EX1A-2A CHARTER

Exhibit 2.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

APERION BIOLOGICS, INC.

Aperion Biologics, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”),

DOES HEREBY CERTIFY:

1.           The name of this corporation is Aperion Biologics, Inc., and that this corporation was originally incorporated pursuant to the General Corporation Law on June 6, 2008 under the name CrossCart, Inc.

2.           That the Board of Directors duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:

RESOLVED, that the Certificate of Incorporation of this corporation be amended and restated in its entirety to read as follows:

FIRST:  The name of this corporation is Aperion Biologics, Inc. (the “Corporation”).

1.           SECOND:  The address of the corporation’s registered office in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.  The name of the corporation’s registered agent at such address is The Corporation Trust Company.

THIRD:  The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.

FOURTH:  The total number of shares of all classes of stock which the Corporation shall have authority to issue is 95,250,000 consisting of 60,000,000 shares of Common Stock, $0.001 par value per share (the “Common Stock”) and 35,250,000 shares of Preferred Stock, par value $0.001 per share (“Preferred Stock”) of which the following series are designated:

1.           18,000,000 shares of Series C-2 Convertible Preferred Stock, $0.001 par value per share (the “Series C-2 Preferred Stock”);

2.           10,000,000 shares of Series C Convertible Preferred Stock, $0.001 par value per share (the “Series C-1 Preferred Stock” and, together with the Series C-2 Preferred Stock, the “Series C Preferred Stock”);

2.           6,500,000 shares of Series B Convertible Preferred Stock, $0.001 par value per share (the “Series B Preferred Stock”); and

3.           750,000 shares of Series A Convertible Preferred Stock, $0.001 par value per share (the “Series A Preferred Stock”).

The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.

A.           COMMON STOCK

1.           General.  The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein.

2.           Voting.  The holders of the Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders (and written actions in lieu of meetings).  No person entitled to vote at an election for directors may cumulate votes to which such person is entitled, unless, at the time of such election, the Corporation is subject to Section 2115 of the California Corporations Code pursuant to a final, non-appealable order from a court of competent jurisdiction.  During such time or times that the Corporation is so subject to Section 2115(b) of the California Corporations Code, every stockholder entitled to vote at an election for directors may cumulate such stockholder’s votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which such stockholder’s shares are otherwise entitled, or distribute the stockholder’s votes on the same principle among as many candidates as such stockholder desires.  No stockholder, however, shall be entitled to so cumulate such stockholder’s votes unless (i) the names of such candidate or candidates have been placed in nomination prior to the voting and (ii) the stockholder has given notice at the meeting, prior to the voting, of such stockholder’s intention to cumulate such stockholder’s votes.  If any stockholder has given proper notice to cumulate votes, all stockholders may cumulate their votes for any candidates who have been properly placed in nomination.  Under cumulative voting, the candidates receiving the highest number of votes, up to the number of directors to be elected, are elected.  The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by the terms of the Certificate of Incorporation) the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.

B.           PREFERRED STOCK

The rights, preferences, powers, privileges and restrictions, qualifications and limitations of the Preferred Stock of the Corporation are as follows.  Unless otherwise indicated, references to “Sections” or “Subsections” in this Part B of this Article Fourth refer to sections and subsections of Part B of this Article Fourth.

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Preferred Stock may be issued from time to time in one or more series, each of such series to consist of such number of shares and to have such terms, rights, powers and preferences, and the qualifications and limitations with respect thereto, as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation as hereinafter provided.

Subject to any vote expressly required by the Certificate of Incorporation, authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issue of the shares thereof, to determine and fix such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including, without limitation thereof, dividend rights, special voting rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the General Corporation Law.  Without limiting the generality of the foregoing, and subject to the rights of any series of Preferred Stock then outstanding, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Preferred Stock of any other series to the extent permitted by law.

1.           Dividends.

1.1           Series C Preferred Stock Dividend.  From and after the date of issuance of any shares of Series C Preferred Stock, dividends at the rate of 8% of the Original Series C Issue Price per share per annum on each outstanding share of Series C Preferred Stock shall accrue on such shares of Series C Preferred Stock from the date of issuance (the “Accruing Dividends”) payable when, as and if declared by the Board of Directors of the Corporation.  Accruing Dividends shall accrue from day to day, whether or not declared, and shall be cumulative; provided however, that except as set forth in this Section 1 or in Subsections 2.1, 4.1, 5 and 6, the Corporation shall be under no obligation to pay such Accruing Dividends.  The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock ) unless (in addition to the obtaining of any consents required elsewhere in the Certificate of Incorporation) the holders of the Series C Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series C Preferred Stock in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Series C Preferred Stock as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Series C Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Series C Preferred Stock determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such

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fraction by an amount equal to the Series C Original Issue Price (as defined below); provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Series C Preferred Stock pursuant to this Section 1.1 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series C Preferred Stock dividend.  The “Series C Original Issue Price” shall mean $0.48 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock.

1.2           Series A Preferred Stock and Series B Preferred Stock.  Subject to Section 1.1, and when and as declared by the Corporation’s Board of Directors, the holders of Series A Preferred and Series B Preferred shall be entitled to receive on a pari passu basis, out of any funds legally available therefor, dividends at the rate of 8% of the Series A Original Issue Price and Series B Original Issue Price, respectively, per share per annum, payable in preference to any payment of any dividend on Common Stock.  The right of the holders of Series A Preferred Stock and Series B Preferred Stock to receive dividends shall not be cumulative, and no right shall accrue to holders of such Preferred Stock by reason of the fact that dividends on such shares are not declared or paid in any prior year.  The “Series A Original Issue Price” shall mean $1.00 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock.  The “Series B Original Issue Price” shall mean $4.576 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B Preferred Stock.

2.           Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.

2.1           Preferential Payments to Holders of Preferred Stock.

2.1.1           Series C Preferred Stock.  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series C Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders on a pari passu basis, and before any payment shall be made to the holders of Series A Preferred Stock, Series B Preferred Stock or Common Stock by reason of their ownership thereof or any other shares of capital stock of the Corporation, an amount per share equal to the Series C-1 Liquidation Preference Amount, with respect to shares of Series C-1 Preferred Stock, and the Series C-2 Liquidation Preference Amount, with respect to shares of Series C-2 Preferred Stock.  The “Series C-1 Liquidation Preference Amount” shall mean an amount per share equal to the greater of (i) two (2) times the Series C Original Issue Price plus any Accruing Dividends unpaid thereon, whether or not declared, together with any other dividends declared but unpaid thereon, and (ii) such amount per share as would have been payable had all shares of Series C Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution or winding up.  The “Series C-2 Liquidation Preference Amount” shall mean an amount per share equal to the greater of (i) the Series C Original Issue Price plus any Accruing Dividends unpaid thereon, whether or not declared, together with any other dividends declared but unpaid thereon, and (ii) such amount per share as would have been payable had all shares of Series C

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Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution or winding up.  If upon any such liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series C Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1.1, the holders of shares of Series C Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

2.1.2           Series B Preferred Stock and Series A Preferred Stock.  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after payment in full of all amounts due to the holders of Series C Preferred Stock under Subsection 2.1.1, the holders of shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders on a pari passu basis, and before any payment shall be made to the holders of Series A Preferred Stock or Common Stock by reason of their ownership thereof, an amount per share equal to the Series B Original Issue Price, plus all declared and unpaid dividends on the Series B Preferred Stock, but no more (the amount payable pursuant to this sentence is hereinafter referred to as the “Series B Liquidation Preference Amount”).  After payment or setting apart of payment has been made to the holders of Series B Preferred Stock of the full preferential amounts so payable to them, the holders of Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of Common Stock by reason of their ownership thereof, the amount of $1.00 per share for each share of Series A Preferred then held by them; and, in addition, an amount equal to all declared but unpaid dividends on the Series A Preferred Stock, but no more (the amount payable pursuant to this sentence is hereinafter referred to as the “Series A Liquidation Preference Amount”).  If the assets and funds thus distributed among the holders of the Series B Preferred Stock and Series A Preferred Stock are insufficient to permit the payment to such holders of their full preferential amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of Series B Preferred Stock and Series A Preferred Stock in the proportion that the full preferential amount each such holder is otherwise entitled to receive bears to the full preferential amount all such holders are entitled to receive.

2.2           Distribution of Remaining Assets.  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after the payment of all preferential amounts required to be paid to the holders of shares of Preferred Stock under Section 2.1 above, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of the shares of Common Stock, pro rata based on the number of shares held by each such holder.

2.3           Deemed Liquidation Events.

2.3.1           Definition.  Each of the following events shall be considered a “Deemed Liquidation Event” unless the holders of at least a majority of the outstanding shares of the Series C Preferred Stock (voting together as a single class on an as-converted basis) elect

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otherwise by written notice sent to the Corporation at least five (5) days prior to the effective date of any such event:

(a)           a merger or consolidation in which

(i) the Corporation is a constituent party or

(ii) a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation,

except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation (provided that, for the purpose of this Subsection 2.3.1, all shares of Common Stock issuable upon exercise of Options (as defined below) outstanding immediately prior to such merger or consolidation or upon conversion of Convertible Securities (as defined below) outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, converted or exchanged in such merger or consolidation on the same terms as the actual outstanding shares of Common Stock are converted or exchanged); or

(b)           the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.

2.3.2           Effecting a Deemed Liquidation Event.

(a)           The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(i) unless the agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides that the consideration payable to the stockholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2.

