registration
Eligibility. The Company is eligible to register the Registrable Securities for resale by the Buyers using Form S-1 promulgated
under the 1933 Act.

 

(ii)           Transfer
Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be
paid in connection with the issuance, sale and/or transfer of the Securities to be sold to each Buyer hereunder will be, or will
have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

 

(jj)           Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as
amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or more of the total
equity of a bank or any equity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any
of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve.

 

(kk)         Public
Utility Holding Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate”
of a “holding company,” as such terms are defined in the Public Utility Holding Act of 2005.

 

(ll)           Federal
Power Act. None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility” under
the Federal Power Act, as amended.

 

(mm)       No
Additional Agreements. The Company does not have any agreement or understanding with any Buyer with respect to the transactions
contemplated by the Transaction Documents other than as specified in the Transaction Documents.

 

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(nn)         Fixtures
and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in,
the tangible personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used
by the Company or its Subsidiaries in connection with the conduct of their respective businesses (the “Fixtures and Equipment”).
The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are adequate for the uses to which
they are being put, are not in need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient
for the conduct of the Company’s and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior
to the Closing. Each of the Fixtures and Equipment that are owned by the Company or its Subsidiaries is owned free and clear of
all Encumbrances except for (a) liens for current taxes not yet due and (b) zoning laws and other land use restrictions that do
not impair the present or anticipated use of the property subject thereto.

 

(oo)         Illegal
or Unauthorized Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of the
Company’s knowledge (after reasonable inquiry of its current officers and directors), any of the current officers, directors,
employees, agents or other representatives of the Company or any of its Subsidiaries or any other business entity or enterprise
with which the Company or any Subsidiary is or has been affiliated or associated, has, directly or indirectly, made or authorized
any payment, contribution or gift of money, property, or services, whether or not in contravention of applicable law, (a) as a
kickback or bribe to any Person or (b) to any political organization, or the holder of or any aspirant to any elective or appointive
public office except for personal political contributions not involving the direct or indirect use of funds of the Company or any
of its Subsidiaries.

 

(pp)        Money
Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act
of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the
laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including,
without limitation, (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations
contained in 31 CFR, Subtitle B, Chapter V.

 

(qq)        Management.
During the prior two (2) year period ending on the day immediately preceding the date hereof, to the knowledge of the Company,
no current officer or director of the Company has been the subject of:

 

(i)          a
petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent
or similar officer for such Person, or any partnership in which such Person was a general partner at or within two years before
the filing of such petition or such appointment, or any corporation or business association of which such Person was an executive
officer at or within two years before the time of the filing of such petition or such appointment;

 

(ii)         a
conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not
relate to driving while intoxicated or driving under the influence);

 

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(iii)        any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining any such Person from, or otherwise limiting, the following activities:

 

(1)         acting
as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other Person regulated by the United States Commodity Futures Trading Commission or an associated Person
of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated Person,
director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;

 

(2)         engaging
in any type of business practice; or

 

(3)         engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities
laws or commodities laws;

 

(iv)        any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting
for more than sixty (60) days the right of any such Person to engage in any activity described in the preceding sub paragraph,
or to be associated with Persons engaged in any such activity;

 

(v)         a
finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities
law, regulation or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently
reversed, suspended or vacated; or

 

(vi)        a
finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any federal commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or
vacated.

 

(rr)    
     Disclosure. The Company confirms that neither it nor any other Person acting on its
behalf has provided any of the Buyers or their agents or counsel with any information that constitutes or could reasonably be
expected to constitute material, non-public information regarding the Company or any of its Subsidiaries, other than the
existence of the transactions contemplated by this Agreement and the other Transaction Documents. The Company understands and
confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries, their businesses and the
transactions contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any
of its Subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were
made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the period beginning on June
26, 2013 and ending on the date of this Agreement did not at the time of release contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not misleading. No event or circumstance has occurred
or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties,
liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under
applicable law, rule or regulation, requires public disclosure at or before the date hereof or announcement by the Company
but which has not been so publicly disclosed. The Company acknowledges and agrees that no Buyer makes or has made any
representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in
Section 2.

    	19

    	 

    

 

4.
          COVENANTS.

 

(a)   
       Commercially Reasonable Efforts. Each
Buyer shall use its commercially reasonable efforts to timely satisfy each of the conditions to be satisfied by it as
provided in Section 6 of this Agreement. The Company shall use its commercially reasonable efforts to timely satisfy each of
the conditions to be satisfied by it as provided in Section 7 of this Agreement.

 

(b) 
         Form D and Blue Sky. The
Company shall file a Form D with respect to the Securities as required under Regulation D and provide a copy thereof to each
Buyer promptly after such filing, provided that the filing thereof on EDGAR shall satisfy such requirement to provide a copy
to each Buyer. The Company shall, on or before the Closing Date or within the time period required following the Closing
Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to
qualify, the Securities for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or
“Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall
provide evidence to the Buyers of any such action so taken on or prior to the Closing Date. Without limiting any other
obligation of the Company under this Agreement, the Company shall timely make all filings and reports relating to the offer
and sale of the Securities required under all applicable federal securities laws and all applicable “Blue
Sky” laws of the states of the United States, and the Company shall comply with all applicable federal, state and local
laws, statutes, rules, regulations and the like relating to the offering and sale of the Securities to the Buyers.

 

(c) 
         Reporting Status. Until the
date on which the Buyers shall have sold all of the Registrable Securities (the “Reporting Period”), the
Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would no longer require or otherwise permit such termination.

 

(d)           Restrictions
on Use of Proceeds; Confidentiality. The Company shall not use any of the net proceeds from the sale of the Securities for
the redemption of any securities of the Company. Each Buyer shall maintain the confidentiality of the existence and terms of the
Transaction Documents until such time as the transactions contemplated by the Transaction Documents are disclosed pursuant to
the Press Release in accordance with Section 4(i) (it being understood and agreed that, without implication that the contrary
would otherwise be true, each Buyer’s obligations under this sentence shall terminate simultaneously with such disclosure
of the transactions contemplated by the Transaction Documents).

 

    	20

    	 

    

 

(e)           Financial
Information. The Company agrees to send the following to each Investor (as defined
in the Registration Rights Agreement) during the Reporting Period unless the following are filed with the SEC through EDGAR and
are available to the public through the EDGAR system, (i) within one (1) Business Day after the filing thereof with the SEC, a
copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any consolidated balance sheets,
income statements, stockholders’ equity statements and/or cash flow statements for any period other than annual, any Current
Reports on Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act and
(ii) copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously
with the making available or giving thereof to the stockholders.

 

(f)            Listing.
The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Registrable Securities
upon each national securities exchange and automated quotation system, if any, upon which the Common Stock is then listed or designated
for quotation (as the case may be) (subject to official notice of issuance) (but in no event later than the Closing Date). The
Company shall maintain the listing or designation for quotation (as the case may be) of the Common Stock and the Registrable Securities
from time to time issuable under the terms of the Transaction Documents on the Principal Market, the OTCQX tier of the OTC Marketplace,
the OTC Bulletin Board, The New York Stock Exchange, the NYSE MKT, the Nasdaq Global Select Market, the Nasdaq Global Market or
the Nasdaq Capital Market (each, an “Eligible Market”). Neither the Company nor any of its Subsidiaries shall
take any action which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible
Market, unless the Common Stock will be listed or designated for quotation on another Eligible Market simultaneously with such
delisting or suspension. The Company shall pay all fees and expenses in connection with satisfying its obligations under this
Section 4(f).

 

(g)           Fees.
The Company shall reimburse Cranshire Capital Master Fund, Ltd. (“Cranshire”) or its designee(s) for all costs
and expenses incurred by it or its affiliates in connection with the transactions contemplated by the Transaction Documents (including,
without limitation, all legal fees and disbursements in connection therewith, structuring, documentation and implementation of
the transactions contemplated by the Transaction Documents and due diligence and regulatory filings in connection therewith) in
a non-accountable amount equal to $25,000, which amount shall be withheld by Cranshire from its Purchase Price at the Closing
or paid by the Company on demand by Cranshire if Cranshire terminates its obligations under this Agreement in accordance with
Section 8 (as the case may be). The Company shall be responsible for the payment of any placement agent’s fees, financial
advisory fees, or broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions
contemplated hereby, and the Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating
to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own
expenses in connection with the sale of the Securities to the Buyers.

 

    	21

    	 

    

 

(h)           Pledge
of Securities. Notwithstanding anything to the contrary contained in this Agreement, the Company
acknowledges and agrees that the Securities may be pledged by a Buyer in connection with a bona fide margin agreement or other
loan or financing arrangement that is secured by the Securities. Except as required by applicable securities laws, the pledge
of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge
of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement or any other Transaction Document. The Company hereby agrees to execute and deliver such documentation as a
pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by a Buyer.

 

(i)            Disclosure
of Transactions and Other Material Information. The Company shall, on or before 8:30 a.m., New York time, on the first (1st)
Business Day after the date of this Agreement, (x) issue a press release (the “Press Release”) reasonably acceptable
to the Buyers disclosing all the material terms of the transactions contemplated by the Transaction Documents and (y) file with
the SEC a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents
in the form required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this
Agreement (and the Schedule of Buyers to this Agreement), the form of Warrants and the form of the Registration Rights Agreement)
(including all attachments, the “8-K Filing”). From and after the issuance of the Press Release, the Company
shall have disclosed all material, non-public information (if any) regarding the Company or any of its Subsidiaries delivered
to any of the Buyers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents
in connection with the transactions contemplated by the Transaction Documents. The Company shall not, and the Company shall cause
each of its Subsidiaries and each of its and their respective officers, directors, employees and agents, not to, provide any Buyer
with any material, non-public information regarding the Company or any of its Subsidiaries from and after the issuance of the
Press Release without the express prior written consent of such Buyer (which may be granted or withheld in such Buyer’s
sole discretion). If a Buyer has, or believes it has, received any material, non-public information regarding the Company or any
of its Subsidiaries in breach of any of the foregoing covenants or any of the covenants contained in Section 4(o) by the Company,
any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents (as determined in the reasonable
good faith judgment of such Buyer), such Buyer shall provide the Company with written notice thereof in which case the Company
shall, within one (1) Trading Day of the receipt of such notice, make a public disclosure of all such material, non-public information
so provided or deliver a written confirmation to such Buyer executed by the Company’s chief executive officer stating that
none of such information so received by such Buyer constitutes material, non-public information regarding the Company or any of
its Subsidiaries. If the Company fails to so disclose all such material, non-public so received by such Buyer or to deliver such
written confirmation to such Buyer, in each case, within one (1) Trading Day of the receipt of such notice from such Buyer, then,
in addition to any other remedy provided herein or in the other Transaction Documents, such Buyer shall have the right to make
a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, non-public information
without the prior approval by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees
or agents. No Buyer shall have any liability to the Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees, stockholders or agents, for any such disclosure. Subject to the foregoing, neither the Company, its Subsidiaries
nor any Buyer shall issue any press releases or any other public statements with respect to the transactions contemplated hereby;
provided, however, the Company shall be entitled, without the prior approval of any Buyer, to make any press release or other
public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each Buyer shall be consulted
by the Company in connection with any such press release or other public disclosure prior to its release). Without the prior written
consent of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company shall not
(and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing (other than the
8-K Filing and any Registration Statement and any amendment or prospectus supplement thereto), announcement, release or otherwise.
Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would otherwise
be true, the Company expressly acknowledges and agrees that, except as expressly set forth in the last sentence of Section 4(d),
no Buyer has had, and no Buyer shall have (unless expressly agreed to by a particular Buyer after the date hereof in a written
definitive and binding agreement executed by the Company and such particular Buyer (it being understood and agreed that no Buyer
may bind any other Buyer with respect thereto)), any duty of confidentiality to the Company with respect to, or a duty to the
Company not to trade on the basis of, any information regarding the Company or any of its Subsidiaries.

 

    	22

    	 

    

 

(j)   
        Additional Registration Statements. Until the Applicable Date (as defined below)
and at any time thereafter while any Registration Statement is not effective or any prospectus contained therein is not
available for use, the Company shall not file a registration statement under the 1933 Act relating to securities that are not
the Registrable Securities, except for any registration statement on Form S-4 (as promulgated under the 1933 Act) or its then
equivalent relating to equity securities to be issued solely in connection with any acquisition of any entity or business.
“Applicable Date” means the first date on which the resale by the Buyers of all Registrable Securities is
covered by one or more effective Registration Statements (as defined in the Registration Rights Agreement) (and each
prospectus contained therein is available for use on such date).

 

    	23

    	 

    

 

(k)           Additional
Issuance of Securities. The Company agrees that for the period commencing on the date hereof and ending on the date immediately
following the ninety (90) day anniversary of the Applicable Date (provided that such period shall be extended by the number of
days during such period and any extension thereof contemplated by this proviso on which the Registration Statement is not effective
or any prospectus contained therein is not available for use) (the “Restricted Period”), neither the
Company nor any of its Subsidiaries shall directly or indirectly issue, offer, sell, grant any option or right to purchase, or
otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right to purchase or other disposition of)
any equity security or any equity-linked or related security (including, without limitation, any “equity security”
(as that term is defined under Rule 405 promulgated under the 1933 Act)), any Convertible Securities, any debt, any preferred
stock or any purchase rights (any such issuance, offer, sale, grant, disposition or announcement (whether occurring during the
Restricted Period or at any time thereafter) is referred to as a “Subsequent Placement”). Notwithstanding the
foregoing, this Section 4(k) shall not apply in respect of the issuance of (A) shares of Common Stock or options to purchase Common
Stock or other equity awards (but which shall not include any Options (as defined in the Warrants) (other than standard options
to purchase Common Stock issued to directors, officers or employees of the Company or any of its Subsidiaries in their capacity
as such, and warrants and standard options to purchase Common Stock issued to consultants or advisors providing services to the
Company or any of its Subsidiaries in their capacity as such so long as such warrants do not contain any terms or conditions more
favorable than any of the terms or conditions contained in the Warrants) or any Convertible Securities) issued to directors, officers,
employees of, or consultants or advisors to, the Company or its Subsidiaries in their capacity as such pursuant to an Approved
Share Plan (as defined below) (it being expressly understood and agreed for all purposes of this Agreement that lawyers, law firms,
accountants and accounting firms do not constitute consultants or advisors), provided that the exercise price of any such options
or such other equity awards is not lowered, none of such options or such other equity awards are amended to increase the number
of shares issuable thereunder and none of the terms or conditions of any such options or such other equity awards are otherwise
materially changed in any manner that adversely affects any of the Buyers; (B) shares of Common Stock issued upon the conversion,
exercise or exchange of Convertible Securities (other than options to purchase Common Stock or such other equity awards issued
pursuant to an Approved Share Plan that are covered by clause (A) above) issued prior to the date hereof, provided that the conversion,
exercise or exchange (as the case may be) of any such Convertible Security is made solely pursuant to the conversion, exercise
or exchange (as the case may be) provisions of such Convertible Security that were in effect (and expressly set forth in such
Convertible Security) on the date immediately prior to the date of this Agreement, the conversion, exercise or exchange price
of any such Convertible Securities (other than options to purchase Common Stock or such other equity awards issued pursuant to
an Approved Share Plan that are covered by clause (A) above) is not lowered, none of such Convertible Securities are (other than
options to purchase Common Stock or such other equity awards issued pursuant to an Approved Share Plan that are covered by clause
(A) above) (nor is any provision of any such Convertible Securities) amended or waived in any manner (whether by the Company or
the holder thereof) to increase, or which results in an increase in, the number of shares issuable thereunder and none of the
terms or conditions of any such Convertible Securities (other than options to purchase Common Stock or such other equity awards
issued pursuant to an Approved Share Plan that are covered by clause (A) above) are otherwise materially changed or waived (whether
by the Company or the holder thereof) in any manner that adversely affects any of the Buyers; (C) the Warrants; (D) the Warrant
Shares and (E) shares of Common Stock issued in connection with acquisitions, asset purchases, licenses, collaborations or strategic
transactions involving the Company and other Persons approved by the Company’s board of directors; provided that any such
issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating
company or an owner of an asset in a business synergistic with the current business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, and shall not include a transaction in which the Company is issuing
Common Stock or any other security primarily for the purpose of raising capital or to an entity whose primary business is investing
in securities (each of the foregoing in clauses (A) through (E), collectively the “Excluded Securities”). “Approved
Share Plan” means any employee benefit plan has been approved by the board of directors of the Company pursuant to which
shares of Common Stock and options to purchase Common Stock and other equity awards (but which shall not include any Options (other
than standard options to purchase Common Stock issued to directors, officers or employees of the Company or any of its Subsidiaries
in their capacity as such, and warrants and standard options to purchase Common Stock issued to consultants or advisors providing
services to the Company or any of its Subsidiaries in their capacity as such so long as such warrants do not contain any terms
or conditions more favorable than any of the terms or conditions contained in the Warrants) or any Convertible Securities) may
be issued to any employee, officer or director of, or consultants or advisors to, the Company or any of its Subsidiaries for services
provided to the Company or any of its Subsidiaries in their capacity as such. “Convertible Securities” means
any capital stock, note, debenture or other security of the Company or any of its Subsidiaries that is, or may become, at any
time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise
entitles the holder thereof to acquire, any capital stock, note, debenture or other security of the Company (including, without
limitation, Common Stock) or any of its Subsidiaries.