(b)           In the event of a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(ii) or 2.3.1(b), if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within 90 days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Preferred Stock no later than the 90th day after the Deemed Liquidation Event advising such holders of their right

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(and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii) to require the redemption of such shares of Preferred Stock, and (ii) if the holders of at least a majority of the then outstanding shares of Series C Preferred Stock (voting together as a single class on an as-converted basis) so request in a written instrument delivered to the Corporation not later than 120 days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for distribution to its stockholders (the “Available Proceeds”), to the extent legally available therefor, no later than the 150th day after such Deemed Liquidation Event (the “Liquidation Redemption Date”), to redeem all outstanding shares of (A) Series C-1 Preferred Stock and Series C-2 Preferred Stock at a price per share equal to the Series C-1 Liquidation Preference Amount and the Series C-2 Liquidation Preference Amount, respectively, then (B) if there are Available Proceeds after payment of the Series C-2 Liquidation Preference Amounts and the Series C-1 Liquidation Preference Amounts, Series B Preferred Stock at a price per share equal to the Series B Liquidation Preference Amount, then (C) if there are Available Proceeds after payment of the Series B Liquidation Preference Amounts, Series A Preferred Stock at a price per share equal to the Series A Liquidation Preference Amount, all in that order of priority.  Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Series C Preferred Stock, the Corporation shall redeem a pro rata portion of each holder’s shares of Series C Preferred Stock on a pari passu basis and to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the remaining shares to have been redeemed as soon as practicable after the Corporation has funds legally available therefor.  Prior to the distribution or redemption provided for in this Subsection 2.3.2(b), the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business.

2.3.3           Amount Deemed Paid or Distributed.  The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring person, firm or other entity.  The value of such property, rights or securities shall be determined in good faith by the Board of Directors of the Corporation.

2.3.4           Redemption Notice.  The Corporation shall send written notice of the redemption pursuant to Section 2.3.2(b) (the “Redemption Notice”) to each holder of record of Preferred Stock not later than the 140th day following the Deemed Liquidation Event or at least ten days prior to the Liquidation Redemption Date. Each Redemption Notice shall state:

(a)           the number of shares of Series C Preferred Stock held by the holder that the Corporation shall redeem on the Liquidation Redemption Date specified in the Redemption Notice;

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(b)           the Liquidation Redemption Date and the Series C-2 Liquidation Preference Amount, Series C-1 Liquidation Preference Amount, Series B Liquidation Preference Amount, or Series A Liquidation Preference Amount as applicable; and

(c)           that the holder is to surrender to the Corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Preferred Stock to be redeemed.

2.3.5           Surrender of Certificates; Payment.  On or before the applicable Liquidation Redemption Date, each holder of shares of Preferred Stock to be redeemed on such Liquidation Redemption Date shall surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Series C-2 Liquidation Preference Amount, Series C-1 Liquidation Preference Amount, Series B Liquidation Preference Amount, or Series A Liquidation Preference Amount, as applicable, for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof.

2.3.6           Rights Subsequent to Redemption.  If the Redemption Notice shall have been duly given, and if on the applicable Liquidation Redemption Date the Liquidation Preference Amount payable upon redemption of the shares of Preferred Stock to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that the certificates evidencing any such shares of Preferred Stock so called for redemption shall not have been surrendered and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the applicable Liquidation Preference Amount, without interest upon surrender of their certificate or certificates therefor.

2.3.7           Allocation of Escrow.  In the event of a Deemed Liquidation Event pursuant to Subsection 2.3.1(a)(i), if any portion of the consideration payable to the stockholders of the Corporation is placed into escrow and/or is payable to the stockholders of the Corporation subject to contingencies, the Merger Agreement shall provide that (a) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event and (b) any additional consideration which becomes payable to the stockholders of the Corporation upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 after taking into account the previous payment of the Initial Consideration as part of the same transaction.

3.           Voting.

3.1           General.  Subject to Section 3.2, on any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders

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of the Corporation (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock, Series B Preferred Stock, or Series C Preferred Stock as applicable, held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter.  Except as provided by law or by the other provisions of the Certificate of Incorporation, holders of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock shall vote together with the holders of Common Stock as a single class.

3.2           Election of Directors.  The holders of record of the shares of Series C-1 Preferred Stock, exclusively and as a separate class, shall be entitled to elect two (2) directors of the Corporation (the “Series C Directors”).  Any director elected as provided in the preceding sentence may be removed without cause by, and only by, the affirmative vote of the holders of the shares of the class or series of capital stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders.  If the holders of shares of Series C-1 Preferred Stock fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting exclusively and as a separate class, pursuant to the first sentence of this Subsection 3.2, then any directorship not so filled shall remain vacant until such time as the holders of the Series C-1 Preferred Stock elect a person to fill such directorship by vote or written consent in lieu of a meeting; and no such directorship may be filled by stockholders of the Corporation other than by the stockholders of the Corporation that are entitled to elect a person to fill such directorship, voting exclusively and as a separate class.  Subject to the provisions of any Voting Agreement or similar agreement in effect among the stockholders of the Corporation, the holders of record of the shares of Common Stock, Series A Preferred Stock and Series B Preferred Stock and Series C Preferred Stock and of any other class or series of voting stock, exclusively and voting together as a single class, shall be entitled to elect the balance of the total number of directors of the Corporation provided that, until March 31, 2010 and provided he is serving the Corporation as an employee, officer or consultant, Dr. Kevin R. Stone shall be one of the directors so elected.  At any meeting held for the purpose of electing a director, the presence in person or by proxy of the holders of a majority of the outstanding shares of the class or series entitled to elect such director shall constitute a quorum for the purpose of electing such director.  Except as otherwise provided in this Subsection 3.2, a vacancy in any directorship filled by the holders of any class or series shall be filled only by vote or written consent in lieu of a meeting of the holders of such class or series or by any remaining director or directors elected by the holders of such class or series pursuant to this Subsection 3.2.

3.3           Protective Provisions.

3.3.1           Series A Preferred Stock Protective Provision.  At any time when any shares of Series A Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, amend, alter or repeal any provision of the Certificate of

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Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers, preferences or rights of the Series A Preferred Stock.

3.3.2           Series B Preferred Stock Protective Provision.  At any time when any shares of Series B Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers, preferences or rights of the Series B Preferred Stock.

3.3.3           Series C Preferred Stock Protective Provisions.  At any time when any shares of Series C Preferred Stock issued by the Corporation are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series C Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class on an as-converted basis:

(a)           liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any Deemed Liquidation Event, or consent to any of the foregoing;

(b)           amend, alter or repeal any provision of the Certificate of Incorporation or Bylaws of the Corporation;

(c)           create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock unless the same ranks junior to the Series C-2 Preferred Stock and Series C-1 Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption, or increase the authorized number of shares of Series C-2 Preferred Stock or Series C-1 Preferred Stock;

(d)           purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Series C Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price or the then-current fair market value thereof;

(e)           create, or authorize the creation of, or issue, or authorize the issuance of any debt security, or permit any subsidiary to take any such action with respect to

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any debt security other than debt in the aggregate amount of $250,000 with no right to acquire or convert into any capital stock of the Corporation;

(f)           Any increase in the number of shares reserved for issuance or granted under the Corporation’s stock option plan to more than 9,100,000 shares of Common Stock; or

(g)           increase or decrease the size of the Board.

4.           Optional Conversion.

The holders of the Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

4.1           Right to Convert.

4.1.1           Conversion Ratio.  Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing, as the case may be, the Series A Original Issue Price by the Series A Conversion Price (as defined below) in effect at the time of conversion, the Series B Original Issue Price by the Series B Conversion Price (as defined below) or the Series C Original Issue Price, plus, at the option of the holder of Series C Preferred Stock being converted, the amount of Accruing Dividends unpaid in cash at the time of conversion) by the Series C Conversion Price (as defined below).  The “Series A Conversion Price” is initially equal to $1.00.  The “Series B Conversion Price” is initially equal to $3.21.  The “Series C Conversion Price” is initially equal to $0.48.  Such initial Conversion Prices and the rate at which shares of Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

4.1.2           Termination of Conversion Rights.  In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Preferred Stock.  In the event of a notice of redemption pursuant to Section 2.3.2 or 6, the Conversion Rights of the shares designated for redemption shall terminate at the close of business on the last full day preceding the date fixed for redemption, unless the redemption price is not fully paid on such redemption date, in which case the Conversion Rights for such shares shall continue until such price is paid in full.

4.2           Fractional Shares.  No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock.  In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Corporation.  Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

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4.3           Mechanics of Conversion.

4.3.1           Notice of Conversion.  In order for a holder of Preferred Stock to voluntarily convert such shares of Preferred Stock into shares of Common Stock, such holder shall surrender the certificate or certificates for such shares of Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the applicable series of Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of the Preferred Stock (and Accruing Dividends, as applicable) represented by such certificate or certificates and, if applicable, any event on which such conversion is contingent.  Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued.  If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing.  The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such certificates (or lost certificate affidavit and agreement) and notice shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the shares represented by such certificate shall be deemed to be outstanding of record as of such date.  The Corporation shall, as soon as practicable after the Conversion Time, (i) issue and deliver to such holder of Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (ii) pay in cash such amount as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) in the case of the Series C Preferred Stock, pay in cash all Accruing Dividends which the holder has not elected to convert into shares of Common Stock, and with respect to the Series A Preferred Stock and Series B Preferred Stock, pay in cash all declared but unpaid dividends on the shares of such Preferred Stock converted.

4.3.2           Reservation of Shares.  The Corporation shall at all times when any shares of Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of each series of Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of each series of Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Certificate of Incorporation.  Before taking any action which would cause an adjustment reducing any Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of any series of

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Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Conversion Price.

4.3.3           Effect of Conversion.  All shares of Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Subsection 4.2 and to receive payment of any dividends declared but unpaid thereon.  Any shares of Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of the applicable Series of Preferred Stock accordingly.

4.3.4           No Further Adjustment.  Upon any such conversion, no adjustment to the Conversion Price shall be made for any declared but unpaid dividends on the Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.

4.3.5           Taxes.  The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Preferred Stock pursuant to this Section 4.  The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

4.4           Adjustments to Series C Conversion Price for Diluting Issues.

4.4.1           Special Definitions.  For purposes of this Article Fourth, the following definitions shall apply:

(a)           “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

(b)           “Series C Original Issue Date” shall mean the date on which the first share of Series C-2 Preferred Stock was issued.

(c)           “Convertible Securities” shall mean any evidences of indebtedness, warrants, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

(d)           “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Subsection 4.4.3 below, deemed to be issued) by the Corporation after the Series C Original Issue Date, other than (1) the following shares of

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Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “Exempted Securities”):

(i) shares of Common Stock issuable upon conversion of the Series A, B or C Preferred Stock or Common Stock, Options or Convertible Securities issued as a dividend or distribution on Preferred Stock;

(ii) shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Subsection 4.5, 4.6, 4.7 or 4.8;

(iii) up to 9,100,000 shares of Common Stock, including Options therefor (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares), issued to employees or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to any plan approved by the Board of Directors of the Corporation, with the consent of at least one Series C Director whether issued before or after the Series C Original Issue Date (provided that any Options for such shares that expire or terminate unexercised or any restricted stock repurchased by the Corporation at cost shall not be counted toward such maximum number unless and until such shares are regranted as new stock grants (or as new Options) pursuant to the terms of any such plan, agreement or arrangement); or

(iv) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case outstanding on the Series C Original Issue Date (including the warrants issued to holders of the Corporation’s promissory notes and accounts payable); provided further, such issuance is pursuant to the terms of such Option or Convertible Security;

(v) shares of Common Stock, Options or Convertible Securities issued in connection with sponsored research, collaboration, technology license,

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development, marketing or other similar agreements or strategic partnerships approved by the Board of Directors of the Corporation with the consent of at least one of the Series C Directors; or

(vi) with respect to the Series A Preferred Stock, the shares of Series C Preferred Stock.

4.4.2           No Adjustment of Series C Conversion Price.  No adjustment in the Series C Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of at least a majority of the then outstanding shares of Series C Preferred Stock (voting together as a single class on an as-converted basis), agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.

4.4.3           Deemed Issue of Additional Shares of Common Stock.

(a)           If the Corporation at any time or from time to time after the Series C Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

(b)           If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Series C Conversion Price pursuant to the terms of Subsection 4.4.4, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the Series C Conversion Price computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Series C Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security.  Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the Series C Conversion Price to an amount which exceeds the lower of (i) the Series C Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (ii) the Series C Conversion

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Price that would have resulted from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.

(c)           If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the Series A Conversion Price or Series B Conversion Price pursuant to the terms of Subsection 4.4.4 (either because the consideration per share (determined pursuant to Subsection 4.4.5) of the Additional Shares of Common Stock subject thereto was equal to or greater than the Series C Conversion Price then in effect, or because such Option or Convertible Security was issued before the Series C Original Issue Date), are revised after the Series C Original issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (1) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Subsection (a)) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

(d)           Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Series C Conversion Price pursuant to the terms of Subsection 4.4.4, the Series C Conversion Price shall be readjusted to such Series C Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.

(e)           If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the Series C Conversion Price provided for in this Subsection 4.4.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Subsection 4.4.3).  If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the Series C Conversion Price that would result under the terms of this Subsection 4.4.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Series C

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Conversion Price that such issuance or amendment took place at the time such calculation can first be made.

4.4.4           Adjustment of Series C Conversion Price Upon Issuance of Additional Shares of Common Stock.  In the event the Corporation shall at any time after the Series C Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 4.4.3), without consideration or for a consideration per share less than the Series C Conversion Price in effect immediately prior to such issue, then the Series C Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:

CP2 = CP1 * (A + B) ÷ (A + C).

For purposes of the foregoing formula, the following definitions shall apply:

(a)           “CP2” shall mean the Series C Conversion Price in effect immediately after such issue of Additional Shares of Common Stock, as appropriate;

(b)           “CP1” shall mean the Series C Conversion Price in effect immediately prior to such issue of Additional Shares of Common Stock;

(c)           “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities (including the Series C Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue, and not treating for this purpose as outstanding any shares convertible in such issue of Additional Shares);

(d)           “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CP1); and

(e)           “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction.

4.4.5           Determination of Consideration.  For purposes of this Subsection 4.4, the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

(a)           Cash and Property:  Such consideration shall:

(i) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest;

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 (ii) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors of the Corporation; and

(iii) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors of the Corporation.

(b)           Options and Convertible Securities.  The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Subsection 4.4.3, relating to Options and Convertible Securities, shall be determined by dividing

(i) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

(ii) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

4.4.6           Multiple Closing Dates.  In the event the Corporation shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to the Series C Conversion

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Price pursuant to the terms of Subsection 4.4.4, then, upon the final such issuance, the Series C Conversion Price shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).

4.5           Adjustment for Stock Splits and Combinations.  If the Corporation shall at any time or from time to time effect a subdivision of the outstanding Common Stock, the Series A Conversion Price, Series B Conversion Price, and Series C Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding.  If the Corporation shall at any time or from time to time combine the outstanding shares of Common Stock, the Series A Conversion Price, Series B Conversion Price and Series C Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

4.6           Adjustment for Certain Dividends and Distributions.  In the event the Corporation at any time or from time to time shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the Conversion Prices in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Series A Conversion Price, Series B Conversion Price, or Series C Conversion Price as the case may be, then in effect by a fraction:

(1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

(2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

Notwithstanding the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Prices shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Prices shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made to a Conversion Price if the holders of the corresponding Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of

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shares of Common Stock as they would have received if all outstanding shares of such Preferred Stock had been converted into Common Stock on the date of such event.

4.7           Adjustments for Other Dividends and Distributions.  In the event the Corporation at any time or from time to time shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 1 do not apply to such dividend or distribution, then and in each such event the holders of Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all their outstanding shares of a Preferred Stock had been converted into Common Stock on the date of such event.

4.8           Adjustment for Merger or Reorganization, etc.  Subject to the provisions of Subsection 2.3, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 4.4, 4.6 or 4.7), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the holders of the each Series of Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the applicable Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the applicable Series of a Preferred Stock.

4.9           Certificate as to Adjustments.  Upon the occurrence of each adjustment or readjustment of the any of the Conversion Prices pursuant to this Section 4, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of the Series of Preferred Stock affected, as appropriate, a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Preferred Stock, as applicable, is convertible) and showing in detail the facts upon which such adjustment or readjustment is based.  The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder Preferred Stock (but in any event not later than 10 days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Conversion Price, as applicable, then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of such Series of Preferred Stock.

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4.10           Notice of Record Date.  In the event:

(a)           the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of any series of Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(b)           of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, or any Deemed Liquidation Event; or

(c)           of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation,

then, and in each such case, the Corporation will send or cause to be sent to the holders of the Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Series of Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series A Preferred Stock, Series B Preferred Stock and the Common Stock. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.

5.           Mandatory Conversion.

5.1           Trigger Events.  Upon (a) the closing of the sale of shares of Common Stock to the public at a price of at least $2.40 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock), in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $50 million of gross proceeds to the Corporation (a “Qualified IPO”) or (b) the date and at the time specified in written notice from the holders of a majority of the then outstanding shares of Series C Preferred Stock (voting together as a single class on an as-converted basis) electing to effect a mandatory conversion of the Series C Preferred Stock and thereby effect the conversion of all other shares, classes and series of Preferred Stock outstanding (the time of such closing or the date and time so specified, is referred to herein as the “Mandatory Conversion Time”), (i) all outstanding shares of Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective conversion rate and (ii) such shares may not be reissued by the Corporation.

5.2           Procedural Requirements.  All holders of record of shares of Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated

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for mandatory conversion of all such shares of Series Preferred Stock pursuant to this Section 5.  Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time.  Upon receipt of such notice, each holder of shares of Preferred Stock shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice.  If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing.  All rights with respect to the Preferred Stock converted pursuant to Section 5.1, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender the certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of their certificate or certificates (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Subsection 5.2.  As soon as practicable after the Mandatory Conversion Time and the surrender of the certificate or certificates (or lost certificate affidavit and agreement) for Preferred Stock, the Corporation shall issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof, together with cash as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any Accruing Dividends or declared but unpaid dividends, as the case may be, on the shares of Preferred Stock converted.  Such converted Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.

6.           Redemption.

6.1           Redemption of Series C Preferred Stock.  Shares of Series C Preferred Stock shall be redeemed by the Corporation out of funds lawfully available therefor at a price per share equal to the Series C-2 Liquidation Preference Amount, with respect to shares of Series C-2 Preferred Stock, or the Series C-1 Liquidation Preference Amount, with respect to the Series C-1 Preferred Stock (the Series C-1 Liquidation Preference Amount and the Series C-2 Liquidation Preference Amount, as applicable, being referred to as the “Redemption Price”), in one installment on the 60th day after receipt by the Corporation at any time on or after April 30, 2013, from the holders of a majority of the then outstanding shares of Series C Preferred Stock (voting together as a single class on an as-converted basis) of written notice requesting redemption of all shares of Series C Preferred Stock (the date of such redemption being referred to as the “Redemption Date”).  On the Redemption Date, the Corporation shall redeem all of the outstanding shares of Series C Preferred Stock.  If the Corporation does not have sufficient funds legally available to redeem on the Redemption Date all shares of Series C Preferred Stock, the Corporation shall redeem a pro rata portion of each holder’s redeemable shares of such capital stock out of funds legally available therefor, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the legally available funds were

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sufficient to redeem all such shares, and shall redeem the remaining shares to have been redeemed as soon as practicable after the Corporation has funds legally available therefor.

6.2           Redemption Notice.  Written notice of the mandatory redemption (the “Redemption Notice”) shall be sent to each holder of record of Series C Preferred Stock not less than 40 days prior to the Redemption Date. The Redemption Notice shall state:

(a)           the Redemption Date and the Redemption Price;

(b)           the date upon which the holder’s right to convert such shares terminates (as determined in accordance with Subsection 4.1); and

(c)           that the holder is to surrender to the Corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Series C Preferred Stock.