 

    	24

    	 

    

 

(l)            Reservation
of Shares. So long as any of the Warrants remain outstanding, the Company shall
take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the maximum
number of shares of Common Stock issuable upon exercise of all the Warrants (without regard to any limitations on the exercise
of the Warrants set forth therein or any potential future adjustments to the number of Warrant Shares and/or exercise price therefor
as set forth in the Warrants).

 

(m)          Conduct
of Business. The business of the Company and its Subsidiaries shall not be conducted
in violation of any law, ordinance or regulation of any governmental entity, except where such violations would not result, either
individually or in the aggregate, in a Material Adverse Effect.

 

(n) 
         Variable Rate Transaction. Beginning on the date hereof and
until the earlier of (a) the twelve (12) month anniversary of the Applicable Date and (b) the date on which all of
the Buyers shall have sold all of the Registrable Securities, the Company and each Subsidiary shall be prohibited from
effecting or entering into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction (it being
expressly understood and agreed that the foregoing shall not prohibit the Company from consummating the
transactions contemplated by this Agreement). “Variable Rate Transaction” means a transaction in which the
Company or any Subsidiary (i) issues or sells any Convertible Securities either (A) at a conversion, exercise or exchange
rate or other price that is based upon and/or varies with the trading prices of, or quotations for, the shares of Common
Stock at any time after the initial issuance of such Convertible Securities, or (B) with a conversion, exercise or exchange
price that is subject to being reset at some future date after the initial issuance of such Convertible Securities or upon
the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market
for the Common Stock, other than pursuant to a customary “weighted average” anti-dilution provision or (ii)
enters into any agreement (including, without limitation, an “equity line of credit” or an “at-the-market
offering”) whereby the Company or any Subsidiary may sell securities at a future determined price (other than standard
and customary “preemptive” or “participation” rights). Each Buyer shall be entitled to obtain
injunctive relief against the Company and its Subsidiaries to preclude any such issuance, which remedy shall be in addition
to any right to collect damages.

 

    	25

    	 

    

 

(o)          Participation
Right. From the date hereof through the six (6) month anniversary of the Applicable Date, neither the Company nor any of its
Subsidiaries shall, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied with this
Section 4(o). The Company acknowledges and agrees that the right set forth in this Section 4(o) is a right granted by the Company,
separately, to each Buyer.

 

(i)          At
least three (3) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Buyer a
written notice of its proposal or intention to effect a Subsequent Placement (each such notice, a “Pre-Notice”),
which Pre-Notice shall not contain any information other than: (i) a statement that the Company proposes or intends to effect a
Subsequent Placement, and (ii) a statement informing such Buyer that it is entitled to receive an Offer Notice (as defined below)
with respect to such Subsequent Placement upon its written request. Upon the written request of a Buyer within two (2) Trading
Days after the Company’s delivery to such Buyer of such Pre-Notice, and only upon a written request by such Buyer, the Company
shall promptly, but no later than one (1) Trading Day after such request, deliver to such Buyer an irrevocable written notice (the
“Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of
the securities being offered (the “Offered Securities”) in a Subsequent Placement, which Offer Notice shall
(w) identify and describe the Offered Securities, (x) describe the price and other terms upon which they are to be issued, sold
or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (y) identify the Persons (if
known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (z) offer to issue and sell
to or exchange with such Buyer in accordance with the terms of the Offer, 50% of the Offered Securities, provided that the number
of Offered Securities which such Buyer shall have the right to subscribe for under this Section 4(o) shall be (a) based on
such Buyer’s pro rata portion of the aggregate number of Common Shares purchased hereunder by all Buyers (the “Basic
Amount”), and (b) with respect to each Buyer that elects to purchase its Basic Amount, any additional portion of the
Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall indicate it will purchase or acquire should
the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription Amount”).

 

(ii)         To
accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the fifth (5th)
Business Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion
of such Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic
Amount, the Undersubscription Amount, if any, that such Buyer elects to purchase (in either case, the “Notice of Acceptance”).
If the Basic Amounts subscribed for by all Buyers are less than the total of all of the Basic Amounts, then such Buyer who has
set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided, however, if the Undersubscription Amounts subscribed
for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), such Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase
only that portion of the Available Undersubscription Amount as the Basic Amount of such Buyer bears to the total Basic Amounts
of all Buyers that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent it deems reasonably
necessary. Notwithstanding the foregoing, if the Company desires to modify or amend the terms and conditions of the Offer prior
to the expiration of the Offer Period, the Company may deliver to each Buyer a new Offer Notice and the Offer Period shall expire
on the fifth (5th) Business Day after such Buyer’s receipt of such new Offer Notice.

    	26

    	 

    

 

(iii)        The
Company shall have five (5) Business Days from the expiration of the Offer Period above (i) to offer, issue, sell or exchange all
or any part of such Offered Securities as to which a Notice of Acceptance has not been given by a Buyer (together with the remaining
50% of the Offered Securities that were not offered to the Buyers pursuant to Section 4(o)(iii), the “Refused Securities”)
pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only to the offerees described
in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and
interest rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set
forth in the Offer Notice and (ii) to publicly announce (a) the execution of such Subsequent Placement Agreement, and (b) either
(x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the termination of such Subsequent
Placement Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement
and any documents contemplated therein filed as exhibits thereto.

 

(iv)        In
the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the
terms specified in Section 4(o)(iii) above), then such Buyer may, at its sole option and in its sole discretion, reduce the number
or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or
amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(o)(ii) above multiplied by a fraction,
(i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or
exchange (including Offered Securities to be issued or sold to Buyers pursuant to this Section 4(o) prior to such reduction) and
(ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer so elects to
reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange
more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the
Buyers in accordance with Section 4(o)(i) above.

 

    	27

    	 

    

 

(v)         Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Buyer shall acquire from
the Company, and the Company shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice of Acceptance.
Subject to Section 4(o)(vii), the purchase by such Buyer of any Offered Securities shall be made on the same terms and conditions
and subject to the same Subsequent Placement Agreement entered into between the Company and the purchasers of the Refused Securities.

 

(vi)        Any
Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(o) may not be issued, sold or exchanged
until they are again offered to such Buyer under the procedures specified in this Agreement.

 

(vii)       The
Company and each Buyer agree that if any Buyer elects to participate in the Offer, neither the Subsequent Placement Agreement with
respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”)
shall include any term or provision whereby such Buyer shall be required to agree to any restrictions on trading as to any securities
of the Company (other than restrictions required by applicable securities laws on the resale of the specific “restricted
securities” (as that term is defined under Rule 144) being issued in the Subsequent Placement) or be required to consent
to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, any agreement previously
entered into with the Company or any instrument received from the Company.

 

(viii)      Notwithstanding
anything to the contrary in this Section 4(o) and unless otherwise agreed to by such Buyer, the Company shall either confirm in
writing to such Buyer that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose
its intention to issue the Offered Securities, in either case, in such a manner such that such Buyer will not be in possession
of any material, non-public information regarding the Company or any of its Subsidiaries, by the fifth (5th) Business
Day following expiration of the Offer Period. If by such fifth (5th) Business Day, no public disclosure regarding a
transaction with respect to the Offered Securities has been made, and no notice regarding the abandonment of such transaction has
been received by such Buyer, such transaction shall be deemed to have been abandoned and such Buyer shall not be in possession
of any material, non-public information regarding the Company or any of its Subsidiaries. Should the Company decide to pursue such
transaction with respect to the Offered Securities, the Company shall provide such Buyer with another Offer Notice in accordance
with, and subject to, the terms of this Section 4(o) and such Buyer will again have the right of participation set forth in this
Section 4(o). The Company shall not be permitted to deliver more than one Offer Notice to such Buyer in any sixty (60) day period,
except as expressly contemplated by the last sentence of Section 4(o)(ii).

 

(ix)         The
restrictions contained in this Section 4(o) shall not apply in connection with the issuance of any Excluded Securities. The Company
shall not circumvent the provisions of this Section 4(o) by providing terms or conditions to one Buyer that are not provided to
all Buyers.

 

(p)           Passive
Foreign Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries to conduct their respective
businesses, in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company
within the meaning of Section 1297 of the Code.

 

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(q)           Corporate
Existence. So long as any Buyer owns any Warrants, the Company shall not be party to any Fundamental Transaction (as defined
in the Warrants) unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth
in the Warrants.

 

(r) 
          Short Sales. Each Buyer agrees solely with the Company that such
Buyer and its affiliates will not, during the period commencing from and after the Closing and ending on the date on which
such Buyer and its affiliates cease to hold any of the Securities acquired by such Buyer hereunder, directly or indirectly,
effect a Short Sale of the Common Stock if such contemplated Short Sale of the Common Stock would result in such Buyer and
its affiliates (taken together) having an Excess Short Position in the Common Stock immediately following such
contemplated Short Sale (as determined pursuant to the immediately following sentence). An “Excess Short Position in
the Common Stock” shall occur only if the number of shares of Common Stock as to which such Buyer and its
affiliates (taken together) have outstanding Short Sales of Common Stock that have not been closed out or covered
immediately following the applicable contemplated Short Sale exceeds the sum of (x) the number of shares of Common Stock held
by such Buyer and its affiliates (taken together) immediately following the applicable contemplated Short Sale plus (y)
the number of shares of Common Stock issuable upon exercise, conversion or exchange (as the case may be) of all Options
and Convertible Securities of the Company held by such Buyer and its affiliates (taken together) immediately following the
applicable contemplated Short Sale (disregarding for purposes of the foregoing any beneficial ownership limitations contained
therein and any other limitations on exercise, conversion or exchange contained therein). Without implication that the
contrary would otherwise be true and without limiting any other provision of this Agreement, it is expressly understood and
agreed that this Section 4(r) is between the Company and each Buyer, solely, and not between the Company and the Buyers
collectively and not between and among the Buyers.

 

5.           REGISTER;
TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

(a)           Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to each holder of Securities), a register for the Common Shares and the Warrants in which the Company shall record the
name and address of the Person in whose name the Common Shares and the Warrants have been issued (including the name and
address of each transferee), the number of Common Shares held by such Person and the number of Warrant Shares issuable upon exercise
of the Warrants held by such Person. The Company shall keep the register open and available at all times during business hours
for inspection of any Buyer or its legal representatives.

 

    	29

    	 

    

 

(b)           Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer
agent and any subsequent transfer agent in a form acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”)
to issue certificates or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”),
registered in the name of each Buyer or its respective nominee(s), (i) for the Common Shares in such amounts as set forth
in column 3 of the Schedule of Buyers within the time period set forth in such Irrevocable Transfer Agent Instructions and in
Section 7(a)(i), and (ii) for the Common Shares and the Warrant Shares in such amounts as specified from time to time by
each Buyer to the Company upon a transfer the outstanding Common Shares or the exercise of the Warrants (as the case may be).
All such certificates shall be issued bearing the restrictive legend set forth in Section 5(c) unless and until the conditions
set forth in Section 5(d) are satisfied. The Company represents and warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5(b), and stop transfer instructions to give effect to Section 2(g) hereof, will
be given by the Company to its transfer agent with respect to the Securities, and that the Securities shall otherwise be freely
transferable on the books and records of the Company, as applicable, to the extent provided in this Agreement and the other Transaction
Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance with Section 2(g), the Company shall
permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates or credit shares to the applicable
balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer or assignment.
In the event that such sale, assignment or transfer involves Common Shares or Warrant Shares sold, assigned or transferred pursuant
to an effective registration statement or in compliance with Rule 144, the transfer agent shall issue such shares to such Buyer,
assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 5(d) below. The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to each Buyer. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that each Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company
shall cause its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Company’s
transfer agent on each Effective Date (as defined in the Registration Rights Agreement). Any fees (with respect to the transfer
agent, counsel to the Company or otherwise) associated with the issuance of such opinion or the removal of any legends on any
of the Securities shall be borne by the Company.

 

(c)           Legends.
Each Buyer understands that the Securities have been issued (or will be issued in the case of the Warrant Shares) pursuant to
an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forth
below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend
in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

[NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN][THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER
(IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

    	30

    	 

    

 

(d)          Removal
of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5(c) above
or any other legend (i) while a registration statement (including a Registration Statement) covering the resale of such Securities
is effective under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not
an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided
that a Buyer provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer
under Rule 144, which may include customary stockholder representation letters but which shall not exclude any opinion of counsel
from such Buyer) or (iv) if such legend is not required under applicable requirements of the 1933 Act (including, without limitation,
controlling judicial interpretations and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing,
the Company shall no later than two (2) Trading Days following the delivery by a Buyer to the Company or the transfer agent (with
concurrent notice to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached,
signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with
any other deliveries from such Buyer as may be required above in this Section 5(d) or, if applicable, the Warrants, as directed
by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities
Transfer Program and such Securities are Common Shares or Warrant Shares, credit the aggregate number of shares of Common Stock
to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal
at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer
Program, issue and deliver (via reputable overnight courier) to such Buyer, a certificate representing such Securities that is
free from all restrictive and other legends, registered in the name of such Buyer or its designee (the date by which such credit
is so required to be made to the balance account of such Buyer’s or such Buyer’s nominee with DTC or such certificate
is required to be delivered to such Buyer pursuant to the foregoing is referred to herein as the “Required Delivery Date”).

 

    	31

    	 

    

  

(e)          Failure
to Timely Deliver; Buy-In. If the Company fails to (i) issue and deliver (or cause to be delivered) to a Buyer by the Required
Delivery Date a certificate representing the Securities so delivered to the Company by such Buyer that is free from all restrictive
and other legends or (ii) credit the balance account of such Buyer’s or such Buyer’s nominee with DTC for such number
of Common Shares or Warrant Shares so delivered to the Company, and if on or after the Required Delivery Date such Buyer (or any
other Person in respect, or on behalf, of such Buyer) purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by such Buyer of all or any portion of the number of shares of Common Stock, or a sale
of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock, that such Buyer so
anticipated receiving from the Company without any restrictive legend, then, in addition to all other remedies available to such
Buyer, the Company shall, within three (3) Trading Days after such Buyer’s request and in such Buyer’s sole discretion,
either (i) pay cash to such Buyer in an amount equal to such Buyer’s total purchase price (including brokerage commissions
and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including brokerage commissions and other
out-of-pocket expenses, if any) (the “Buy-In Price”), at which point the Company’s obligation to so deliver
such certificate or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly
honor its obligation to so deliver to such Buyer a certificate or certificates or credit such Buyer’s DTC account representing
such number of shares of Common Stock that would have been so delivered if the Company timely complied with its obligations hereunder
and pay cash to such Buyer 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 Shares or Warrant Shares (as the case may be) that the Company was required to deliver to such Buyer by the Required
Delivery Date multiplied by (B) the lowest Closing Sale Price of the Common Stock on any Trading Day during the period commencing
on the date of the delivery by such Buyer to the Company of the applicable Common Shares or Warrant Shares (as the case may be)
and ending on the date of such delivery and payment under this clause (ii).

 

6.          CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.

 

(a)          The
obligation of the Company hereunder to issue and sell the Common Shares and the related Warrants to each Buyer at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing each
Buyer with prior written notice thereof:

 

(i)          Such
Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.

 

(ii)         Such
Buyer and each other Buyer shall have delivered to the Company the Purchase Price (less, in the case of Cranshire, the amounts
withheld pursuant to Section 4(g)) for the Common Shares and the related Warrants being purchased by such Buyer at the Closing
by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

 

(iii)        The
representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as
of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such date), and such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by
such Buyer at or prior to the Closing Date.

 

    	32

    	 

    

  

7.          CONDITIONS
TO EACH BUYER’S OBLIGATION TO PURCHASE. 

 

(a)          The
obligation of each Buyer hereunder to purchase the Common Shares and the related Warrants at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s
sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice
thereof:

 

(i)          The
Company shall have duly executed and delivered to such Buyer (A) the Registration Rights Agreement, (B) the Warrants
(for the number of Warrant Shares as is set forth across from such Buyer’s name in columns (4), (5) and (6) of the Schedule
of Buyers) being purchased by such Buyer at the Closing pursuant to this Agreement and (c) a copy of the stock certificate
representing the Common Shares (in the number as is set forth across from such Buyer’s name in column (3) of the Schedule
of Buyers) (it being understood and agreed that the original of such stock certificate will be delivered to the address specified
by such Buyer within three (3) Trading Days following the Closing Date).

 

(ii)         Such
Buyer shall have received the opinion of Morrison & Foerster LLP,
the Company’s counsel, dated as of the Closing Date, in the form acceptable to such Buyer.

 

(iii)        The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such
Buyer, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.

 

(iv)        The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of
its Subsidiaries in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office)
of such jurisdiction of formation as of a date within ten (10) days of the Closing Date.

 

(v)         The
Company shall have delivered to such Buyer a certificate evidencing the Company’s qualification as a foreign corporation
and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business
and is required to so qualify, as of a date within ten (10) days of the Closing Date.

 

(vi)        The
Company shall have delivered to such Buyer a certified copy of the Charter as certified by the Secretary of State of the Company’s
jurisdiction of formation within ten (10) days of the Closing Date.

 

(vii)       The
Company shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary of the
Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s
board of directors in a form reasonably acceptable to such Buyer, (ii) the Charter and (iii) the Bylaws, each as in effect at the
Closing.

 

    	33

    	 

    

  

(viii)      Each
and every representation and warranty of the Company shall be true and correct in as of the date when made and shall be true and
correct in all material respects as of the Closing Date as though originally made at that time (except that (x) representations
and warranties that speak as of a specific date shall be true and correct as of such date and (y) any representation and warranty
qualified by materiality or Material Adverse Effect shall be true and correct in all respects) and the Company shall have performed,
satisfied and complied in all respects with the covenants, agreements and conditions required to be performed, satisfied or complied
with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive
Officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer in the form acceptable to such Buyer.

 

(ix)         The
Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of
Common Stock outstanding on the Closing Date immediately prior to the Closing.

 

(x)          The
Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have been suspended, as
of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC or
the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the Principal Market or
(B) by falling below the minimum maintenance requirements of the Principal Market.

 

(xi)         The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities, including without limitation, those required by the Principal Market.

 

(xii)        No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.

 

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

 

(xiv)      To
the extent required by the Principal Market, the Company shall have obtained approval of the Principal Market to list or designate
for quotation (as the case may be) the Common Shares and the Warrant Shares.

 

(xv)       The
Company shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions contemplated
by this Agreement as such Buyer or its counsel may reasonably request.

 

    	34

    	 

    

  

8.          TERMINATION.

 

In the event that the
Closing shall not have occurred with respect to a Buyer within ten (10) days after the date hereof, then such Buyer shall have
the right to terminate its obligations under this Agreement with respect to itself at any time on or after the close of business
on such date without liability of such Buyer to any other party; provided, however, (i) the right of a Buyer to terminate its obligations
under this Agreement pursuant to this Section 8 shall not be available to such Buyer if the failure of the transactions contemplated
by this Agreement to have been consummated by such date is the result of such Buyer’s breach of this Agreement and (ii) the
abandonment of the sale and purchase of the Common Shares and the Warrants shall be applicable only to such Buyer providing such
written notice, provided further that no such termination shall affect any obligation of the Company under this Agreement to reimburse
such Buyer for the expenses described in Section 4(g) above. Nothing contained in this Section 8 shall be deemed to release any
party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction Documents
or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or
the other Transaction Documents.

 

9.          MISCELLANEOUS.

 

(a)          Governing
Law; Jurisdiction; Jury Trial. The parties hereby agree that they have chosen that all questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan for
the adjudication of any dispute hereunder or under any of the other Transaction Documents or in connection herewith or with any
transaction contemplated hereby or thereby or discussed herein or therein, and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall (i) limit,
or be deemed to limit, in any way any right to serve process in any manner permitted by law, (ii) operate, or shall be deemed
to operate, to preclude any Buyer from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling in favor of such Buyer
or (iii) limit, or be deemed to limit, any provision of Section 13 of the Warrants. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER
TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY.

 

(b)          Counterparts.
This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature
is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature
page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such signature page were an original thereof.

 

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(c)          Headings;
Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision
in which they are found.

 

(d)          Severability.
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

    	36

    	 

    

  

(e)          Entire
Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and
thereto and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers,
the Company, their affiliates and Persons acting on their behalf solely with respect to the matters contained herein and therein,
and this Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein contain the entire understanding of the parties solely with respect to the matters covered herein
and therein; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed
to) (i) have any effect on any agreements any Buyer or any of its affiliates has entered into with, or any instruments any Buyer
or any of its affiliates has received from, the Company or any of its Subsidiaries prior to the date hereof with respect to any
prior investment made by such Buyer or any of its affiliates in the Company or (ii) waive, alter, modify or amend in any respect
any obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any of its affiliates
or any other Person, in any agreement entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries
and any Buyer or any of its affiliates, or any instruments any Buyer or any of its affiliates has received from the Company and/or
any of its Subsidiaries prior to the date hereof, and all such agreements and instruments shall continue in full force and effect.
Except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant
or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. Provisions of
this Agreement may be amended only with the written consent of the Company and each Significant Buyer (as defined below), and
any amendment of any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding
upon each Buyer and the Company, provided that no such amendment shall be effective to the extent that it (1) applies to less
than all of the Buyers, (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent
(which may be granted or withheld in such Buyer’s sole discretion) or (3) applies retroactively. No waiver shall be effective
unless it is in writing and signed by an authorized representative of the waiving party, provided that each Significant Buyer
(in one or more writings signed by all of the Significant Buyers) may waive any provision of this Agreement, and any waiver of
any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding on each Buyer, provided
that no such waiver shall be effective to the extent that it (1) applies to less than all the Buyers (unless a party gives a waiver
as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s prior written consent (which
may be granted or withheld in such Buyer’s sole discretion). No consideration shall be offered or paid to any Person to
amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration
also is offered to all of the parties to the Transaction Documents, all holders of Common Shares or all holders of the Warrants
(as the case may be). The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without
limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or
promise or has any other obligation to provide any financing to the Company, any Subsidiary or otherwise. As a material inducement
for each Buyer to enter into this Agreement, the Company expressly acknowledges and agrees that (i) no due diligence or other
investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives shall affect such Buyer’s
right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s representations and
warranties contained in this Agreement or any other Transaction Document and (ii) unless a provision of this Agreement or any
other Transaction Document is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing
contained in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner
or be an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction
Document. “Significant Buyers” means, collectively, each Buyer whose Purchase Price is equal to or exceeds
$600,000 (each of the foregoing is referred to herein as a “Significant Buyer”).

 

(f)          Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, if delivered personally; (ii) when sent, if sent by
facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party);
(iii) when sent, if sent by e-mail (provided that such sent e-mail is kept on file (whether electronically or otherwise) by the
sending party and the sending party does not receive an automatically generated message from the recipient’s e-mail server
that such e-mail could not be delivered to such recipient) and (iv) if sent by overnight courier service, one (1) Business Day
after deposit with an overnight courier service with next day delivery specified, in each case, properly addressed to the party
to receive the same. The addresses, facsimile numbers and/or e-mail addresses for such communications are as follows:

 

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If to the Company:

 

Arch Therapeutics, Inc.

20 William Street, Suite
2790

Wellesley, Massachusetts
02481

Facsimile: (617)
431-2307

E-mail address: twn@archtherapeutics.com

Attention: Chief Executive Officer

 

With a copy (for informational
purposes only) to:

 

Morrison & Foerster
LLP

12531 High Bluff Drive,
Suite 100

San Diego, California
92130

Facsimile: (858)
720-5125

E-mail address: srowles@mofo.com

Attention: Steven
G. Rowles, Esq.

 

If to the Company’s Transfer
Agent:

 

Empire Stock Transfer

1859 Whitney Mesa Drive

Henderson, Nevada 89014

Facsimile: (702)
974-1444

E-mail address: brian@empirestock.com

Attention: Brian
Barthlow

 

If to a Buyer, to its
address, facsimile number and/or e-mail address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives
as set forth on the Schedule of Buyers,

 

with a copy (for informational
purposes only) to:

 

Greenberg Traurig, LLP

77 W. Wacker Drive, Suite 3100

Chicago, Illinois 60601

Facsimile: (312) 456-8435

E-mail addresses: liebermanp@gtlaw.com

mazurt@gtlaw.com

Attention: Peter H. Lieberman,
Esq.

Todd A. Mazur, Esq.

 

    	38

    	 

    

  

or to such other address, facsimile number
or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change, provided that Greenberg Traurig, LLP shall only be provided
copies of notices sent to Cranshire. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver
or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time,
date and recipient facsimile number or (C) provided by an overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iv) above, respectively.
A copy of the e-mail transmission containing the time, date and recipient e-mail address shall be rebuttable evidence of receipt
by e-mail in accordance with clause (iii) above.

 

(g)          Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors
and assigns, including, as contemplated below, any assignee or transferee of any of the Securities. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written consent of each of the Significant Buyers (which
may be granted or withheld in each Significant Buyer’s sole discretion), including, without limitation, by way of a Fundamental
Transaction (as defined in the Warrants) (unless the Company is in compliance with the applicable provisions governing Fundamental
Transactions set forth in the Warrants). A Buyer may assign some or all of its rights hereunder in connection with any assignment
or transfer of any of its Securities compliant with the terms of this Agreement (including without limitation Section 2(g)), and
any transfer restrictions set forth in the Warrants, without the consent of the Company, in which event such assignee or transferee
(as the case may be) shall be deemed to be a Buyer hereunder with respect to such assigned rights; provided that, in the event
of any such transfer, the assignee or transferee shall agree in writing to be bound, with respect to the transferred Securities,
by the terms and conditions of this Agreement as applicable to Buyers.

 

(h)          No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than
the Indemnitees referred to in Section 9(k).

 

(i)          Survival.
The representations, warranties, agreements and covenants shall survive the Closing. Each Buyer shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.

 

(j)          Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

    	39

    	 

    

  

(k)          Indemnification.
In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each holder of any Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively,
the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the Company in any of the Transaction Documents, (b)
any breach of any covenant, agreement or obligation of the Company contained in any of the Transaction Documents or (c) any cause
of action, suit, proceeding or claim brought or made against such Indemnitee by a third party (including, without limitation,
for these purposes a derivative action brought on behalf of the Company or any Subsidiary) or which otherwise involves such Indemnitee
that arises out of, relates to or results from (i) the execution, delivery, performance or enforcement of any of the Transaction
Documents, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Securities, (iii) any disclosure properly made by such Buyer pursuant to Section 4(i), or (iv) the status of such
Buyer or holder of the Securities either as an investor in the Company pursuant to the transactions contemplated by the Transaction
Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action or
proceeding for injunctive or other equitable relief). To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to
the rights and obligations under this Section 9(k) shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.

 

(l)          Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and
no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality
or applicability of a more general representation or warranty. Each and every reference to share prices, shares of Common Stock
and any other numbers in this Agreement that relate to the Common Stock shall be automatically adjusted for stock splits, stock
combinations and other similar transactions that occur with respect to the Common Stock after the date of this Agreement. It is
expressly understood and agreed that for all purposes of this Agreement, and without implication that the contrary would otherwise
be true, neither transactions nor purchases nor sales shall include the location and/or reservation of borrowable shares of Common
Stock. Unless expressly indicated otherwise, all section references are to sections of this Agreement.

 

(m)          Remedies.
Each Buyer and each holder of any Securities shall have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event
that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law
may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek specific
performance and/or temporary, preliminary and permanent injunctive or other equitable relief from any court of competent jurisdiction
in any such case without the necessity of proving actual damages and without posting a bond or other security. The remedies provided
in this Agreement and the other Transaction Documents shall be cumulative and in addition to all other remedies available under
this Agreement and the other Transaction Documents, at law or in equity (including, without limitation, a decree of specific performance
and/or other injunctive relief).

 

    	40

    	 

    

  

(n)          Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company does
not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in its
sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights.

 

(o)          Payment
Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to any
of the other Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and such payment
or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred. Until the one (1) year anniversary of the Applicable Date, the Company shall not effect
any stock combination, reverse stock split or other similar transaction (or make any public announcement or disclosure with respect
to any of the foregoing) without the prior written consent of each Significant Buyer (which may be granted or withheld in such
Significant Buyer’s sole discretion). Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement
and the other Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts owing under
this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All amounts denominated in other currencies
(if any) shall be converted into the U.S. Dollar equivalent amount in accordance with the Exchange Rate on the date of calculation.
“Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to
this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of calculation.