6.3           Surrender of Certificates; Payment.  On or before the Redemption Date, each holder of shares of Series C Preferred Stock, unless such holder has exercised his, her or its right to convert such shares as provided in Section 4, shall surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof.

6.4           Rights Subsequent to Redemption.  If the Redemption Notice shall have been duly given, and if on the Redemption Date the Redemption Price payable upon redemption of the shares of Series C Preferred Stock to be redeemed is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor, then notwithstanding that the certificates evidencing any of the shares of Series C Preferred Stock so called for redemption shall not have been surrendered, dividends with respect to such shares of Series C Preferred Stock shall cease to accrue after the Redemption Date and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the Redemption Price without interest upon surrender of their certificate or certificates therefor.

6.5           Series A and Series B.  Neither the Series A Preferred Stock nor the Series B Preferred Stock shall be redeemable except in accordance with the Deemed Liquidation provisions of Subsection 2.3.

7.           Redeemed or Otherwise Acquired Shares.  Any shares of Series C Preferred Stock that are redeemed pursuant to Section 6 and any shares of Preferred Stock that are redeemed pursuant to a Deemed Liquidation Event or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred.  Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Preferred Stock following redemption.

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8.           Waiver.  Any of the rights, powers, preferences and other terms of any class or series of Preferred Stock set forth herein may be waived on behalf of all holders of such class or series of Preferred Stock, as the case may be, by the affirmative written consent or vote of the holders of at least a majority of the shares of such class or series of Preferred Stock, as appropriate, then outstanding.

9.           Notices.  Any notice required or permitted by the provisions of this Article Fourth to be given to a holder of shares of Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.

FIFTH:  Subject to any additional vote required by the Certificate of Incorporation or Bylaws, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws of the Corporation.

SIXTH:  Subject to any additional vote required by the Certificate of Incorporation, the number of directors of the Corporation shall be determined in the manner set forth in the Bylaws of the Corporation.

SEVENTH:  Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide.

EIGHTH:  Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws of the Corporation may provide.  The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.

NINTH:  To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.  If the General Corporation Law or any other law of the State of Delaware is amended after approval by the stockholders of this Article Ninth to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law as so amended.

Any repeal or modification of the foregoing provisions of this Article Ninth by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.

TENTH:  To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which General Corporation Law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of

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the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law.

Any amendment, repeal or modification of the foregoing provisions of this Article Tenth shall not adversely affect any right or protection of any director, officer or other agent of the Corporation existing at the time of such amendment, repeal or modification.

ELEVENTH:  Subject to any additional vote required by this Certificate of Incorporation, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute.

TWELFTH:  In connection with repurchases by the Corporation of its Common Stock from employees, officers, directors, advisors, consultants or other persons performing services for the Corporation or any subsidiary pursuant to agreements under which the Corporation has the option to repurchase such shares at cost upon the occurrence of certain events, such as the termination of employment, Sections 502 and 503 of the California Corporations Code shall not apply in all or in part with respect to such repurchases.

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IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on this 18th day of May, 2011.

By:	/s/Daniel R. Lee
	Daniel R. Lee, Chief Executive Officer

EX1A-2A CHARTER

Exhibit 2.2

SECOND AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

APERION BIOLOGICS, INC.

Aperion Biologics, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

1.           The name of the Corporation is Aperion Biologics, Inc. The date of the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was June 6, 2008 under the name CrossCart, Inc. (the “Original Certificate”).

2.           This Second Amended and Restated Certificate of Incorporation (the “Certificate”) amends, restates and integrates the provisions of the Amended and Restated Certificate of Incorporation that was filed with the Secretary of State of the State of Delaware on May 18, 2011 (the “Amended and Restated Certificate”), and was duly adopted in accordance with the provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”).

3.           The text of the Amended and Restated Certificate is hereby amended and restated in its entirety to provide as herein set forth in full.

ARTICLE I

The name of the Corporation is Aperion Biologics, Inc.

ARTICLE II

The address of the Corporation’s registered office in the State of Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, County, New Castle, 19801. The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

ARTICLE IV

CAPITAL STOCK

The total number of shares of capital stock which the Corporation shall have authority to issue is [              ] ([             ]), of which (i) [             ] ([              ]) shares shall be a class designated as common stock, par value $0.001 per share (the “Common Stock”), and (ii) [       ]

([          ]) shares shall be a class designated as undesignated preferred stock, par value $0.001 per share (the “Undesignated Preferred Stock”).

Except as otherwise provided in any certificate of designations of any series of Undesignated Preferred Stock, the number of authorized shares of the class of Common Stock or Undesignated Preferred Stock may from time to time be increased or decreased (but not below the number of shares of such class outstanding) by the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the Corporation irrespective of the provisions of Section 242(b)(2) of the DGCL.

The powers, preferences and rights of, and the qualifications, limitations and restrictions upon, each class or series of stock shall be determined in accordance with, or as set forth below in, this Article IV.

A.           COMMON STOCK

Subject to all the rights, powers and preferences of the Undesignated Preferred Stock and except as provided by law or in this Certificate (or in any certificate of designations of any series of Undesignated Preferred Stock):

(a)           the holders of the Common Stock shall have the exclusive right to vote for the election of directors of the Corporation (the “Directors”) and on all other matters requiring stockholder action, each outstanding share entitling the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate (or on any amendment to a certificate of designations of any series of Undesignated Preferred Stock) that alters or changes the powers, preferences, rights or other terms of one or more outstanding series of Undesignated Preferred Stock if the holders of such affected series of Undesignated Preferred Stock are entitled to vote, either separately or together with the holders of one or more other such series, on such amendment pursuant to this Certificate (or pursuant to a certificate of designations of any series of Undesignated Preferred Stock) or pursuant to the DGCL;

(b)           dividends may be declared and paid or set apart for payment upon the Common Stock out of any assets or funds of the Corporation legally available for the payment of dividends, but only when and as declared by the Board of Directors or any authorized committee thereof; and

(c)           upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock.

B.           UNDESIGNATED PREFERRED STOCK

The Board of Directors or any authorized committee thereof is expressly authorized, to the fullest extent permitted by law, to provide by resolution or resolutions for, out of the unissued shares of Undesignated Preferred Stock, the issuance of the shares of Undesignated Preferred Stock in one or more series of such stock, and by filing a certificate of designations pursuant to

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applicable law of the State of Delaware, to establish or change from time to time the number of shares of each such series, and to fix the designations, powers, including voting powers, full or limited, or no voting powers, preferences and the relative, participating, optional or other special rights of the shares of each series and any qualifications, limitations and restrictions thereof.

ARTICLE V

STOCKHOLDER ACTION

1.           Action without Meeting. Any action required or permitted to be taken by the stockholders of the Corporation at any annual or special meeting of stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders and may not be taken or effected by a written consent of stockholders in lieu thereof.

2.           Special Meetings. Except as otherwise required by statute and subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Board of Directors acting pursuant to a resolution approved by the affirmative vote of a majority of the Directors then in office, and special meetings of stockholders may not be called by any other person or persons. Only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation.

ARTICLE VI

DIRECTORS

1.           General. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors except as otherwise provided herein or required by law.

2.           Election of Directors. Election of Directors need not be by written ballot unless the Bylaws of the Corporation (the “Bylaws”) shall so provide.

3.           Number of Directors; Term of Office. The number of Directors of the Corporation shall be fixed solely and exclusively by resolution duly adopted from time to time by the Board of Directors. The Directors, other than those who may be elected by the holders of any series of Undesignated Preferred Stock, shall be classified, with respect to the term for which they severally hold office, into three classes. The Board of Directors shall assign directors into classes at the time the classification becomes effective. The initial Class I Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2015, the initial Class II Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2016, and the initial Class III Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2017. At each annual meeting of stockholders, Directors elected to succeed those Directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. Notwithstanding the foregoing, the Directors elected to each class shall hold office until their successors are duly elected and qualified or until their earlier resignation, death or removal.

Notwithstanding the foregoing, whenever, pursuant to the provisions of Article IV of this Certificate, the holders of any one or more series of Undesignated Preferred Stock shall

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have the right, voting separately as a series or together with holders of other such series, to elect Directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Certificate and any certificate of designations applicable to such series.

4.           Vacancies. Subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock to elect Directors and to fill vacancies in the Board of Directors relating thereto, any and all vacancies in the Board of Directors, however occurring, including, without limitation, by reason of an increase in the size of the Board of Directors, or the death, resignation, disqualification or removal of a Director, shall be filled solely and exclusively by the affirmative vote of a majority of the remaining Directors then in office, even if less than a quorum of the Board of Directors, and not by the stockholders. Any Director appointed in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director’s successor shall have been duly elected and qualified or until his or her earlier resignation, death or removal. Subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock to elect Directors, when the number of Directors is increased or decreased, the Board of Directors shall, subject to Article VI.3 hereof, determine the class or classes to which the increased or decreased number of Directors shall be apportioned; provided, however, that no decrease in the number of Directors shall shorten the term of any incumbent Director. In the event of a vacancy in the Board of Directors, the remaining Directors, except as otherwise provided by law, shall exercise the powers of the full Board of Directors until the vacancy is filled.

5.           Removal. Subject to the rights, if any, of any series of Undesignated Preferred Stock to elect Directors and to remove any Director whom the holders of any such series have the right to elect, any Director (including persons elected by Directors to fill vacancies in the Board of Directors) may be removed from office (i) only with cause and (ii) only by the affirmative vote of the holders of 75% or more of the outstanding shares of capital stock then entitled to vote at an election of Directors. At least forty-five (45) days prior to any annual or special meeting of stockholders at which it is proposed that any Director be removed from office, written notice of such proposed removal and the alleged grounds thereof shall be sent to the Director whose removal will be considered at the meeting.

ARTICLE VII

LIMITATION OF LIABILITY

A Director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except for liability (a) for any breach of the Director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL or (d) for any transaction from which the Director derived an improper personal benefit. If the DGCL is amended after the effective date of this Certificate to authorize corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

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Any amendment, repeal or modification of this Article VII by either of (i) the stockholders of the Corporation or (ii) an amendment to the DGCL, shall not adversely affect any right or protection existing at the time of such amendment, repeal or modification with respect to any acts or omissions occurring before such amendment, repeal or modification of a person serving as a Director at the time of such amendment, repeal or modification.

ARTICLE VIII

EXCLUSIVE JURISDICTION OF DELAWARE COURTS

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s Certificate of Incorporation or Bylaws, or (iv) any action asserting a claim against the Corporation governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article VIII.

ARTICLE IX

1.           Amendment by Directors. Except as otherwise provided by law, the Bylaws of the Corporation may be amended or repealed by the Board of Directors by the affirmative vote of a majority of the Directors then in office.

2.           Amendment by Stockholders. The Bylaws of the Corporation may be amended or repealed at any annual meeting of stockholders, or special meeting of stockholders called for such purpose, by the affirmative vote of at least 75% of the outstanding shares of capital stock entitled to vote on such amendment or repeal, voting together as a single class; provided, however, that if the Board of Directors recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of the majority of the outstanding shares of capital stock entitled to vote on such amendment or repeal, voting together as a single class.

ARTICLE X

The Corporation reserves the right to amend or repeal this Certificate in the manner now or hereafter prescribed by statute and this Certificate, and all rights conferred upon stockholders herein are granted subject to this reservation. Whenever any vote of the holders of capital stock of the Corporation is required to amend or repeal any provision of this Certificate, and in addition to any other vote of holders of capital stock that is required by this Certificate or by law, such amendment or repeal shall require the affirmative vote of the majority of the outstanding shares of capital stock entitled to vote on such amendment or repeal, and the affirmative vote of the majority of the outstanding shares of each class entitled to vote thereon as a class, at a duly constituted meeting of stockholders called expressly for such purpose; provided, however, that the affirmative vote of not less than 75% of the outstanding shares of capital stock entitled to

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vote on such amendment or repeal, and the affirmative vote of not less than 75% of the outstanding shares of each class entitled to vote thereon as a class, shall be required to amend or repeal any provision of Article V, Article VI, Article VII, Article VIII, Article IX or Article X of this Certificate.

[Signature Block to Follow]

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THIS AMENDED AND RESTATED CERTIFICATE OF INCORPORATION is executed as of this      day of             , 2015.

Aperion Biologics, Inc.

By:

Name:

Title:

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EX1A-2B BYLAWS

Exhibit 2.3

BYLAWS

OF

APERION BIOLOGICS, INC.,

a Delaware corporation

ARTICLE I.

OFFICES

Section 1.      Registered Office. The registered office of the corporation shall be fixed in the Certificate of Incorporation of the corporation.

Section 2.      Other Offices. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

ARTICLE II.

MEETINGS OF STOCKHOLDERS

Section 1.      Annual Meeting. An annual meeting of the stockholders for the election of directors shall be held at such place either within or without the State of Delaware as shall be designated on an annual basis by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Any other proper business may be transacted at the annual meeting.

Section 2.      Notice of Annual Meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.

Section 3.      Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, or cause a third party to prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 4.      Special Meetings. Special meetings of the stockholders of this corporation, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, shall be called by the President or Secretary at the request in writing of a majority of the members of the Board of Directors or at the request in writing of stockholders owning at

least ten (10%) of the total voting power of all outstanding shares of stock of this corporation then entitled to vote, and may not be called absent such a request. Such request shall state the purpose or purposes of the proposed meeting.

Section 5.      Notice of Special Meetings. As soon as reasonably practicable after receipt of a request as provided in Section 4 of this Article II, written notice of a special meeting, stating the place, date (which shall be not less than ten nor more than sixty days from the date of the notice) and hour of the special meeting and the purpose or purposes for which the special meeting is called, shall be given to each stockholder entitled to vote at such special meeting.

Section 6.      Scope of Business at Special Meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

Section 7.      Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the chairman of the meeting or the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting as provided in Section 5 of this Article II.

Section 8.      Qualifications to Vote. The stockholders of record on the books of the corporation at the close of business on the record date as determined by the Board of Directors and only such stockholders shall be entitled to vote at any meeting of stockholders or any adjournment thereof.

Section 9.      Record Date. The Board of Directors may fix a record date for the determination of the stockholders entitled to notice of or to vote at any stockholders’ meeting and at any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action. The record date shall not be more than sixty nor less than ten days before the date of such meeting, and not more than sixty days prior to any other action. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

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Section 10.      Action at Meetings. When a quorum is present at any meeting, the vote of the holders of a majority of the shares of stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of applicable law or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question.

Section 11.      Voting and Proxies. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. Each proxy shall be revocable unless expressly provided therein to be irrevocable and unless it is coupled with an interest sufficient in law to support an irrevocable power.

Section 12.      Action by Stockholders Without a Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the State of Delaware (by hand or by certified or registered mail, return receipt requested), to its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded, provided, however, that action by written consent to elect directors, if less than unanimous, shall be in lieu of holding an annual meeting only if all the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were delivered to the corporation by delivery to its registered office in the State of Delaware (by hand or by certified or registered mail, return receipt requested), to its principal place of business, or to an officer or agent of the corporation having custody of the book in which proceedings or meetings of stockholders are recorded.

Section 13.      Nominations for Board of Directors. Nominations for election to the Board of Directors must be made by the Board of Directors or by any stockholder of any outstanding class of capital stock of the corporation entitled to vote for the election of directors. Nominations, other than those made by the Board of Directors of the corporation, must be preceded by notification in writing in fact received by the Secretary of the corporation not less than sixty days prior to any meeting of stockholders called for the election of directors. Such notification shall contain the written consent of each proposed nominee to serve as a director if so elected and the following information as to each proposed nominee and as to each person, acting alone or in conjunction with one or more other persons as a partnership, limited

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partnership, syndicate or other group, who participates or is expected to participate in making such nomination or in organizing, directing or financing such nomination or solicitation of proxies to vote for the nominee:

(a)      the name, age, residence, address, and business address of each proposed nominee and of each such person;

(b)      the principal occupation or employment, the name, type of business and address of the corporation or other organization in which such employment is carried on of each proposed nominee and of each such person;

(c)      the amount of stock of the corporation owned beneficially, either directly or indirectly, by each proposed nominee and each such person; and

(d)      a description of any arrangement or understanding of each proposed nominee and of each such person with each other or any other person regarding future employment or any future transaction to which the corporation will or may be a party.

The presiding officer of the meeting shall have the authority to determine and declare to the meeting that a nomination not preceded by notification made in accordance with the foregoing procedure shall be disregarded.

ARTICLE III.

DIRECTORS

Section 1.      Powers. The business of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by applicable law or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.

Section 2.      Number; Election; Tenure and Qualification. The number of directors which shall constitute the whole board shall be fixed from time to time by resolution of the Board of Directors or by the Stockholders at an annual meeting of the Stockholders, with the exception of the first Board of Directors, which shall be elected by the incorporator, and except as provided in the corporation’s Certificate of Incorporation or in Section 3 of this Article III, the directors shall be elected at the annual meeting of the stockholders by a plurality vote of the shares represented in person or by proxy and each director elected shall hold office until his successor is elected and qualified unless he shall resign, become disqualified, disabled, or otherwise removed. Directors need not be stockholders.

Section 3.      Vacancies and Newly Created Directorships. Unless otherwise provided in the Certificate of Incorporation, vacancies and newly-created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director. The directors so chosen shall serve until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by applicable law. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole

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board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

Section 4.      Location of Meetings. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.

Section 5.      Meeting of Newly Elected Board of Directors. The first meeting of each newly elected Board of Directors shall be held immediately following the annual meeting of stockholders and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event such meeting is not held at such time, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.

Section 6.      Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of such location.

Section 7.      Special Meetings. Special meetings of the Board of Directors may be called by the President on two days’ notice to each director by mail, overnight courier service or facsimile; special meetings shall be called by the President or Secretary in a like manner and on like notice on the written request of two directors unless the Board of Directors consists of only one director, in which case special meetings shall be called by the President or Secretary in a like manner and on like notice on the written request of the sole director. Notice may be waived in accordance with Section 229 of the General Corporation Law of the State of Delaware.

Section 8.      Quorum and Action at Meetings. At all meetings of the Board of Directors, a majority of the directors then in office shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 9.      Action Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.

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Section 10.      Telephonic Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

Section 11.      Committees. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Section 12.      Committee Authority. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (a) approving, adopting or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of the State of Delaware to be submitted to stockholders for approval, or (b) adopting, amending or repealing any Bylaw of the corporation. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.

Section 13.      Committee Minutes. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required to do so by the Board of Directors.

Section 14.      Directors Compensation. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

Section 15.      Resignation. Any director or officer of the corporation may resign at any time. Each such resignation shall be made in writing and shall take effect at the time specified therein, or, if no time is specified, at the time of its receipt by either the Board of Directors, the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective unless expressly so provided in the resignation.

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Section 16.      Removal. Unless otherwise restricted by the Certificate of Incorporation, these Bylaws or applicable law, any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors.

ARTICLE IV.

NOTICES

Section 1.      Notice to Directors and Stockholders. Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the corporation that the notice has been given shall in the absence of fraud, be prima facie evidence of the facts stated therein. Notice to directors may also be given by telephone, facsimile or telegram (with confirmation of receipt).

Section 2.      Waiver. Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. The written waiver need not specify the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee of directors. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Attendance at the meeting is not a waiver of any right to object to the consideration of matters required by the General Corporation Law of the State of Delaware to be included in the notice of the meeting but not so included, if such objection is expressly made at the meeting.