 

    	41

    	 

    

  

(p)          Independent
Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several
and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the
obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges
that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or
create a presumption that the Buyers are in any way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Buyers are
not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the
transactions contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted
as agent for such Buyer in connection with such Buyer making its investment hereunder and that no other Buyer will be acting as
agent of such Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its rights under
the Transaction Documents. The Company and each Buyer confirms that each Buyer has independently participated with the Company
in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be
entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement
or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party
in any proceeding for such purpose. The use of a single agreement to effectuate the purchase and sale of the Securities contemplated
hereby was solely in the control of the Company, not the action or decision of any Buyer, and was done solely for the convenience
of the Company and not because it was required or requested to do so by any Buyer. It is expressly understood and agreed that
each provision contained in this Agreement and in each other Transaction Document is between the Company and a Buyer, solely,
and not between the Company and the Buyers collectively and not between and among the Buyers.

 

[signature pages follow]

 

    	42

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	COMPANY:
	 	 
	 	Arch therapeutics, INC.
	 	 	 
	 	By:	/s/ Terrence W. Norchi, M.D.
	 	 	Name: Terrence W. Norchi, M.D
	 	 	Title:  President, Chief Executive Officer

 

    	 

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	BUYER:
	 	 
	 	CRANSHIRE CAPITAL MASTER FUND, LTD.
	 	 	 
	 	By:	Cranshire Capital Advisors, LLC
	 	Its:	Investment Manager
	 	 
	 	/s/ Keith Goodman
	 	By: Keith Goodman
	 	Its:  Authorized Signatory

 

    	 

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	BUYER:
	 	 
	 	EQUITEC SPECIALISTS, LLC
	 	 	 
	 	By:	Cranshire Capital Advisors, LLC
	 	Its:	Investment Manager
	 	 
	 	/s/ Keith Goodman
	 	By: Keith Goodman
	 	Its:  Authorized Signatory

 

    	 

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	BUYER:
	 	 
	 	Anson Investments Master Fund, Ltd.
	 	 	 
	 	By:	/s/ Moez Kassam
	 	 	Name: Moez Kassam
	 	 	Title:  Director, M5V Advisors, Inc.

 

    	 

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	BUYER:
	 	 
	 	CAPITAL VENTURES INTERNATIONAL
	 	 	 
	 	By:	/s/ Martin Kobinger
	 	 	Name: Martin Kobinger
	 	 	Title:  Investment Manager

 

    	 

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	BUYER:
	 	 
	 	HENG HONG LTD
	 	 	 
	 	By:	/s/ Daniel MacMullin
	 	 	Name: Daniel MacMullin
	 	 	Title:  Managing Director

 

    	 

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	BUYER:
	 	 
	 	0903746 B.C. Ltd
	 	 	 
	 	By:	/s/ Maheep Dhillon
	 	 	Name: Maheep Dhillon
	 	 	Title:  Director

 

    	 

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	BUYER:
	 	 
	 	ocean creation investments limited
	 	 	 
	 	By:	/s/ Norman Winata
	 	 	Name: Norman Winata
	 	 	Title:  Director

 

    	 

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	BUYER:
	 	 
	 	/s/ Ong Kim Kiat
	 	Ong Kim Kiat

 

    	 

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	BUYER:
	 	 
	 	/s/ Karmdeep Bains
	 	Karmdeep Bains

 

    	 

    	 

    

  

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written
above.

 

	 	BUYER:
	 	 
	 	/s/ Harpreet Bains
	 	Harpreet Bains

 

    	 

    	 

    

  

SCHEDULE OF BUYERS

 

	(1)	 	(2)	 	 	(3)		 	 	(4)		 	 	(5)		 	 	(6)		 	 	(7)		 	(8)
	Buyer
	 	Address, Facsimile Number and 

                                         E-mail Address
	 	 	Number of

                                         Common
 Shares
	 	 	 	Number of 

                                         Series A
 Warrant Shares
	 	 	 	Number of 

                                         Series B 
 Warrant Shares
	 	 	 	Number of 

                                         Series C 
 Warrant Shares
	 	 	 	Purchase Price
	 	 	Legal Representative’s

                                         Address and Facsimile
 Number

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cranshire Capital Master
    Fund, Ltd.	 	c/o
                                         Cranshire Capital Advisors, LLC
 3100
                                         Dundee Road, Suite 703
 Northbrook,
                                         Illinois 60062
 Attn:
                                         Mitchell P. Kopin
 Facsimile:
                                         (847) 562-9031
 E-mail:
                                         notices@cranshirecapital.com
  
	 	 	3,200,000	 	 	 	3,200,000	 	 	 	3,200,000	 	 	 	3,200,000	 	 	$	800,000.00	 	 	Greenberg
                                         Traurig, LLP
 77 W. Wacker Drive, Suite 3100
 Chicago, Illinois 60601
 Attention:
                                         Peter H. Lieberman
 Todd
                                         A. Mazur
 Facsimile:
                                         (312) 456-8435
 E-Mail:
                                         liebermanp@gtlaw.com
 mazurt@gtlaw.com

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equitec Specialists, LLC	 	c/o
                                         Cranshire Capital Advisors, LLC
 3100
                                         Dundee Road, Suite 703
 Northbrook,
                                         Illinois 60062
 Attn:
                                         Mitchell P. Kopin
 Facsimile:
                                         (847) 562-9031
 E-mail:
                                         notices@cranshirecapital.com
  
	 	 	800,000	 	 	 	800,000	 	 	 	800,000	 	 	 	800,000	 	 	$	200,000.00	 	 	Greenberg
                                         Traurig, LLP
 77 W. Wacker Drive, Suite 3100
 Chicago, Illinois 60601
 Attention:
                                         Peter H. Lieberman
 Todd
                                         A. Mazur
 Facsimile:
                                         (312) 456-8435
 E-Mail:
                                         liebermanp@gtlaw.com
 mazurt@gtlaw.com

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Anson Investments Master
    Fund, Ltd.	 	111
                                         Peter Street Suite 904
 Toronto,
                                         Ontario M5V 2H1
 Canada
 Attn:
                                         Amin Nathoo, Moez Kassam
 Facsimile:
 E-mail:
                                         anathoo@ansonfunds.com
	 	 	2,000,000	 	 	 	2,000,000	 	 	 	2,000,000	 	 	 	2,000,000	 	 	$	500,000.00	 	 	N/A

 

    	1

    	 

    

  

	(1)	 	(2)	 	 	(3)		 	 	(4)		 	 	(5)		 	 	(6)		 	 	(7)		 	(8)
	Buyer	 	Address, Facsimile Number and 

    E-mail Address	 	 	Number of

                                         Common
 Shares	 	 	 	Number of 

                                         Series A

                                         Warrant Shares	 	 	 	Number of 

                                         Series B 

                                         Warrant Shares	 	 	 	Number of 

                                         Series C 

                                         Warrant Shares	 	 	 	Purchase Price	 	 	Legal Representative’s

    Address and Facsimile
 Number
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Capital Ventures International	 	c/o Heights Capital Management, 101 California
    St., Suite 3250 
San Francisco, CA 94111, 
Attn: Sam Winer, Martin Kobinger 
Facsimile: 
E-mail: sam.winer@sig.com
    
	 	 	2,000,000	 	 	 	2,000,000	 	 	 	2,000,000	 	 	 	2,000,000	 	 	$	500,000.00	 	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Heng Hong Ltd	 	Rams Office Complex 
Stoney Grove, Box 822
    
Charlestown, Nevis 
St. Kitts & Nevis, West Indies 
Attn: Dan McAllister, Daniel MacMullin 
Facsimile: 
E-mail:
    dmacmullin@ifgnevis.com 
	 	 	2,100,000	 	 	 	2,100,000	 	 	 	2,100,000	 	 	 	2,100,000	 	 	$	525,000.00	 	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	0903746 B.C. Ltd	 	1885
                                         East 36th
 Vancouver,
                                         BC V5P1C7
 Canada
 Attn:
                                         Maheep Dhillon
 Facsimile:
 E-mail:
                                         md@idhillon.com
  
	 	 	700,000	 	 	 	700,000	 	 	 	700,000	 	 	 	700,000	 	 	$	175,000.00	 	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ocean Creation Investments
    Limited	 	65 Chulia St. #41-02 
Singapore 049513 
Attn:
    Norman Winata 
Facsimile: 
E-mail: norman@lucrumcapital.com.sg 
	 	 	200,000	 	 	 	200,000	 	 	 	200,000	 	 	 	200,000	 	 	$	50,000.00	 	 	N/A

 

    	2

    	 

    

 

 

	(1)	 	(2)	 	 	(3)		 	 	(4)		 	 	(5)		 	 	(6)		 	 	(7)		 	(8)
	Buyer	 	Address, Facsimile Number and 

    E-mail Address	 	 	Number of

                                         Common
 Shares	 	 	 	Number of 

                                         Series A

                                         Warrant Shares	 	 	 	Number of 

                                         Series B 

                                         Warrant Shares	 	 	 	Number of 

                                         Series C 

                                         Warrant Shares	 	 	 	Purchase Price	 	 	Legal Representative’s

    Address and Facsimile
 Number
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ong Kim Kiat	 	4 Sunrise Drive 
Singapore 806507 
Attn:
    Ong Kim Kiat 
Facsimile: 
E-mail:drkkong@yahoo.com 
	 	 	200,000	 	 	 	200,000	 	 	 	200,000	 	 	 	200,000	 	 	$	50,000.00	 	 	N/A
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Karmdeep and Harpreet
    Bains	 	925 Woodridge Court 
Yuba City, CA 95993
    
Attn: Karmdeep Bains 
Facsimile: 
E-mail: karmbains1@comcast.net 
	 	 	200,000	 	 	 	200,000	 	 	 	200,000	 	 	 	200,000	 	 	$	50,000.00	 	 	N/A

 

    	3

    	 

    

  

EXHIBIT A

 

Form of Series A Warrant

 

    	 

    	 

    

  

EXHIBIT B

 

Form of Series B Warrant

 

    	 

    	 

    

  

EXHIBIT C

 

Form of Series C Warrant

 

    	 

    	 

    

  

EXHIBIT D

 

Registration Rights AgreementREGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION
RIGHTS AGREEMENT (this “Agreement”), dated as of February [___], 2014, is by and among Arch Therapeutics,
Inc., a Nevada corporation (the “Company”), and each of the undersigned buyers (each, a “Buyer,”
and collectively, the “Buyers”).

 

RECITALS

 

A.           In
connection with the Securities Purchase Agreement by and among the parties hereto, dated as of January [___], 2014 (as may be amended
from time to time, the “Securities Purchase Agreement”), the Company has agreed, upon the terms and subject
to the conditions of the Securities Purchase Agreement, to issue and sell to each Buyer (i) shares of Common Stock (as defined
in the Securities Purchase Agreement) (the “Common Shares”) and (ii) the Warrants, which will be exercisable
to purchase Warrant Shares (each as defined in the Securities Purchase Agreement) in accordance with the terms of the Warrants.

 

B.           To
induce the Buyers to consummate the transactions contemplated by the Securities Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the “1933 Act”), and applicable state securities laws.

 

AGREEMENT

 

NOW, THEREFORE,
in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:

 

1.            Definitions.

 

Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement. As used
in this Agreement, the following terms shall have the following meanings:

 

(a)          “Business
Day” means any day other than Saturday, Sunday or any other day on which commercial banks in New York, New York are authorized
or required by law to remain closed.

 

(b)          “Closing
Date” shall have the meaning set forth in the Securities Purchase Agreement.

 

(c)          “Effective
Date” means the date that the applicable Registration Statement has been declared effective by the SEC.

 

    	 

    	 

    

 

(d)          “Effectiveness
Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a),
the earlier of the (A) 90th calendar day after the Closing Date (or the 150th calendar day after the Closing
Date in the event that such Registration Statement is subject to review by the SEC) and (B) 3rd Business Day after the
date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not
be reviewed or will not be subject to further review and (ii) with respect to any additional Registration Statements that may be
required to be filed by the Company pursuant to this Agreement, the earlier of the (A) 90th calendar day following the
date on which the Company was required to file such additional Registration Statement (or the 150th calendar day after
such date in the event that such Registration Statement is subject to review by the SEC) and (B) 3rd Business Day after
the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will
not be reviewed or will not be subject to further review.

 

(e)          “Filing
Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a),
the 45th calendar day after the Closing Date and (ii) with respect to any additional Registration Statements that may
be required to be filed by the Company pursuant to this Agreement, the date on which the Company was required to file such additional
Registration Statement pursuant to the terms of this Agreement.

 

(f)          “Investor”
means a Buyer or any transferee or assignee of any Registrable Securities or Warrants, as applicable, to whom a Buyer assigns its
rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and
any transferee or assignee thereof to whom a transferee or assignee of any Registrable Securities or Warrants, as applicable, assigns
its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.

 

(g)          “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization
or a government or any department or agency thereof.

 

(h)          “register,”
“registered,” and “registration” refer to a registration effected by preparing and filing
one or more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 and the declaration of effectiveness
of such Registration Statement(s) by the SEC.

 

(i)          “Registrable
Securities” means (i) the Common Shares, (ii) the Warrant Shares and (iii) any capital stock of the Company issued or
issuable with respect to the Common Shares, the Warrant Shares or the Warrants, including, without limitation, (1) as a result
of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise and (2) shares of capital stock of
the Company into which the shares of Common Stock are converted or exchanged and shares of capital stock of a Successor Entity
(as defined in the Warrants) into which the shares of Common Stock are converted or exchanged, in each case, without regard to
any limitations on exercise of the Warrants, provided that all of the foregoing shall cease being Registrable Securities upon any
sale thereof pursuant to an effective Registration Statement or Rule 144.

 

    	2

    	 

    

 

(j)          “Registration
Statement” means a registration statement or registration statements of the Company filed under the 1933 Act covering
Registrable Securities, including (in each case) the prospectus, amendments and supplements to such registration statements, including
pre-effective and post-effective amendments, and all exhibits and other material incorporated by reference or deemed to be incorporated
by reference in such registration statements.

 

(k)          “Required
Holders” means (i) the holders of at least a majority of the Registrable Securities and (ii) Cranshire (as defined in
the Securities Purchase Agreement).

 

(l)          “Required
Registration Amount” means 133% of the sum of (i) the Common Shares issued and (ii) the maximum number of Warrant Shares
issued and issuable pursuant to the Warrants as of the Trading Day (as defined in the Warrants) immediately preceding the applicable
date of determination (without taking into account any limitations on the exercise of the Warrants set forth therein or any potential
future adjustments to the number of Warrant Shares and/or exercise price therefor as set forth in the Warrants), all subject to
adjustment as provided in Section 2(d).

 

(m)          “Rule
144” means Rule 144 promulgated by the SEC under the 1933 Act, as such rule may be
amended from time to time, or any other similar or successor rule or regulation of the SEC that may at any time permit the Investors
to sell securities of the Company to the public without registration.

 

(n)          “Rule
415” means Rule 415 promulgated by the SEC under the 1933 Act, as such rule may be
amended from time to time, or any other similar or successor rule or regulation of the SEC providing for offering securities on
a continuous or delayed basis.

 

(o)          “SEC”
means the United States Securities and Exchange Commission or any successor thereto.

 

2.            Registration.

 

(a)          Mandatory
Registration. The Company shall prepare and, as soon as practicable, but in no event later than the Filing Deadline, file with
the SEC an initial Registration Statement on Form S-1 covering the resale of all of the Registrable Securities, provided that such
initial Registration Statement shall register for resale at least the number of shares of Common Stock equal to the Required Registration
Amount as of the date such Registration Statement is initially filed with the SEC. Such initial Registration Statement, and each
other Registration Statement required to be filed pursuant to the terms of this Agreement, shall contain (except if otherwise directed
by the Required Holders or if the SEC shall have any comments regarding either such section) the “Selling Securityholders”
and “Plan of Distribution” sections in substantially the form attached hereto as Exhibit B (and
each Buyer hereby acknowledges and agrees solely with respect to the initial Registration Statement that, as of the date hereof,
(i) the disclosure set forth under such “Plan of Distribution” section is accurate and complete with respect
to it and (ii) the information about such Buyer set forth in such “Selling Securityholders” section is accurate
and complete). The Company shall use its commercially reasonable efforts to have such initial Registration Statement, and each
other Registration Statement required to be filed pursuant to the terms of this Agreement, declared effective by the SEC as soon
as practicable, but in no event later than the applicable Effectiveness Deadline for such Registration Statement.

 

    	3

    	 

    

 

(b)          Legal
Counsel. Subject to Section 5 hereof, Cranshire shall have the right to select one (1) legal counsel to review and oversee,
solely on its behalf, any registration pursuant to this Section 2 (“Legal Counsel”), which shall be Greenberg
Traurig, LLP or such other counsel as thereafter designated by Cranshire.

 

(c)          Use
of Form S-3. The Company shall undertake to register the resale of all the Registrable Securities on Form S-3 as soon as such
form is available, provided that the Company shall maintain the effectiveness of all Registration Statements then in effect and
the availability for use of each prospectus contained therein until such time as a Registration Statement on Form S-3 covering
the resale of all the Registrable Securities has been declared effective by the SEC and the prospectus contained therein is available
for use or, if earlier, such time as a Registration Statement is no longer required to be maintained hereunder.

 

(d)          Sufficient
Number of Shares Registered. In the event the number of shares available under any Registration Statement is insufficient to
cover all of the Registrable Securities required to be covered by such Registration Statement or an Investor’s allocated
portion of the Registrable Securities pursuant to Section 2(h), the Company shall amend such Registration Statement (if permissible),
or file with the SEC a new Registration Statement (on the shortest form available therefor, if applicable), or both, so as to cover
at least the Required Registration Amount as of the Trading Day immediately preceding the date of the filing of such amendment
or new Registration Statement, in each case, as soon as practicable, but in any event not later than thirty (30) days after the
necessity therefor arises (but taking account of any Staff position with respect to the date on which the Staff will permit such
amendment to the Registration Statement and/or such new Registration Statement (as the case may be) to be filed with the SEC).
The Company shall use its commercially reasonable efforts to cause such amendment to such Registration Statement and/or such new
Registration Statement (as the case may be) to become effective as soon as practicable following the filing thereof with the SEC,
but in no event later than the applicable Effectiveness Deadline for such Registration Statement. For purposes of the foregoing
provision, the number of shares available under a Registration Statement shall be deemed “insufficient to cover all of the
Registrable Securities” if at any time the number of shares of Common Stock available for resale under the applicable Registration
Statement is less than the product determined by multiplying (i) the Required Registration Amount as of such time by (ii) 0.90.
The calculation set forth in the foregoing sentence shall be made without regard to any limitations on exercise of the Warrants
(and such calculation shall assume that the Warrants are then fully exercisable for shares of Common Stock at the then-prevailing
applicable Exercise Price).

 

    	4

    	 

    

 

(e)          Effect
of Failure to File and Obtain and Maintain Effectiveness of any Registration Statement. If (i) a Registration Statement covering
the resale of all of the Registrable Securities required to be covered thereby (disregarding any reduction pursuant to Section
2(f) of Registrable Securities that constitute Common Shares) and required to be filed by the Company pursuant to this Agreement
is (A) not filed with the SEC on or before the Filing Deadline for such Registration Statement unless such failure to file on or
before the Filing Deadline shall solely be the result of an unreasonable objection by Legal Counsel (a “Filing Failure”),
or (B) not declared effective by the SEC on or before the Effectiveness Deadline for such Registration Statement (it being understood
that if on the Business Day immediately following the Effective Date for such Registration Statement the Company shall not have
filed a “final” prospectus for such Registration Statement with the SEC under Rule 424(b) in accordance with Section
3(b) (whether or not such a prospectus is technically required by such rule), the Company shall be deemed to not have satisfied
this clause (i)(B) and such event shall be deemed to be an Effectiveness Failure) (an “Effectiveness Failure”),
(ii) other than during an Allowable Grace Period (as defined below), on any day after the Effective Date of a Registration Statement
sales of all of the Registrable Securities required to be included on such Registration Statement (disregarding any reduction pursuant
to Section 2(f) of Registrable Securities that constitute Common Shares) cannot be made pursuant to such Registration Statement
(including, without limitation, because of a failure to keep such Registration Statement effective, a failure to disclose such
information as is necessary for sales to be made pursuant to such Registration Statement, a suspension or delisting of (or a failure
to timely list) the shares of Common Stock on the Principal Market (as defined in the Securities Purchase Agreement), or a failure
to register a sufficient number of shares of Common Stock or by reason of a stop order) or the prospectus contained therein is
not available for use for any reason (a “Maintenance Failure”), or (iii) if on any day after the Effective Date
of a Registration Statement, a Registration Statement is not effective for any reason or the prospectus contained therein is not
available for use for any reason and the Company fails to file with the SEC any required reports under Section 13 or 15(d) of the
1934 Act such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as a result of which any of the
Investors are unable to sell Registrable Securities without restriction under Rule 144 (including, without limitation, volume restrictions)
(a “Current Public Information Failure”), then, as partial relief for the damages to any holder by reason of
any such delay in, or reduction of, its ability to sell the underlying shares of Common Stock (which remedy shall not be exclusive
of any other remedies available at law or in equity), the Company shall pay to each holder of Registrable Securities relating to
such Registration Statement an amount in cash equal to one percent (1%) of such Investor’s Purchase Price (as defined in
the Securities Purchase Agreement) (1) on the date of such Filing Failure, Effectiveness Failure, Maintenance Failure or Current
Public Information Failure, as applicable, and (2) on every thirty (30) day anniversary of (I) a Filing Failure until such Filing
Failure is cured; (II) an Effectiveness Failure until such Effectiveness Failure is cured; (III) a Maintenance Failure until such
Maintenance Failure is cured; and (IV) a Current Public Information Failure until the earlier of (i) the date such Current Public
Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144 (in each
case, pro rated for periods totaling less than thirty (30) days). The payments to which a holder of Registrable Securities shall
be entitled pursuant to this Section 2(e) are referred to herein as “Registration Delay Payments.” Following
the initial Registration Delay Payment for any particular event or failure (which shall be paid on the date of such event or failure,
as set forth above), without limiting the foregoing, if an event or failure giving rise to the Registration Delay Payments is cured
prior to any thirty (30) day anniversary of such event or failure, then such Registration Delay Payment shall be made on the third
(3rd) Business Day after such cure. In the event the Company fails to make Registration Delay Payments in a timely manner
in accordance with the foregoing, such Registration Delay Payments shall bear interest at the rate of one and one-half percent
(1.5%) per month (prorated for partial months) until paid in full. Notwithstanding the foregoing, no Registration Delay Payments
shall be owed to an Investor (other than with respect to a Maintenance Failure resulting from a suspension or delisting of (or
a failure to timely list) the shares of Common Stock on the Principal Market) with respect to any period during which all of such
Investor’s Registrable Securities may be sold by such Investor without restriction under Rule 144 (including, without limitation,
volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable).
Notwithstanding anything to the contrary contained in this Agreement, the Company shall not be liable for any Registration Delay
Payments solely with respect to the exclusion from the initial Registration Statement required to be filed hereunder of the Warrant
Shares (or any capital stock of the Company issued or issuable with respect to the Warrant Shares) as a result of the application
of Section 2(f).

 

    	5

    	 

    

 

(f)          Offering.
Notwithstanding anything to the contrary contained in this Agreement, but subject to the payment of the Registration Delay Payments
as expressly set forth in Section 2(e), in the event the staff of the SEC (the “Staff”) or the SEC seeks to
characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering
of securities by, or on behalf of, the Company, or in any other manner, such that the Staff or the SEC do not permit
such Registration Statement to become effective and used for resales in a manner that does not constitute such an offering and
that permits the continuous resale at the market by the Investors participating therein (or as otherwise may be acceptable
to each Investor) without being named therein as an “underwriter,” then the Company shall reduce the number of shares
to be included in such Registration Statement by all Investors until such time as the Staff and the SEC shall so permit such
Registration Statement to become effective as aforesaid. In making such reduction, the Company shall (i) first, reduce
the number of Warrant Shares (or any capital stock of the Company issued or issuable with respect to the Warrant Shares) to be
included by all Investors on a pro rata basis (based upon the number of such Reigstrable Securities otherwise required to be included
for each Investor), and (ii) second, reduce the number of Common Shares (or any capital stock of the Company issued or issuable
with respect to the Common Shares) to be included by all Investors on a pro rata basis (based upon the number of such Registrable
Securities otherwise required to be included for each Investor), unless in either case the inclusion of shares by a particular
Investor or a particular set of Investors are resulting in the Staff or the SEC’s “by or on behalf of the Company”
offering position, in which event the shares held by such Investor or set of Investors shall be the only shares subject to reduction
(and if by a set of Investors on a pro rata basis by such Investors or on such other basis as would result in the exclusion of
the least number of shares by all such Investors).  In addition, in the event that the Staff or the SEC requires any Investor
seeking to sell securities under a Registration Statement filed pursuant to this Agreement to be specifically identified
as an “underwriter” in order to permit such Registration Statement to become effective, and such Investor
does not consent to being so named as an underwriter in such Registration Statement, then, in each such case, the Company shall
reduce the total number of Registrable Securities to be registered on behalf of such Investor, until such time as
the Staff or the SEC does not require such identification or until such Investor accepts such identification and the manner thereof. Any
reduction pursuant to this paragraph will first reduce all securities that are not Registrable Securities, if any such securities
are permitted by the Required Holders to be included in accordance with the terms of this Agreement. In the event of any reduction
in Registrable Securities pursuant to this paragraph, an affected Investor shall have the right to require, upon delivery
of a written request to the Company signed by such Investor, the Company to file a registration statement within thirty (30) days
of such request (subject to any restrictions or longer periods imposed by Rule 415 or required by the Staff or the SEC)
for resale by such Investor in a manner acceptable to such Investor, and the Company shall following such request cause to
be and keep effective such registration statement in the same manner as otherwise contemplated in this Agreement for Registration
Statements hereunder, in each case until such time as: (i) all Registrable Securities held by such Investor have been registered
and sold pursuant to an effective Registration Statement in a manner acceptable to such Investor or (ii) all Registrable Securities
may be resold by such Investor without restriction (including, without limitation, volume limitations) pursuant to Rule 144
(taking account of any Staff position with respect to “affiliate” status) and without the need for current public information
required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (iii) such Investor agrees to be named as an underwriter in any
such Registration Statement in a manner acceptable to such Investor as to all Registrable Securities held by such Investor and
that have not theretofore been included in a Registration Statement under this Agreement (it being understood that the special
demand right under this sentence may be exercised by an Investor multiple times and with respect to limited amounts of Registrable
Securities in order to permit the resale thereof by such Investor as contemplated above).

 

    	6

    	 

    

 

(g)          Piggyback
Registrations. Without limiting any obligation of the Company hereunder or under the Securities Purchase Agreement, if there
is not an effective Registration Statement covering all of the Registrable Securities or the prospectus contained therein is not
available for use and the Company shall determine to prepare and file with the SEC a registration statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form
S-8 (each as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option
or other employee benefit plans), then the Company shall deliver to each Investor a written notice of such determination and, if
within ten (10) days after the date of the delivery of such notice, any such Investor shall so request in writing, the Company
shall include in such registration statement all or any part of such Registrable Securities such Investor requests to be registered;
provided, however, the Company shall not be required to register any Registrable Securities pursuant to this Section 2(g) that
are eligible for resale pursuant to Rule 144 without restriction (including, without limitation, volume restrictions) and without
the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the subject of
a then-effective Registration Statement.

 

(h)          Allocation
of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement and any increase
in the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of
Registrable Securities held by each Investor at the time such Registration Statement covering such initial number of Registrable
Securities or increase thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any
of such Investor’s Registrable Securities, each transferee or assignee (as the case may be) that becomes an Investor shall
be allocated a pro rata portion of the then-remaining number of Registrable Securities included in such Registration Statement
for such transferor or assignee (as the case may be). Any shares of Common Stock included in a Registration Statement and which
remain allocated to any Person which ceases to hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Investors, pro rata based on the number of Registrable Securities then held by such Investors which
are covered by such Registration Statement.

 

    	7

    	 

    

 

(i)          No
Inclusion of Other Securities. In no event shall the Company include any securities other than Registrable Securities on any
Registration Statement without the prior written consent of the Required Holders. Until the Applicable Date (as defined in the
Securities Purchase Agreement), the Company shall not enter into any agreement providing any registration rights to any of its
security holders.

 

3.            Related
Obligations.

 

The Company shall use
its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method
of disposition thereof, and, pursuant thereto, the Company shall have the following obligations:

 

(a)          The
Company shall promptly prepare and file with the SEC a Registration Statement with respect to all the Registrable Securities (but
in no event later than the applicable Filing Deadline) and use its commercially reasonable efforts to cause such Registration Statement
to become effective as soon as practicable after such filing (but in no event later than the Effectiveness Deadline). Subject to
Allowable Grace Periods, the Company shall keep each Registration Statement effective (and the prospectus contained therein available
for use) pursuant to Rule 415 for resales by the Investors on a delayed or continuous basis at then-prevailing market prices (and
not fixed prices) at all times until the earlier of (i) the date as of which all of the Investors may sell all of the Registrable
Securities required to be covered by such Registration Statement (disregarding any reduction pursuant to Section 2(f)) without
restriction pursuant to Rule 144 (including, without limitation, volume restrictions) and without the need for current public information
required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date on which the Investors shall have sold all of the
Registrable Securities covered by such Registration Statement (the “Registration Period”). Notwithstanding anything
to the contrary contained in this Agreement, the Company shall ensure that, when filed and at all times while effective, each Registration
Statement (including, without limitation, all amendments and supplements thereto) and the prospectus (including, without limitation,
all amendments and supplements thereto) used in connection with such Registration Statement (1) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein
(in the case of prospectuses, in the light of the circumstances in which they were made) not misleading and (2) will disclose (whether
directly or through incorporation by reference to other SEC filings to the extent permitted) all material information regarding
the Company and its securities. The Company shall submit to the SEC, within one (1) Business Day after the later of the date that
(i) the Company learns that no review of a particular Registration Statement will be made by the Staff or that the Staff has no
further comments on a particular Registration Statement (as the case may be) and (ii) the consent of Legal Counsel is obtained
pursuant to Section 3(c) (which consent shall be immediately sought), a request for acceleration of effectiveness of such Registration
Statement to a time and date not later than forty-eight (48) hours after the submission of such request.