ARTICLE V.

OFFICERS

Section 1.      Enumeration. The officers of the corporation shall be chosen by the Board of Directors and shall include a President, a Secretary, a Treasurer or Chief Financial Officer and such other officers with such other titles as the Board of Directors shall determine. The Board of Directors may elect from among its members a Chairman or Chairmen of the Board and a Vice Chairman of the Board. The Board of Directors may also choose one or more Vice-Presidents, Assistant Secretaries and Assistant Treasurers. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these Bylaws otherwise provide.

Section 2.      Election. The Board of Directors at its first meeting after each annual meeting of stockholders shall elect a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine.

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Section 3.      Appointment of Other Agents. The Board of Directors may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

Section 4.      Compensation. The salaries of all officers of the corporation shall be fixed by the Board of Directors or a committee thereof. The salaries of agents of the corporation shall, unless fixed by the Board of Directors, be fixed by the President or any Vice-President of the corporation.

Section 5.      Tenure. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the directors of the Board of Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.

Section 6.      Chairman of the Board and Vice-Chairman of the Board. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which the Chairman shall be present. The Chairman shall have and may exercise such powers as are, from time to time, assigned to the Chairman by the Board of Directors and as may be provided by law. In the absence of the Chairman of the Board, the Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which the Vice Chairman shall be present. The Vice Chairman shall have and may exercise such powers as are, from time to time, assigned to such person by the Board of Directors and as may be provided by law.

Section 7.      President. The President shall be the Chief Executive Officer of the corporation unless such title is assigned to another officer of the corporation; in the absence of a Chairman and Vice Chairman of the Board, the President shall preside as the chairman of meetings of the stockholders and the Board of Directors; and the President shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President or any Vice President shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation.

Section 8.      Vice-President. In the absence of the President or in the event of the President’s inability or refusal to act, the Vice-President, if any (or in the event there be more than one Vice-President, the Vice-Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice-President shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

Section 9.      Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of

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the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision the Secretary shall be subject. The Secretary shall have custody of the corporate seal of the corporation and the Secretary, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the Secretary’s signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by such officer’s signature.

Section 10.      Assistant Secretary. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

Section 11.      Chief Financial Officer. The Chief Financial Officer may also be designated by the alternate title of "Treasurer." The Chief Financial Officer shall have the custody of all moneys and securities of the Corporation and shall keep regular books of account. Such officer shall disburse funds of the Corporation in payment of the just demands against the Corporation, or as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the Board from time to time as may be required of such officer, an account of all transactions as Chief Financial Officer and of the financial condition of the Corporation. Such officer shall perform all duties incident to such office or that are properly required by the President or by the Board. If required by the Board of Directors, the Chief Financial Officer shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of such officer’s office and for the restoration to the corporation, in case of such officer’s death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in such officer’s possession or control belonging to the corporation.

Section 12.      Assistant Treasurer. The Assistant Treasurer or the Assistant Treasurers, in the order of their seniority, shall, in the absence or disability of the Chief Financial Officer, or in the event of such officer’s refusal to act, perform the duties and exercise the powers of the Chief Financial Officer, and shall have such powers and discharge such duties as may be assigned from time to time by the President or by the Board of Directors.

ARTICLE VI.

CAPITAL STOCK

Section 1.      Certificates. The shares of the corporation shall be represented by a certificate, unless and until the Board of Directors adopts a resolution permitting shares to be uncertificated. Certificates shall be signed by, or in the name of the corporation by, (a) the Chairman of the Board, the Vice-Chairman of the Board, the President or a Vice-President, and

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(b) the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, certifying the number of shares owned by such stockholder in the corporation. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be specified.

Section 2.      Class or Series. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of the State of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the Delaware Corporation Law or a statement that the corporation will furnish without charge, to each stockholder who so requests, the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

Section 3.      Signature. Any of or all of the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

Section 4.      Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or such owner’s legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 5.      Transfer of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction

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upon its books. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation.

Section 6.      Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholder or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 7.      Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VII.

GENERAL PROVISIONS

Section 1.      Dividends. Dividends upon the capital stock of the corporation, subject to the applicable provisions, if any, of the Certificate of Incorporation, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the Board of Directors shall think conducive to the interest of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.

Section 2.      Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

Section 3.      Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

Section 4.      Seal. The Board of Directors may adopt a corporate seal having inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal,

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Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 5.      Loans. The Board of Directors of this corporation may, without stockholder approval, authorize loans to, or guaranty obligations of, or otherwise assist, including, without limitation, the adoption of employee benefit plans under which loans and guarantees may be made, any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the Board of Directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation.

ARTICLE VIII.

INDEMNIFICATION

Section 1.      Scope. The corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as that Section may be amended and supplemented from time to time, indemnify any director, officer, employee or agent of the corporation, against expenses (including attorneys’ fees), judgments, fines, amounts paid in settlement and/or other matters referred to in or covered by that Section, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

Section 2.      Advancing Expenses. Expenses (including attorneys’ fees) incurred by a present or former director or officer of the corporation in defending a civil, criminal, administrative or investigative action, suit or proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the corporation (or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized by relevant provisions of the General Corporation Law of the State of Delaware; provided, however, the corporation shall not be required to advance such expenses to a director (i) who commences any action, suit or proceeding as a plaintiff unless such advance is specifically approved by a majority of the Board of Directors, or (ii) who is a party to an action, suit or proceeding brought by the corporation and approved by a majority of the Board of Directors which alleges willful misappropriation of corporate assets by such director, disclosure of confidential information in violation of such director’s fiduciary or contractual obligations to the corporation, or any other willful and deliberate breach in bad faith of such director’s duty to the corporation or its stockholders.

Section 3.      Liability Offset. The corporation’s obligation to provide indemnification under this Article VIII shall be offset to the extent the indemnified party is indemnified by any

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other source including, but not limited to, any applicable insurance coverage under a policy maintained by the corporation, the indemnified party or any other person.

Section 4.      Continuing Obligation. The provisions of this Article VIII shall be deemed to be a contract between the corporation and each director of the corporation who serves in such capacity at any time while this bylaw is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.

Section 5.      Nonexclusive. The indemnification and advancement of expenses provided for in this Article VIII shall (i) not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement or vote of stockholders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, (ii) continue as to a person who has ceased to be a director and (iii) inure to the benefit of the heirs, executors and administrators of such a person.

Section 6.      Other Persons. In addition to the indemnification rights of directors, officers, employees, or agents of the corporation, the Board of Directors in its discretion shall have the power on behalf of the corporation to indemnify any other person made a party to any action, suit or proceeding who the corporation may indemnify under Section 145 of the General Corporation Law of the State of Delaware.

Section 7.      Definitions. The phrases and terms set forth in this Article VIII shall be given the same meaning as the identical terms and phrases are given in Section 145 of the General Corporation Law of the State of Delaware, as that Section may be amended and supplemented from time to time.

ARTICLE IX.

AMENDMENTS

Except as otherwise provided in the Certificate of Incorporation, these Bylaws may be altered, amended or repealed, or new Bylaws may be adopted, by the holders of a majority of the outstanding voting shares or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice of such special meeting. If the power to adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the Certificate of Incorporation, it shall not divest or limit the power of the stockholders to adopt, amend or repeal Bylaws.

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EX1A-2B BYLAWS

Exhibit 2.4

AMENDED AND RESTATED

BYLAWS

OF

APERION BIOLOGICS, INC.

(the “Corporation”)

ARTICLE I

STOCKHOLDERS

SECTION 1.      Annual Meeting. The annual meeting of stockholders (any such meeting being referred to in these Bylaws as an “Annual Meeting”) shall be held at the hour, date and place within or without the United States which is fixed by the Board of Directors, which time, date and place may subsequently be changed at any time by vote of the Board of Directors. If no Annual Meeting has been held for a period of thirteen (13) months after the Corporation’s last Annual Meeting, a special meeting in lieu thereof may be held, and such special meeting shall have, for the purposes of these Bylaws or otherwise, all the force and effect of an Annual Meeting. Any and all references hereafter in these Bylaws to an Annual Meeting or Annual Meetings also shall be deemed to refer to any special meeting(s) in lieu thereof.

SECTION 2.      Notice of Stockholder Business and Nominations.

(a)           Annual Meetings of Stockholders.

(1)           Nominations of persons for election to the Board of Directors of the Corporation and the proposal of other business to be considered by the stockholders may be brought before an Annual Meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Bylaw, who is entitled to vote at the meeting, who is present (in person or by proxy) at the meeting and who complies with the notice procedures set forth in this Bylaw as to such nomination or business. For the avoidance of doubt, the foregoing clause (ii) shall be the exclusive means for a stockholder to bring nominations or business properly before an Annual Meeting (other than matters properly brought under Rule 14a-8 or Rule 14a-11 (or any successor rules) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and such stockholder must comply with the notice and other procedures set forth in Article I, Section 2(a)(2) and (3) of this Bylaw to bring such nominations or business properly before an Annual Meeting. In addition to the other requirements set forth in this Bylaw, for any proposal of business to be considered at an Annual Meeting, it must be a proper subject for action by stockholders of the Corporation under Delaware law.

(2)           For nominations or other business to be properly brought before an Annual Meeting by a stockholder pursuant to clause (ii) of Article I, Section 2(a)(1) of this Bylaw, the stockholder must (i) have given Timely Notice (as defined below) thereof in writing to the Secretary of the Corporation, (ii) have provided any updates or supplements to such notice

at the times and in the forms required by this Bylaw and (iii) together with the beneficial owner(s), if any, on whose behalf the nomination or business proposal is made, have acted in accordance with the representations set forth in the Solicitation Statement (as defined below) required by this Bylaw. To be timely, a stockholder’s written notice shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the one-year anniversary of the preceding year’s Annual Meeting; provided, however, that in the event the Annual Meeting is first convened more than thirty (30) days before or more than sixty (60) days after such anniversary date, or if no Annual Meeting were held in the preceding year, notice by the stockholder to be timely must be received by the Secretary of the Corporation not later than the close of business on the later of the ninetieth (90th) day prior to the scheduled date of such Annual Meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made (such notice within such time periods shall be referred to as “Timely Notice”). Notwithstanding anything to the contrary provided herein, for the first Annual Meeting following the initial public offering of common stock of the Corporation, a stockholder’s notice shall be timely if received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the later of the ninetieth (90th) day prior to the scheduled date of such Annual Meeting or the tenth (10th) day following the day on which public announcement of the date of such Annual Meeting is first made or sent by the Corporation. Such stockholder’s Timely Notice shall set forth:

(A)           as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected);

(B)           as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest in such business of each Proposing Person (as defined below);

(C)           (i) the name and address of the stockholder giving the notice, as they appear on the Corporation’s books, and the names and addresses of the other Proposing Persons (if any) and (ii) as to each Proposing Person, the following information: (a) the class or series and number of all shares of capital stock of the Corporation which are, directly or indirectly, owned beneficially or of record by such Proposing Person or any of its affiliates or associates (as such terms are defined in Rule 12b-2 promulgated under the Exchange Act), including any shares of any class or series of capital stock of the Corporation as to which such Proposing Person or any of its affiliates or associates has a right to acquire beneficial ownership at any time in the future, (b) all Synthetic Equity Interests (as defined below) in which such Proposing Person or any of its affiliates or associates, directly or indirectly, holds an interest including a description of the material terms of each such Synthetic Equity Interest, including without limitation, identification of the counterparty to each such Synthetic Equity Interest and disclosure, for each such Synthetic Equity Interest, as to (x) whether or not such Synthetic Equity Interest conveys any voting rights, directly or indirectly, in such shares to such Proposing

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Person, (y) whether or not such Synthetic Equity Interest is required to be, or is capable of being, settled through delivery of such shares and (z) whether or not such Proposing Person and/or, to the extent known, the counterparty to such Synthetic Equity Interest has entered into other transactions that hedge or mitigate the economic effect of such Synthetic Equity Interest, (c) any proxy (other than a revocable proxy given in response to a public proxy solicitation made pursuant to, and in accordance with, the Exchange Act), agreement, arrangement, understanding or relationship pursuant to which such Proposing Person has or shares a right to, directly or indirectly, vote any shares of any class or series of capital stock of the Corporation, (d) any rights to dividends or other distributions on the shares of any class or series of capital stock of the Corporation, directly or indirectly, owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, and (e) any performance-related fees (other than an asset based fee) that such Proposing Person, directly or indirectly, is entitled to based on any increase or decrease in the value of shares of any class or series of capital stock of the Corporation or any Synthetic Equity Interests (the disclosures to be made pursuant to the foregoing clauses (a) through (e) are referred to, collectively, as “Material Ownership Interests”) and (iii) a description of the material terms of all agreements, arrangements or understandings (whether or not in writing) entered into by any Proposing Person or any of its affiliates or associates with any other person for the purpose of acquiring, holding, disposing or voting of any shares of any class or series of capital stock of the Corporation;

(D)           (i) a description of all agreements, arrangements or understandings by and among any of the Proposing Persons, or by and among any Proposing Persons and any other person (including with any proposed nominee(s)), pertaining to the nomination(s) or other business proposed to be brought before the meeting of stockholders (which description shall identify the name of each other person who is party to such an agreement, arrangement or understanding), and (ii) identification of the names and addresses of other stockholders (including beneficial owners) known by any of the Proposing Persons to support such nominations or other business proposal(s), and to the extent known the class and number of all shares of the Corporation’s capital stock owned beneficially or of record by such other stockholder(s) or other beneficial owner(s); and

(E)           a statement whether or not the stockholder giving the notice and/or the other Proposing Person(s), if any, will deliver a proxy statement and form of proxy to holders of, in the case of a business proposal, at least the percentage of voting power of all of the shares of capital stock of the Corporation required under applicable law to approve the proposal or, in the case of a nomination or nominations, at least the percentage of voting power of all of the shares of capital stock of the Corporation reasonably believed by such Proposing Person to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder (such statement, the “Solicitation Statement”).

For purposes of this Article I of these Bylaws, the term “Proposing Person” shall mean the following persons: (i) the stockholder of record providing the notice of nominations or business proposed to be brought before a stockholders’ meeting, and (ii) the beneficial owner(s), if different, on whose behalf the nominations or business proposed to be brought before a stockholders’ meeting is made. For purposes of this Section 2 of Article I of these Bylaws, the term “Synthetic Equity Interest” shall mean any transaction, agreement or arrangement (or series of transactions, agreements or arrangements), including, without limitation, any derivative, swap,

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hedge, repurchase or so-called “stock borrowing” agreement or arrangement, the purpose or effect of which is to, directly or indirectly: (a) give a person or entity economic benefit and/or risk similar to ownership of shares of any class or series of capital stock of the Corporation, in whole or in part, including due to the fact that such transaction, agreement or arrangement provides, directly or indirectly, the opportunity to profit or avoid a loss from any increase or decrease in the value of any shares of any class or series of capital stock of the Corporation, (b) mitigate loss to, reduce the economic risk of or manage the risk of share price changes for, any person or entity with respect to any shares of any class or series of capital stock of the Corporation, (c) otherwise provide in any manner the opportunity to profit or avoid a loss from any decrease in the value of any shares of any class or series of capital stock of the Corporation, or (d) increase or decrease the voting power of any person or entity with respect to any shares of any class or series of capital stock of the Corporation.

(3)           A stockholder providing Timely Notice of nominations or business proposed to be brought before an Annual Meeting shall further update and supplement such notice, if necessary, so that the information (including, without limitation, the Material Ownership Interests information) provided or required to be provided in such notice pursuant to this Bylaw shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to such Annual Meeting, and such update and supplement shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the fifth (5th) business day after the record date for the Annual Meeting (in the case of the update and supplement required to be made as of the record date), and not later than the close of business on the eighth (8th) business day prior to the date of the Annual Meeting (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting).

(4)           Notwithstanding anything in the second sentence of Article I, Section 2(a)(2) of this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least ten (10) days before the last day a stockholder may deliver a notice of nomination in accordance with the second sentence of Article I, Section 2(a)(2), a stockholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be received by the Secretary of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

(b)           General.

(1)           Only such persons who are nominated in accordance with the provisions of this Bylaw or in accordance with Rule 14a-11 under the Exchange Act shall be eligible for election and to serve as directors and only such business shall be conducted at an Annual Meeting as shall have been brought before the meeting in accordance with the provisions of this Bylaw or in accordance with Rule 14a-8 under the Exchange Act. The Board of Directors or a designated committee thereof shall have the power to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the

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provisions of this Bylaw. If neither the Board of Directors nor such designated committee makes a determination as to whether any stockholder proposal or nomination was made in accordance with the provisions of this Bylaw, the presiding officer of the Annual Meeting shall have the power and duty to determine whether the stockholder proposal or nomination was made in accordance with the provisions of this Bylaw. If the Board of Directors or a designated committee thereof or the presiding officer, as applicable, determines that any stockholder proposal or nomination was not made in accordance with the provisions of this Bylaw, such proposal or nomination shall be disregarded and shall not be presented for action at the Annual Meeting.

(2)           Except as otherwise required by law, nothing in this Article I, Section 2 shall obligate the Corporation or the Board of Directors to include in any proxy statement or other stockholder communication distributed on behalf of the Corporation or the Board of Directors information with respect to any nominee for director or any other matter of business submitted by a stockholder.

(3)           Notwithstanding the foregoing provisions of this Article I, Section 2, if the nominating or proposing stockholder (or a qualified representative of the stockholder) does not appear at the Annual Meeting to present a nomination or any business, such nomination or business shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Article I, Section 2, to be considered a qualified representative of the proposing stockholder, a person must be authorized by a written instrument executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such written instrument or electronic transmission, or a reliable reproduction of the written instrument or electronic transmission, to the presiding officer at the meeting of stockholders.

(4)           For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(5)           Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights of (i) stockholders to have nominations or proposals included in the Corporation’s proxy statement pursuant to Rule 14a-8 or Rule 14a-11 (or any successor rules), as applicable, under the Exchange Act and, to the extent required by such rule, have such nominations or proposals considered and voted on at an Annual Meeting or (ii) the holders of any series of Undesignated Preferred Stock to elect directors under specified circumstances.

SECTION 3.      Special Meetings. Except as otherwise required by statute and subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Board of Directors acting pursuant to a resolution approved by the affirmative vote of a majority of the Directors

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then in office. The Board of Directors may postpone or reschedule any previously scheduled special meeting of stockholders. Only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation. Nominations of persons for election to the Board of Directors of the Corporation and stockholder proposals of other business shall not be brought before a special meeting of stockholders to be considered by the stockholders unless such special meeting is held in lieu of an annual meeting of stockholders in accordance with Article I, Section 1 of these Bylaws, in which case such special meeting in lieu thereof shall be deemed an Annual Meeting for purposes of these Bylaws and the provisions of Article I, Section 2 of these Bylaws shall govern such special meeting.

SECTION 4.      Notice of Meetings; Adjournments.

(a)           A notice of each Annual Meeting stating the hour, date and place, if any, of such Annual Meeting and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given not less than ten (10) days nor more than sixty (60) days before the Annual Meeting, to each stockholder entitled to vote thereat by delivering such notice to such stockholder or by mailing it, postage prepaid, addressed to such stockholder at the address of such stockholder as it appears on the Corporation’s stock transfer books. Without limiting the manner by which notice may otherwise be given to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law (“DGCL”).