 

    	8

    	 

    

 

(b)          Subject
to Section 3(p) of this Agreement, the Company shall prepare and file with the SEC such amendments (including, without limitation,
post-effective amendments) and supplements to each Registration Statement and the prospectus used in connection with each such
Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary
to keep each such Registration Statement effective at all times during the Registration Period for such Registration Statement,
and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities
of the Company required to be covered by such Registration Statement until such time as all of such Registrable Securities shall
have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such
Registration Statement; provided, however, by 8:30 a.m. (New York time) on the Business Day immediately following each Effective
Date, the Company shall file with the SEC in accordance with Rule 424(b) under the 1933 Act the final prospectus to be used in
connection with sales pursuant to the applicable Registration Statement (whether or not such a prospectus is technically required
by such rule). In the case of amendments and supplements to any Registration Statement which are required to be filed pursuant
to this Agreement (including, without limitation, pursuant to this Section 3(b)) by reason of the Company filing a report on Form
10-Q or Form 10-K or any analogous report under the Securities Exchange Act of 1934, as amended (the “1934 Act”),
the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such
amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement for
the Company to amend or supplement such Registration Statement.

 

(c)          The
Company shall (A) permit Legal Counsel and any legal counsel for each other Investor to review and comment upon (i) each Registration
Statement at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration
Statement (including, without limitation, the prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number of days prior
to their filing with the SEC, and (B) not file any Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel or any legal counsel for any other Investor reasonably objects. The Company shall promptly furnish to Legal Counsel,
without charge, (i) copies of any correspondence from the SEC or the Staff to the Company or its representatives relating
to each Registration Statement, provided that such correspondence shall not contain any material, non-public information regarding
the Company or any of its Subsidiaries (as defined in the Securities Purchase Agreement), (ii) after the same is prepared and filed
with the SEC, one (1) copy of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation,
financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, and all exhibits,
and (iii) upon the effectiveness of each Registration Statement, one (1) copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto; if in each case such items are not available on EDGAR. The Company shall
reasonably cooperate with Legal Counsel and any legal counsel for each other Investor in performing the Company’s obligations
pursuant to this Section 3.

 

(d)          The
Company shall promptly furnish to each Investor whose Registrable Securities are included in any Registration Statement, if requested
and without charge, (i) after the same is prepared and filed with the SEC, at least one (1) copy of each Registration Statement
and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and schedules, all documents
incorporated therein by reference, if requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon the second
(2nd) Business Day following effectiveness of each Registration Statement, ten (10) copies of the final prospectus included
in such Registration Statement and all amendments and supplements thereto (or such other number of copies as such Investor may
reasonably request from time to time) and (iii) such other documents, including, without limitation, copies of any preliminary
or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor, provided that, in each case, the availability of any such documents on EDGAR shall be deemed
to satisfy the Company’s obligation to furnish such documents under this Section 3(d) unless otherwise required by applicable
law.

 

    	9

    	 

    

 

(e)          The
Company shall use its commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification
applies, the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities
or “blue sky” laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions,
such amendments (including, without limitation, post-effective amendments) and supplements to such registrations and qualifications
as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may
be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall
promptly notify Legal Counsel, legal counsel for each other Investor and each Investor who holds Registrable Securities of the
receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt
of actual notice of the initiation or threatening of any proceeding for such purpose.

 

(f)          The
Company shall notify Legal Counsel, any legal counsel for each other Investor and each Investor in writing of the happening of
any event, as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material, non-public information regarding the Company or any
of its Subsidiaries), and, subject to Section 3(p), promptly prepare a supplement or amendment to such Registration Statement and
such prospectus contained therein to correct such untrue statement or omission and deliver ten (10) copies of such supplement or
amendment to Legal Counsel, legal counsel for each other Investor and each Investor (or such other number of copies as Legal Counsel,
legal counsel for each other Investor or such Investor may reasonably request), if such supplement or amendment is not available
on EDGAR by the time required under Section 3(p). The Company shall also promptly notify Legal Counsel, legal counsel for
each other Investor and each Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness
shall be delivered to Legal Counsel, legal counsel for each other Investor and each Investor by facsimile or e-mail no later than
8:30 a.m. (New York time) on the Trading Day immediately following such effectiveness), and when the Company receives written notice
from the SEC that a Registration Statement or any post-effective amendment will be reviewed by the SEC and/or receives written
comments to a Registration Statement from the SEC, (ii) of any request by the SEC for amendments or supplements to a Registration
Statement or related prospectus or related information, (iii) of the Company’s reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate; and (iv) of the receipt of any request by the SEC or any other federal
or state governmental authority for any additional information relating to the Registration Statement or any amendment or supplement
thereto or any related prospectus. The Company shall respond as promptly as practicable to any comments received from the SEC with
respect to each Registration Statement or any amendment thereto (it being understood and agreed that the Company’s response
to any such comments shall be delivered to the SEC no later than ten (10) days after the receipt thereof).

 

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(g)          The
Company shall (i) use its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness
of each Registration Statement or the use of any prospectus contained therein, or the suspension of the qualification, or the loss
of an exemption from qualification, of any of the Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and (ii) notify Legal
Counsel, legal counsel for each other Investor and each Investor who holds Registrable Securities of the issuance of any such stop
order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

 

(h)          The
Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state securities laws, rules or regulations or the Staff’s
interpretations thereof or is required pursuant to any SEC comments to a Registration Statement, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required to be disclosed
in such Registration Statement pursuant to the 1933 Act, (iii) the release of such information is ordered pursuant to a subpoena
or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document.
The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a
court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow
such Investor, at such Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information. Notwithstanding anything to the contrary herein, no Effectiveness Failure or Maintenance Failure shall
be deemed to occur to the extent that a Registration Statement is not declared or maintained effective by the required deadlines
or for the required periods as set forth herein solely because an Investor is seeking a protective order or other action under
this Section 3(h).

 

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(i)          Without
limiting any obligation of the Company under the Securities Purchase Agreement, the Company shall use its commercially reasonable
efforts either to (i) cause all of the Registrable Securities covered by each Registration Statement to be listed on each securities
exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, (ii) secure designation and quotation of all of the
Registrable Securities covered by each Registration Statement on the OTC Bulletin Board or the OTCQX or OTCQB tiers of the OTC
Marketplace, or (iii) if, despite the Company’s commercially reasonable efforts to satisfy the preceding clauses (i) or (ii)
the Company is unsuccessful in satisfying the preceding clauses (i) or (ii), without limiting the generality of the foregoing,
to use its commercially reasonable efforts to arrange for at least two market makers to register with the Financial Industry Regulatory
Authority (“FINRA”) as such with respect to such Registrable Securities. In addition, the Company shall cooperate
with each Investor and any broker or dealer through which any such Investor proposes to sell its Registrable Securities in effecting
a filing with FINRA pursuant to FINRA Rule 5110 as requested by such Investor. The Company shall pay all fees and expenses in connection
with satisfying its obligations under this Section 3(i).

 

(j)          The
Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities
to be offered pursuant to a Registration Statement and, without limiting the transfer restrictions set forth herein, in the Securities
Purchase Agreement or the Warrants or as required by applicable securities laws, enable such certificates to be in such denominations
or amounts (as the case may be) as the Investors may reasonably request from time to time and registered in such names as the Investors
may request.

 

(k)          If
requested by an Investor, the Company shall as soon as reasonably practicable after receipt of notice from such Investor and subject
to Section 3(p) hereof, (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor
reasonably requests to be included therein relating to the sale and distribution of Registrable Securities (including, without
limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities to be sold in such offering); and (ii) make all required
filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment pursuant to clause (i).

 

(l)          The
Company shall use its commercially reasonable efforts to cause the Registrable Securities covered by a Registration Statement to
be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition
of such Registrable Securities.

 

(m)          Solely
to the extent an Investor is or is deemed an underwriter in or with respect to a Registration Statement, the Company shall make
generally available to its security holders as soon as reasonably practical, but not later than ninety (90) days after the close
of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of
Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal
quarter next following the applicable Effective Date of each Registration Statement.

 

(n)          The
Company shall otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC
in connection with any registration hereunder.

 

    	12

    	 

    

 

(o)          Within
one (1) Business Day after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities
(with copies to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A.

 

(p)          Notwithstanding
anything to the contrary herein (but subject to the last sentence of this Section 3(p)), at any time after the Effective Date of
a particular Registration Statement, the Company may delay the disclosure of material, non-public information concerning the Company
or any of its Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the board of directors of the
Company, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace
Period”), provided that the Company shall promptly notify the Investors in writing of the (i) existence of material,
non-public information giving rise to a Grace Period (provided that in each such notice the Company shall not disclose the content
of such material, non-public information to any of the Investors) and the date on which such Grace Period will begin and (ii) date
on which such Grace Period ends, provided further that (I) no Grace Period shall exceed twenty (20) consecutive days and during
any three hundred sixty five (365) day period all such Grace Periods shall not exceed an aggregate of thirty (30) days, (II) the
first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior Grace Period and (III) no
Grace Period may exist during the sixty (60) Trading Day period immediately following the Effective Date of such Registration Statement
(provided that such sixty (60) Trading Day period shall be extended by the number of Trading Days during such period and any extension
thereof contemplated by this proviso during which such Registration Statement is not effective or the prospectus contained therein
is not available for use) (each, an “Allowable Grace Period”). For purposes of determining the length of a Grace
Period above, such Grace Period shall begin on and include the date the Investors receive the notice referred to in clause (i)
above and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) above and
the date referred to in such notice. The provisions of Section 3(g) hereof shall not be applicable during the period of any Allowable
Grace Period. Upon expiration of each Grace Period, the Company shall again be bound by the first sentence of Section 3(f) with
respect to the information giving rise thereto unless such material, non-public information is no longer applicable. Notwithstanding
anything to the contrary contained in this Section 3(p), the Company shall cause its transfer agent to deliver unlegended shares
of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale, and delivered
a copy of the prospectus included as part of the particular Registration Statement to the extent applicable, prior to such Investor’s
receipt of the notice of a Grace Period and for which the Investor has not yet settled.

 

(q)          The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investors of its Registrable
Securities pursuant to each Registration Statement.

 

    	13

    	 

    

 

4.            Obligations
of the Investors.

 

(a)          At
least five (5) Business Days prior to the first anticipated filing date of each Registration Statement or any prospectus supplement
or pre-effective or post-effective amendment thereto, the Company shall notify each Investor in writing of the information the
Company requires from each such Investor with respect to such Registration Statement. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of
a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities
held by it and beneficial ownership information related thereto, and the intended method of disposition of the Registrable Securities
held by it, as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the Company may reasonably request. Without limiting the
generality of the foregoing, the Investor acknowledges and agrees that such information shall include at least (i) the Investor’s
confirmation of the accuracy of, or revision to maintain the accuracy of, the disclosure under the heading “Plan of Distribution”
in the applicable Registration Statement (of any prospectus supplement or pre-effective or post-effective amendment thereto), and
(ii) the detail regarding such Investor as set forth under the heading “Selling Securityholders” in the applicable
Registration Statement (or any prospectus supplement or pre-effective or post-effective amendment thereto).

 

(b)          Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of each Registration Statement or any prospectus supplement
or pre-effective or post-effective amendment thereto hereunder, unless such Investor has notified the Company in writing of such
Investor’s election to exclude all of such Investor’s Registrable Securities from such Registration Statement.

 

(c)          Each
Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section
3(g) or the first sentence of 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to
any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented
or amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement
or amendment is required. Notwithstanding anything to the contrary in this Section 4(c), the Company shall cause its transfer agent
to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase
Agreement in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract
for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described
in Section 3(g) or the first sentence of Section 3(f) and for which such Investor has not yet settled.

 

(d)          Each
Investor covenants and agrees that it will comply with the prospectus delivery requirements of the 1933 Act as applicable to it
in connection with sales of Registrable Securities pursuant to a Registration Statement.

 

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5.          Expenses
of Registration.

 

All reasonable expenses,
other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant
to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting
fees, FINRA filing fees (if any) and fees and disbursements of counsel for the Company shall be paid by the Company. The Company
shall also reimburse Cranshire for the fees and disbursements of Legal Counsel in connection with registration, filing or qualification
pursuant to Sections 2 and 3 of this Agreement which amount shall be limited to $10,000.

 

6.          Indemnification.

 

(a)          To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and each
of its directors, officers, managers, shareholders, members, partners, employees, agents, advisors, representatives (and any other
Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other
title) and each Person, if any, who controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the directors,
officers, managers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such
controlling Persons (each, an “Indemnified Person”), against any losses, obligations, claims, damages, liabilities,
contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys’
fees and costs of defense and investigation), amounts paid in settlement or expenses, joint or several (collectively, “Claims”),
incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from
the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending
or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to
which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under
the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue
Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus
(as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the
1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). Subject to Section 6(c), the Company shall reimburse
the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of such Indemnified Person for such Indemnified Person expressly for use in connection with the
preparation of such Registration Statement or any such amendment thereof or supplement thereto and (ii) shall not be available
to a particular Investor to the extent such Claim is based on a failure of such Investor to deliver or to cause to be delivered
the prospectus made available by the Company (to the extent applicable), including, without limitation, a corrected prospectus,
if such prospectus or corrected prospectus was timely made available by the Company pursuant to Section 3(d) and then only if,
and to the extent that, following the receipt of the corrected prospectus no grounds for such Claim would have existed; and (iii)
shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of any of the Registrable
Securities by any of the Investors pursuant to Section 9.

 

    	15

    	 

    

 

(b)          In
connection with any Registration Statement in which an Investor is participating, such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each
of its directors, officers, employees, agents, advisors, representatives and each Person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case, to the extent, and only to the extent, that such Violation
occurs in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Investor or
its Indemnified Persons expressly for use in connection with such Registration Statement; and, subject to Section 6(c) and the
below provisos in this Section 6(b), such Investor will reimburse an Indemnified Party any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any such Claim; provided, however, the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent
shall not be unreasonably withheld or delayed, provided further that such Investor shall be liable under this Section 6(b) for
only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the applicable
sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of any of the Registrable Securities
by any of the Investors pursuant to Section 9.

 

    	16

    	 

    

 

(c)          Promptly
after receipt by an Indemnified Person or Indemnified Party (as the case may be) under this Section 6 of notice of the commencement
of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Indemnified
Person or Indemnified Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party (as the case may be); provided, however, an Indemnified Person or Indemnified
Party (as the case may be) shall have the right to retain its own counsel with the fees and expenses of such counsel to be paid
by the indemnifying party if: (i) the indemnifying party has agreed in writing to pay such fees and expenses; (ii) the indemnifying
party shall have failed promptly to assume the defense of such Claim and to employ counsel reasonably satisfactory to such Indemnified
Person or Indemnified Party (as the case may be) in any such Claim; or (iii) the named parties to any such Claim (including, without
limitation, any impleaded parties) include both such Indemnified Person or Indemnified Party (as the case may be) and the indemnifying
party, and such Indemnified Person or such Indemnified Party (as the case may be) shall have been advised by counsel that a conflict
of interest is likely to exist if the same counsel were to represent such Indemnified Person or such Indemnified Party and the
indemnifying party (in which case, if such Indemnified Person or such Indemnified Party (as the case may be) notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of the indemnifying party, then the indemnifying party
shall not have the right to assume the defense thereof and such counsel shall be at the expense of the indemnifying party, provided
further that in the case of clause (iii) above the indemnifying party shall not be responsible for the reasonable fees and expenses
of more than one (1) separate legal counsel at any time for all Indemnified Persons or Indemnified Parties (as the case may be).
The Indemnified Party or Indemnified Person (as the case may be) shall reasonably cooperate with the indemnifying party in connection
with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party
all information reasonably available to the Indemnified Party or Indemnified Person (as the case may be) which relates to such
action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person (as the case may be) reasonably
apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party
shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however,
the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person (as the case may be), consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party or Indemnified Person (as the case may be) of a release from all liability in respect to
such Claim or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnified Party
or Indemnified Person (as the case may be). Following indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person (as the case may be) with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party
of any liability to the Indemnified Person or Indemnified Party (as the case may be) under this Section 6, except to the extent
that the indemnifying party is materially and adversely prejudiced in its ability to defend such action.

 

(d)          No
Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) in connection with such sale shall be entitled to indemnification from any Person involved in such sale
of Registrable Securities who is not guilty of fraudulent misrepresentation.

 

    	17

    	 

    

 

(e)          The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

 

(f)          The
indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to pursuant to the law.

 

7.            Contribution.

 

To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however:
(i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the
fault standards set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which Person
is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall
be entitled to contribution from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation;
and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received
by such seller from the applicable sale of such Registrable Securities pursuant to such Registration Statement. Notwithstanding
the provisions of this Section 7, no Investor shall be required to contribute, in the aggregate, any amount in excess of the amount
by which the net proceeds actually received by such Investor from the applicable sale of the Registrable Securities subject to
the Claim exceeds the amount of any damages that such Investor has otherwise been required to pay, or would otherwise be required
to pay under Section 6(b), by reason of such untrue or alleged untrue statement or omission or alleged omission.

 

8.            Reports
Under the 1934 Act.

 

With a view to making
available to the Investors the benefits of Rule 144, the Company agrees to:

 

(a)          make
and keep public information available, as those terms are understood and defined in Rule 144;

 

(b)          file
with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so
long as the Company remains subject to such requirements (it being understood and agreed that nothing herein shall limit any obligations
of the Company under the Securities Purchase Agreement) and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and

 

    	18

    	 

    

 

(c)          furnish
to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting, submission and posting requirements of Rule 144 and the 1934 Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with
the SEC if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without registration.

 

9.            Assignment
of Registration Rights.

 

All or any portion
of the rights under this Agreement shall be automatically assignable by each Investor to any transferee or assignee (as the case
may be) of all or any portion of such Investor’s Registrable Securities or Warrants if: (i) such Investor agrees in writing
with such transferee or assignee (as the case may be) to assign all or any portion of such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such transfer or assignment (as the case may be); (ii) the Company is,
within a reasonable time after such transfer or assignment (as the case may be), furnished with written notice of (a) the name
and address of such transferee or assignee (as the case may be), and (b) the securities with respect to which such registration
rights are being transferred or assigned (as the case may be); (iii) immediately following such transfer or assignment (as the
case may be) the further disposition of such securities by such transferee or assignee (as the case may be) is restricted under
the 1933 Act or applicable state securities laws if so required; (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence such transferee or assignee (as the case may be) agrees in writing with the Company
to be bound by all of the provisions contained herein; (v) such transfer or assignment (as the case may be) shall have been made
in accordance with the applicable requirements of the Securities Purchase Agreement and the Warrants (as the case may be); and
(vi) such transfer or assignment (as the case may be) shall have been conducted in accordance with all applicable federal and state
securities laws. Notwithstanding anything to the contrary set forth herein, the rights of the Investors hereunder, may only be
assigned by each Investor to transferees or assignees that after such assignment hold or have the right to acquire at least 300,000
shares of Common Stock that constitute Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends,
combinations and other recapitalizations).

 

10.         Amendment
of Registration Rights.

 

Provisions of this
Agreement may be amended only with the written consent of the Company and the Required Holders. Any amendment effected in accordance
with this Section 10 shall be binding upon each Investor and the Company, provided that no such amendment shall be effective to
the extent that it (1) applies to less than all of the holders of Registrable Securities, (2) imposes any obligation or liability
on any Investor without such Investor’s prior written consent (which may be granted or withheld in such Investor’s
sole discretion) or (3) applies retroactively. No waiver shall be effective unless it is in writing and signed by an authorized
representative of the waiving party, provided that the Required Holders (in a writing signed by all of the Required Holders) may
waive any provision of this Agreement, and any waiver of any provision of this Agreement made in conformity with the provisions
of this Section 10 shall be binding on each Investor, provided that no such waiver shall be effective to the extent that it (1)
applies to less than all the Investors (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability
on any Investor without such Investor’s prior written consent (which may be granted or withheld in such Investor’s
sole discretion). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.

 

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11.         Miscellaneous.

 

(a)          Solely
for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns, or is deemed
to own, of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two
or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or
election received from such record owner of such Registrable Securities.

 

(b)          Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be
in writing and will be deemed to have been delivered: (i) upon receipt, if delivered personally; (ii) when sent, if sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii)
when sent, if sent by e-mail (provided that such sent e-mail is kept on file (whether electronically or otherwise) by the sending
party and the sending party does not receive an automatically generated message from the recipient’s e-mail server that such
e-mail could not be delivered to such recipient) and (iv) if sent by overnight courier service, one (1) Business Day after deposit
with an overnight courier service with next day delivery specified, in each case, properly addressed to the party to receive the
same. The addresses, facsimile numbers and/or e-mail addresses for such communications are as follows:

 

If to the Company:

 

Arch Therapeutics, Inc.

20 William Street, Suite 2790

Wellesley, Massachusetts 02481

Facsimile: (617) 431-2307

E-mail address: twn@archtherapeutics.com

Attention: Chief Executive Officer

 

With a copy (for informational
purposes only) to:

 

Morrison & Foerster LLP

12531 High Bluff Drive, Suite 100

San Diego, California 92130

Facsimile: (858) 720-5125

E-mail address: srowles@mofo.com

Attention: Steven G. Rowles, Esq.

 

    	20

    	 

    

 

If to the Company’s Transfer
Agent:

 

Empire Stock Transfer

1859 Whitney Mesa Drive

Henderson, Nevada 89014

Facsimile: (702) 974-1444

E-mail address: brian@empirestock.com

Attention: Brian Barthlow

 

			If to Legal Counsel:

 

Greenberg Traurig, LLP

77 W. Wacker Drive, Suite 3100

Chicago, Illinois 60601

E-mail addresses: liebermanp@gtlaw.com

 mazurt@gtlaw.com

Facsimile: (312) 456-8435

Attention: Peter H. Lieberman, Esq.

   Todd A. Mazur, Esq.

 

If to a Buyer, to its
address, facsimile number or e-mail address (as the case may be) set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers, or to such other
address, facsimile number or e-mail address and/or to the attention of such other Person as the recipient party has specified by
written notice given to each other party five (5) days prior to the effectiveness of such change, provided that Greenberg Traurig,
LLP shall only be provided copies of notices sent to Cranshire.

 

Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s
facsimile machine containing the time, date and recipient facsimile number or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with
clause (i), (ii) or (iv) above, respectively. A copy of the e-mail transmission containing the time, date and recipient e-mail
address shall be rebuttable evidence of receipt by e-mail in accordance with clause (iii) above.

 

(c)          Failure
of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof. The Company and each Investor acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions to prevent
or cure breaches of the provisions of this Agreement by any other party hereto and to enforce specifically the terms and provisions
hereof (without the necessity of showing economic loss and without any bond or other security being required), this being in addition
to any other remedy to which any party may be entitled by law or equity.

 

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(d)          The
parties hereby agree that they have chosen that all questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in
any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL
FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

 

(e)          This
Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced
herein and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to
herein and therein. This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and
the instruments referenced herein and therein supersede all prior agreements and understandings among the parties hereto solely
with respect to the subject matter hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction
Document shall (or shall be deemed to) (i) have any effect on any agreements any Investor has entered into with, or any instrument
that any Investor received from, the Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment
made by such Investor in the Company, or (ii) limit any obligations of the Company under any of the other Transaction Documents.

 

(f)          Subject
to compliance with Section 9 (if applicable), this Agreement shall inure to the benefit of and be binding upon the permitted successors
and assigns of each of the parties hereto. This Agreement is not for the benefit of, nor may any provision hereof be enforced by,
any Person, other than the parties hereto, their respective permitted successors and assigns and the Persons referred to in Sections
6 and 7 hereof.

 

(g)          The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Unless
the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular
and plural forms thereof. The terms “including,” “includes,” “include” and words of like import
shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.

 

    	22

    	 

    

 

(h)          This
Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature
page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature
is executed) with the same force and effect as if such signature page were an original thereof.

 

(i)          Each
party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

(j)          The
language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any party. Notwithstanding anything to the contrary set forth in Section 10, terms
used and not defined in this Agreement but defined in the other Transaction Documents shall have the meanings ascribed to such
terms on the Closing Date in such other Transaction Documents unless otherwise consented to in writing by each Investor.

 

(k)          All
consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by the Required Holders.

 

(l)          The
obligations of each Investor under this Agreement and the other Transaction Documents 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. 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, and the Company acknowledges
that the Investors do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or
create a presumption that the Investors are in any way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Investors are
not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions
contemplated by this Agreement or any of the other the Transaction Documents. Each Investor shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any 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. The use of a single agreement with respect to the obligations of the Company contained herein was solely in the control
of the Company, not the action or decision of any Investor, and was done solely for the convenience of the Company and not because
it was required or requested to do so by any Investor. It is expressly understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the Company and an Investor, solely, and not between the Company and
the Investors collectively and not between and among Investors.

 

[signature pages follow]

 

    	23

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	COMPANY:
	 	 
	 	ARCH THERAPEUTICS, INC.

 

	 	By:	 	 
	 	 	Name:
	 	 	Title:

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	BUYER:
	 	 
	 	CRANSHIRE CAPITAL MASTER FUND, LTD.

 

	 	By:	Cranshire Capital Advisors, LLC
	 	Its:	Investment Manager

 

	 	 	 
	 	By:
	 	Its:

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	BUYER:
	 	 
	 	EQUITEC SPECIALISTS, LLC

 

	 	By:	Cranshire Capital Advisors, LLC
	 	Its:	Investment Manager

 

	 	 	 
	 	By:
	 	Its:

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	BUYER:
	 	 
	 	Anson Investments Master Fund, Ltd.

 

	 	By:	 	 	 
	 	Name:	 	 	 
	 	Title:	 	 	 

 

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	BUYER:
	 	 
	 	CAPITAL VENTURES INTERNATIONAL

 

	 	By:	 	 	 
	 	Name:	 	 	 
	 	Title:	 	 	 

 

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	BUYER:
	 	 
	 	HENG HONG LTD

 

	 	By:	 	 	 
	 	Name:	 	 	 
	 	Title:	 	 	 

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	BUYER:
	 	 
	 	ocean creation investments limited

 

	 	By:	 	 	 
	 	Name:	 	 	 
	 	Title:	 	 	 

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	BUYER:
	 	 
	 	 	 
	 	Ong Kim Kiat

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	BUYER:
	 	 
	 	0903746 B.C. Ltd

 

	 	By:	 	 	 
	 	Name:	 	 	 
	 	Title:	 	 	 

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	BUYER:
	 	 
	 	 	 
	 	Karmdeep Bains

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.

 

	 	BUYER:
	 	 
	 	 	 
	 	Harpreet Bains

 

    	 

    	 

    

 

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

[Address 1]

[Address 2]

[Address 3]

Facsimile: [(   )    -    ]

E-mail address: [__________]

Attention: [__________]

 

		Re:	Arch Therapeutics, Inc.

 

Ladies and Gentlemen:

 

We are counsel to Arch
Therapeutics, Inc., a Nevada corporation (the “Company”), and have represented the Company in connection with
that certain Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into by and among the
Company and the investors named on the Schedule of Buyers attached thereto (collectively, the “Holders”) pursuant
to which the Company issued to the Holders shares of the Company’s common stock, $0.001 par value per share (the “Common
Stock”), and warrants exercisable for shares of Common Stock (the “Warrants”). Pursuant to the Securities
Purchase Agreement, the Company also has entered into a Registration Rights Agreement with the Holders (the “Registration
Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Registrable Securities (as
defined in the Registration Rights Agreement), including the shares of Common Stock issuable upon exercise of the Warrants, under
the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations
under the Registration Rights Agreement, on ____________ ___, 20__, the Company filed a Registration Statement on Form S-1 (File
No. 333-_____________) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”)
relating to the Registrable Securities which names each of the Holders listed below as a selling securityholder thereunder (each
such Holder, a “Selling Securityholder”) with respect to the number of Registrable Securities set forth opposite
such Holder’s name below.

 

	
        Name of Selling

        Securityholder
	 	
        Number of Shares of Common

        Stock registered under the

        Registration Statement
	 	
        Number of Shares of Common

        Stock underling the Warrants

        registered under the

        Registration Statement

	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

    	 

    	 

    

 

In connection with
the foregoing, we advise you that a member of the SEC’s staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]
and, as of the date hereof, we have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop
order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by,
the SEC.

 

This letter shall serve
as our standing instruction letter to you that we have no objection to the removal of the restrictive legend from certificates
representing the Registrable Securities set forth in the table above upon request of a Selling Securityholder or its broker in
connection with the sale by the Selling Securityholder of such Registrable Securities pursuant to the Registration Statement. You
need not require further letters from us to effect the removal of the restrictive legend from any such certificates as contemplated
hereby and by the Company’s Irrevocable Transfer Agent Instructions dated _________ __, 20__.

 

Our lack of objection
to the removal of the restrictive legend from certificates representing the Registrable Securities as set forth in this instruction
letter is in reliance upon each Selling Securityholder’s contractual obligations under the Registration Rights Agreement
to comply with the prospectus delivery requirements under the 1933 Act as applicable to it, unless an exemption therefrom is available;
to sell the Registrable Securities under the Registration Statement only in accordance with the plan of distribution contained
therein; and to refrain from selling the Registrable Securities under the Registration Statement at any time that such Registration
Statement is not effective for any reason. Notwithstanding anything herein that may be implied or construed to the contrary, we
have made no investigation into, and are not and shall not be considered to render any opinion with respect to, the extent of any
Selling Securityholder’s compliance or non-compliance with any such contractual obligations, and we have assumed for all
purposes with respect to this instruction letter that the Selling Securityholder’s are in full compliance therewith.

 

The authorizations
and opinions set forth in this letter may be rescinded, and thereupon shall immediately be deemed null and void, upon delivery
of a notice either (a) in writing or (b) verbally to be followed by written confirmation. This letter is solely for your benefit
and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent.

 

	 	Very truly yours,
	 	 
	 	MORRISON & FOERSTER LLP

 

	 	By:	 	 

 

		CC:	[LIST NAMES OF HOLDERS]

 

    	 

    	 

    

 

EXHIBIT B

 

SELLING SECURITYHOLDERS

 

This prospectus covers
the resale from time to time by the selling securityholders identified in the table below of up to an aggregate of [_______] shares
of our common stock, [_______] of which were previously issued to the selling securityholders and [_______] of which may be issuable
upon exercise of our Series A warrants, Series B warrants and Series C warrants. The shares of common stock being offered by the
selling securityholders and the Series A warrants, Series B warrants and Series C warrants, in each case, were issued to the selling
securityholders in the January 2014 Private Placement. For additional information regarding the issuance of the common stock and
the warrants, see “January 2014 Private Placement” elsewhere in this prospectus.

 

We are registering
the shares of common stock pursuant to the terms of the registration rights agreement among us and the holders of the common stock
and the warrants issued in the January 2014 Private Placement, in order to permit the selling securityholders identified in the
table below to offer the shares for resale from time to time. In accordance with the terms of the registration rights agreement,
this prospectus generally covers the resale of 133% of the sum of (i) the shares of common stock issued to the selling securityholders
and (ii) the maximum number of shares of common stock issuable upon exercise of the warrants determined as if the outstanding warrants
were exercised in full (without regard to any limitations on exercise contained therein) as of the trading day immediately preceding
the date this registration statement was initially filed with the SEC. Because the exercise price of the warrants is subject to
anti-dilution and other adjustments as set forth therein and as further described elsewhere in this prospectus, the number of shares
that will actually be issued may be more or less than the number of shares being offered by this prospectus. The warrants issued
in the January 2014 Private Placement also provide that a selling securityholder may not exercise its warrants to the extent (but
only to the extent) such selling securityholder or any of its affiliates would beneficially own a number of shares of our common
stock which would exceed 4.9%. The number of shares to be registered by this prospectus generally does not take into account any
such ownership limitation.

 

The table below has
been prepared based upon information furnished to us by the selling securityholders as of as of [________], 2014. The selling securityholders
may sell all, some or none of their shares in this offering. See the disclosure under the heading “Plan of Distribution”
elsewhere in this prospectus. The selling securityholders identified in the table below may have sold, transferred or otherwise
disposed of some or all of their shares since the date on which the information in the following table is presented in transactions
exempt from or not subject to the registration requirements of the Securities Act. Information concerning the selling securityholders
may change from time to time and, if necessary, we will amend or supplement this prospectus accordingly and as required.

 

    	 

    	 

    

 

The table below lists
the selling securityholders and other information regarding the beneficial ownership (as determined under Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder) of our common stock by each of the selling
securityholders. The second column of the table below lists the number of shares of common stock beneficially owned by the selling
securityholders, based on their respective ownership of shares of common stock and warrants as of the date presented. The third
column of the table below lists the shares of common stock being offered by this prospectus by the selling securityholders and
also does not take into account the ownership limitations on exercise of the warrants set forth therein. The fourth column of the
table below reflects the shares owned by each selling securityholder after completion of this offering, assuming the sale of all
of the shares offered by the selling securityholders pursuant to this prospectus. The fifth column of the table below reflects
the percentage of our common stock beneficially owned by each selling securityholder after completion of this offering, assuming
the sale of all of the shares offered by such selling securityholder pursuant to this prospectus.

 

	Name of Selling Securityholder	 	Number of Shares 
of Outstanding 
Common Stock 
Beneficially Owned 
Prior to this 
Offering (1)	 	 	Maximum Number 
of Shares of 
Common Stock to 
be Sold Pursuant to 
this Prospectus (2)	 	 	Number of 
Shares of 
Common Stock 
Owned After 
Offering (3)	 	 	Percentage of 
Shares of 
Common Stock 
Beneficially 
Owned After 
Offering (4)	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cranshire Capital Master Fund, Ltd. (5)	 	 	12,800,000	 	 	 	12,800,000	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equitec Specialists, LLC (6)	 	 	3,200,000	 	 	 	3,200,000	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Anson Investments Master Fund, Ltd. (7)	 	 	8,000,000	 	 	 	8,000,000	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Capital Ventures International (8)	 	 	8,000,000	 	 	 	8,000,000	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Heng Hong Ltd (9)	 	 	8,400,000	 	 	 	8,400,000	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	0903746 B.C. Ltd (10)	 	 	2,800,000	 	 	 	2,800,000	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ocean Creation Investments Limited (11)	 	 	800,000	 	 	 	800,000	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ong Kim Kiat	 	 	800,000	 	 	 	800,000	 	 	 	—	 	 	 	—	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Karmdeep & Harpreet Bains	 	 	800,000	 	 	 	800,000	 	 	 	—	 	 	 	—	 

 

*          Less than 1%.

(1)         Assumes
that none of the shares of common stock or warrants issued to the selling securityholders in the January 2014 Private Placement
have been sold or otherwise transferred prior to the date of this prospectus in transactions exempt from the registration requirements
of the Securities Act.

(2)         Includes
all shares of common stock issued and issuable to the selling securityholders in the January 2014 Private Placement, including
all shares underlying the warrants issued therein.

(3)         Assumes
that (i) all of the shares of common stock to be registered on the registration statement of which this prospectus is a part, including
all shares of common stock issued and outstanding and all shares of common stock issuable upon exercise of the warrants, are sold
in the offering and (ii) the selling securityholders do not acquire additional shares of our common stock after the date of this
prospectus and prior to completion of this offering.

(4)         Percentage
ownership for each selling securityholder is determined under Section 13(d) of the Exchange Act of 1934.

(5)         Cranshire
Capital Advisors, LLC (“CCA”) serves as the investment manager to Cranshire Capital Master Fund, Ltd. (“Cranshire
Master Fund”) and consequently has voting control and investment discretion over securities held by Cranshire Master Fund.
Mitchell P. Kopin (“Mr. Kopin”) has voting control over CCA. As a result, each of Mr. Kopin and CCA may be deemed to
have beneficial ownership (as determined under Section 13(d) of the Exchange Act of 1934) of the securities held by Cranshire Master
Fund which are covered hereunder.

 

    	 

    	 

    

 

(6)         CCA
serves as the investment manager to Equitec Specialists, LLC (“Equitec”) and consequently has voting control and investment
discretion over securities held by Equitec. Mr. Kopin has voting control over CCA. As a result, each of Mr. Kopin and CCA may be
deemed to have beneficial ownership (as determined under Section 13(d) of the Exchange Act of 1934) of the securities held by Equitec
which are covered hereunder.

(7)         M5V
Advisors Inc. and Frigate Ventures LP (“M5V” and “Frigate”, respectively), the Co-Investment Advisers of
Anson Investments Master Fund LP (“Anson”), hold voting and dispositive power over the securities held by Anson. 
Bruce Winson is the managing member of Admiralty Advisors LLC, which is the general partner of Frigate.  Moez Kassam and Adam
Spears are directors of M5V.  Mr. Winson, Mr. Kassam and Mr. Spears each disclaim beneficial ownership of the securities held
by Anson that are covered hereunder except to the extent of their pecuniary interest therein.  The principal business address
of Anson is 190 Elgin Avenue, George Town, Grand Cayman.

(8)         Heights
Capital Management, Inc., the authorized agent of Capital Ventures International, has discretionary authority to vote and dispose
of the shares held by Capital Ventures International. Martin Kobinger, in his capacity as Investment Manager of Heights Capital
Management, Inc., also has investment discretion and voting power over the shares held by Capital Ventures International. As a
result, each of Heights Capital Management, Inc. and Mr. Kobinger may be deemed to have beneficial ownership (as determined under
Section 13(d) of the Exchange Act of 1934) of the securities held by Capital Ventures International that are covered hereunder.
Mr. Kobinger disclaims any such beneficial ownership of such securities.

(9)         Daniel
MacMullin, in his capacity as the Managing Partner of Heng Hong Ltd, has investment discretion and voting power over the shares
held by Heng Hong Ltd. As a result, Mr. McAllister may be deemed to have beneficial ownership (as determined under Section 13(d)
of the Exchange Act of 1934) of the securities held by Heng Hong Ltd that are covered hereunder. Mr. McAllister disclaims any such
beneficial ownership of such securities.

(10)        Maheep
Dhillon, in his capacity as the Managing Member of 0903746 B.C. Ltd, has investment discretion and voting power over the shares
held by 0903746 B.C. Ltd. As a result, Mr. Dhillon may be deemed to have beneficial ownership (as determined under Section 13(d)
of the Exchange Act of 1934) of the securities held by 0903746 B.C. Ltd that are covered hereunder. Mr. Dhillon disclaims any such
beneficial ownership of such securities.

(11)        Norman
Winata, in his capacity as the Managing Member of Ocean Creation Investments Limited, has investment discretion and voting power
over the shares held by Ocean Creation Investments Limited. As a result, Mr. Winata may be deemed to have beneficial ownership
(as determined under Section 13(d) of the Exchange Act of 1934) of the securities held by Ocean Creation Investments Limited that
are covered hereunder. Mr. Winata disclaims any such beneficial ownership of such securities.

 

Except for the ownership
of the common stock and warrants issued in the January 2014 Private Placement as reflected in the table above and as otherwise
described in this “Selling Securityholder” section below, (a) we have not made, and are not required to make,
any potential payments regarding the January 2014 Private Placement to any selling securityholder, any affiliate of a selling securityholder,
or any person with whom any selling securityholder has a contractual relationship, other than as described below and (b) none of
the selling securityholders has, or has had within the past three years, any material relationship with us. We have also been advised
that none of the selling securityholders is a broker-dealer or an affiliate of a broker-dealer, other than Equitec Specialists,
LLC, which has informed us that it is an affiliate of a broker-dealer.

 

The holders of the
warrants issued in the January 2014 Private Placement have ongoing rights to exercise those warrants. We have described the material
terms of the warrants elsewhere in this prospectus. In addition, the participants in the January 2014 Private Placement have ongoing
registration rights related to the securities issued therein pursuant to the terms of the registration rights agreement, which
are described in more detail elsewhere in this prospectus.

 

    	 

    	 

    

 

We may be required
to make certain payments to the investors in the January 2014 Private Placement under certain circumstances pursuant to the terms
of the securities purchase agreement and the registration rights agreement. These potential payments include: (a) potential partial
damages for failure to register the common stock issued or issuable upon exercise of warrants; (b) amounts payable if we and our
transfer agent fail to timely remove certain restrictive legends from certificates representing shares of common stock issued in
the January 2014 Private Placement or issuable upon exercise of the warrants; (c) expense reimbursement for the lead investor;
and (d) payments in respect of claims for which we provide indemnification. We intend to comply with the requirements of the registration
rights agreement and do not currently expect to make any such payments; however, it is possible that such payments may be required.

 

The securities purchase
agreement entered into in connection with the January 2014 Private Placement grants to the investors, until the six month anniversary
of the date of the closing of the January 2014 Private Placement, the right to participate in any financing by us through an issuance
of any of our securities up to an amount equal to the pro rata portion of the investor’s subscription amount in the January
2014 Private Placement, on the same pricing and other terms and conditions as such subsequent financing, provided that the aggregate
participation by all such investors collectively shall not exceed 50% of the subsequent financing amount. The terms and conditions
of such subsequent financing shall not include any provision that requires a participating investor to agree to any restrictions
on its trading of any of the shares acquired in connection with the January 2014 Private Placement without such investor’s
consent.

 

    	 

    	 

    

 

PLAN OF DISTRIBUTION

 

We are registering
(i) the shares of common stock issued and (ii) the shares of common stock issuable upon exercise of the warrants, in each case,
issued to the selling securityholders in the January 2014 Private Placement to permit the resale of these shares of common stock
by the selling securityholders from time to time after the date of this prospectus. We will not receive any of the proceeds from
the sale by the selling securityholders of the shares of common stock. We will bear all fees and expenses incident to our obligation
to register the shares of common stock.

 

The selling securityholders
may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one
or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers,
the selling securityholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares
of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at
varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions, which may involve
crosses or block transactions, pursuant to one or more of the following methods:

 

		·	on any national securities exchange or quotation service on which the securities may be listed
or quoted at the time of sale;

 

		·	in the over-the-counter market;

 

		·	in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

 

		·	through the writing or settlement of options, whether such options are listed on an options exchange
or otherwise;

 

		·	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

		·	block trades in which the broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;

 

		·	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

		·	an exchange distribution in accordance with the rules of the applicable exchange;

 

		·	privately negotiated transactions;

 

		·	short sales made after the date the Registration Statement is declared effective by the SEC that
comply with the terms of the securities purchase agreement;

 

    	 

    	 

    

 

		·	broker-dealers may agree with a selling securityholder to sell a specified number of such shares
at a stipulated price per share;

 

		·	a combination of any such methods of sale; and

 

		·	any other method permitted pursuant to applicable law.

 

The selling securityholders
may also sell shares of common stock under Rule 144 promulgated under the Securities Act, if available, rather than under this
prospectus. In addition, the selling securityholders may transfer the shares of common stock by other means not described in this
prospectus. If the selling securityholders effect such transactions by selling shares of common stock to or through underwriters,
broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions
or commissions from the selling securityholders or commissions from purchasers of the shares of common stock for whom they may
act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters,
broker-dealers or agents may be in excess of those customary in the types of transactions involved but, except as set forth in
a supplement to this prospectus to the extent required, in the case of an agency transaction will not be in excess of a customary
brokerage commission in compliance with FINRA Rule 5110 and in no event shall any broker-dealer receive fees, commissions and markups
that, in the aggregate, would exceed eight percent (8%)).

 

In connection with
sales of the shares of common stock or otherwise, the selling securityholders may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the shares of common stock in the course of hedging in positions they assume. The selling
securityholders may also sell shares of common stock short and deliver shares of common stock covered by this prospectus to close
out short positions and to return borrowed shares in connection with such short sales. The selling securityholders may also loan
or pledge shares of common stock to broker-dealers that in turn may sell such shares.

 

The selling securityholders
may pledge or grant a security interest in some or all of the warrants or shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock
from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act amending, if necessary, the list of selling securityholders to include the pledgee, transferee or other successors
in interest as selling securityholders under this prospectus. The selling securityholders also may transfer and donate the shares
of common stock in other circumstances as permitted by the securities purchase agreement, the registration rights agreement, the
warrants and all applicable law, in which case the transferees, donees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.

 

To the extent required
by the Securities Act and the rules and regulations thereunder, the selling securityholders and any broker-dealer participating
in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities
Act. In such event, any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. Selling securityholders who are deemed to be “underwriters”
under the Securities Act (if any) will be subject to the prospectus delivery requirements of the Securities Act and may be subject
to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act.

 

    	 

    	 

    

 

Each selling securityholder
has informed us that it is not a registered broker-dealer and does not have any written or oral agreement or understanding, directly
or indirectly, with any person to engage in a distribution of the common stock. Upon us being notified in writing by a selling
securityholder that any material arrangement has been entered into with a broker-dealer for the distribution of common stock, a
prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of shares of common stock being
distributed and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling securityholders and any discounts, commissions or concessions allowed
or re-allowed or paid to broker-dealers.

 

Under the securities
laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is available and is complied with.

 

Each selling securityholder
may sell all, some or none of the shares of common stock registered pursuant to the registration statement of which this prospectus
forms a part. If sold under the registration statement of which this prospectus forms a part, the shares of common stock registered
hereunder will be freely tradable in the hands of persons other than our affiliates that acquire such shares.

 

The selling securityholders
and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules
and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may
limit the timing of purchases and sales of any of the shares of common stock by the selling securityholders and any other participating
person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the shares
of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect
the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with
respect to the shares of common stock.

 

We have agreed to keep
this prospectus effective until the earlier of (i) the date on which the securities may be resold by the selling securityholders
without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement
for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule
of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act
or any other rule of similar effect. We have also agreed to pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be $[     ] in total, including, without limitation,
SEC filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, a selling securityholder
will pay all underwriting discounts and selling commissions, if any.

 

    	 

    	 

    

 

We have further agreed
to indemnify or provide contribution to the selling securityholders with respect to certain liabilities, including some liabilities
under the Securities Act, in accordance with the registration rights agreements. Each selling securityholder, severally and not
jointly, has agreed to indemnify or provide contribution to us with respect to certain civil liabilities, including liabilities
under the Securities Act, that may arise from any written information furnished to us by the selling securityholder specifically
for use in this prospectus, in accordance with the related registration rights agreements.

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