(b)           Notice of all special meetings of stockholders shall be given in the same manner as provided for Annual Meetings, except that the notice of all special meetings shall state the purpose or purposes for which the meeting has been called.

(c)           Notice of an Annual Meeting or special meeting of stockholders need not be given to a stockholder if a waiver of notice is executed, or waiver of notice by electronic transmission is provided, before or after such meeting by such stockholder or if such stockholder attends such meeting, unless such attendance is for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting was not lawfully called or convened.

(d)           The Board of Directors may postpone and reschedule any previously scheduled Annual Meeting or special meeting of stockholders and any record date with respect thereto, regardless of whether any notice or public disclosure with respect to any such meeting has been sent or made pursuant to Section 2 of this Article I of these Bylaws or otherwise. In no event shall the public announcement of an adjournment, postponement or rescheduling of any previously scheduled meeting of stockholders commence a new time period for the giving of a stockholder’s notice under this Article I of these Bylaws.

(e)           When any meeting is convened, the presiding officer may adjourn the meeting if (i) no quorum is present for the transaction of business, (ii) the Board of Directors determines that adjournment is necessary or appropriate to enable the stockholders to consider fully information which the Board of Directors determines has not been made sufficiently or timely available to stockholders, or (iii) the Board of Directors determines that adjournment is

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otherwise in the best interests of the Corporation. When any Annual Meeting or special meeting of stockholders is adjourned to another hour, date or place, notice need not be given of the adjourned meeting other than an announcement at the meeting at which the adjournment is taken of the hour, date and place, if any, to which the meeting is adjourned and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting; provided, however, that if the adjournment is for more than thirty (30) days from the meeting date, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting shall be given to each stockholder of record entitled to vote thereat and each stockholder who, by law or under the Certificate of Incorporation of the Corporation (as the same may hereafter be amended and/or restated, the “Certificate”) or these Bylaws, is entitled to such notice.

SECTION 5.      Quorum. A majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders. If less than a quorum is present at a meeting, the holders of voting stock representing a majority of the voting power present at the meeting or the presiding officer may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice, except as provided in Section 4 of this Article I. At such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally noticed. The stockholders present at a duly constituted meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

SECTION 6.      Voting and Proxies. Stockholders shall have one vote for each share of stock entitled to vote owned by them of record according to the stock ledger of the Corporation as of the record date, unless otherwise provided by law or by the Certificate. Stockholders may vote either (i) in person, (ii) by written proxy or (iii) by a transmission permitted by Section 212(c) of the DGCL. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission permitted by Section 212(c) of the DGCL may be substituted for or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. Proxies shall be filed in accordance with the procedures established for the meeting of stockholders. Except as otherwise limited therein or as otherwise provided by law, proxies authorizing a person to vote at a specific meeting shall entitle the persons authorized thereby to vote at any adjournment of such meeting, but they shall not be valid after final adjournment of such meeting. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by or on behalf of any one of them unless at or prior to the exercise of the proxy the Corporation receives a specific written notice to the contrary from any one of them.

SECTION 7.      Action at Meeting. When a quorum is present at any meeting of stockholders, any matter before any such meeting (other than an election of a director or directors) shall be decided by a majority of the votes properly cast for and against such matter, except where a larger vote is required by law, by the Certificate or by these Bylaws. Any election

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of directors by stockholders shall be determined by a plurality of the votes properly cast on the election of directors.

SECTION 8.      Stockholder Lists. The Secretary or an Assistant Secretary (or the Corporation’s transfer agent or other person authorized by these Bylaws or by law) shall prepare and make, at least ten (10) days before every Annual Meeting or special meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for a period of at least ten (10) days prior to the meeting in the manner provided by law. The list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law.

SECTION 9.      Presiding Officer. The Board of Directors shall designate a representative to preside over all Annual Meetings or special meetings of stockholders, provide that if the Board of Directors does not so designate such a presiding officer, then the Chairman of the Board, if one is elected, shall preside over such meetings. If the Board of Directors does not so designate such a presiding officer and there is no Chairman of the Board or the Chairman of the Board is unable to so preside or is absent, then the Chief Executive Officer, if one is elected, shall preside over such meetings, provided further that if there is no Chief Executive Officer or the Chief Executive Officer is unable to so preside or is absent, then the President shall preside over such meetings. The presiding officer at any Annual Meeting or special meeting of stockholders shall have the power, among other things, to adjourn such meeting at any time and from time to time, subject to Sections 4 and 5 of this Article I. The order of business and all other matters of procedure at any meeting of the stockholders shall be determined by the presiding officer.

SECTION 10.      Inspectors of Elections. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the presiding officer shall appoint one or more inspectors to act at the meeting. Any inspector may, but need not, be an officer, employee or agent of the Corporation. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall perform such duties as are required by the DGCL, including the counting of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors. The presiding officer may review all determinations made by the inspectors, and in so doing the presiding officer shall be entitled to exercise his or her sole judgment and discretion and he or she shall not be bound by any determinations made by the inspectors. All determinations by the inspectors and, if applicable, the presiding officer, shall be subject to further review by any court of competent jurisdiction.

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ARTICLE II

DIRECTORS

SECTION 1.      Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors except as otherwise provided by the Certificate or required by law.

SECTION 2.      Number and Terms. The number of directors of the Corporation shall be fixed solely and exclusively by resolution duly adopted from time to time by the Board of Directors. The directors shall hold office in the manner provided in the Certificate.

SECTION 3.      Qualification. No director need be a stockholder of the Corporation.

SECTION 4.      Vacancies. Vacancies in the Board of Directors shall be filled in the manner provided in the Certificate.

SECTION 5.      Removal. Directors may be removed from office only in the manner provided in the Certificate.

SECTION 6.      Resignation. A director may resign at any time by giving written notice to the Chairman of the Board, if one is elected, the President or the Secretary. A resignation shall be effective upon receipt, unless the resignation otherwise provides.

SECTION 7.      Regular Meetings. The regular annual meeting of the Board of Directors shall be held, without notice other than this Section 7, on the same date and at the same place as the Annual Meeting following the close of such meeting of stockholders. Other regular meetings of the Board of Directors may be held at such hour, date and place as the Board of Directors may by resolution from time to time determine and publicize by means of reasonable notice given to any director who is not present at the meeting at which such resolution is adopted.

SECTION 8.      Special Meetings. Special meetings of the Board of Directors may be called, orally or in writing, by or at the request of a majority of the directors, the Chairman of the Board, if one is elected, or the President. The person calling any such special meeting of the Board of Directors may fix the hour, date and place thereof.

SECTION 9.      Notice of Meetings. Notice of the hour, date and place of all special meetings of the Board of Directors shall be given to each director by the Secretary or an Assistant Secretary, or in case of the death, absence, incapacity or refusal of such persons, by the Chairman of the Board, if one is elected, or the President or such other officer designated by the Chairman of the Board, if one is elected, or the President. Notice of any special meeting of the Board of Directors shall be given to each director in person, by telephone, or by facsimile, electronic mail or other form of electronic communication, sent to his or her business or home address, at least twenty-four (24) hours in advance of the meeting, or by written notice mailed to his or her business or home address, at least forty-eight (48) hours in advance of the meeting. Such notice shall be deemed to be delivered when hand-delivered to such address, read to such director by telephone, deposited in the mail so addressed, with postage thereon prepaid if mailed,

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dispatched or transmitted if sent by facsimile transmission or by electronic mail or other form of electronic communications. A written waiver of notice signed before or after a meeting by a director and filed with the records of the meeting shall be deemed to be equivalent to notice of the meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because such meeting is not lawfully called or convened. Except as otherwise required by law, by the Certificate or by these Bylaws, neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

SECTION 10.      Quorum. At any meeting of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business, but if less than a quorum is present at a meeting, a majority of the directors present may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice. Any business which might have been transacted at the meeting as originally noticed may be transacted at such adjourned meeting at which a quorum is present. For purposes of this section, the total number of directors includes any unfilled vacancies on the Board of Directors.

SECTION 11.      Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of the directors present shall constitute action by the Board of Directors, unless otherwise required by law, by the Certificate or by these Bylaws.

SECTION 12.      Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the records of the meetings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Such consent shall be treated as a resolution of the Board of Directors for all purposes.

SECTION 13.      Manner of Participation. Directors may participate in meetings of the Board of Directors by means of conference telephone or other communications equipment by means of which all directors participating in the meeting can hear each other, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting for purposes of these Bylaws.

SECTION 14.      Presiding Director. The Board of Directors shall designate a representative to preside over all meetings of the Board of Directors, provided that if the Board of Directors does not so designate such a presiding director or such designated presiding director is unable to so preside or is absent, then the Chairman of the Board, if one is elected, shall preside over all meetings of the Board of Directors. If both the designated presiding director, if one is so designated, and the Chairman of the Board, if one is elected, are unable to preside or are absent, the Board of Directors shall designate an alternate representative to preside over a meeting of the Board of Directors.

SECTION 15.      Committees. The Board of Directors, by vote of a majority of the directors then in office, may elect one or more committees, including, without limitation, a

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Compensation Committee, a Nominating & Corporate Governance Committee and an Audit Committee, and may delegate thereto some or all of its powers except those which by law, by the Certificate or by these Bylaws may not be delegated. Except as the Board of Directors may otherwise determine, any such committee may make rules for the conduct of its business, but unless otherwise provided by the Board of Directors or in such rules, its business shall be conducted so far as possible in the same manner as is provided by these Bylaws for the Board of Directors. All members of such committees shall hold such offices at the pleasure of the Board of Directors. The Board of Directors may abolish any such committee at any time. Any committee to which the Board of Directors delegates any of its powers or duties shall keep records of its meetings and shall report its action to the Board of Directors.

SECTION 16.      Compensation of Directors. Directors shall receive such compensation for their services as shall be determined by a majority of the Board of Directors, or a designated committee thereof, provided that directors who are serving the Corporation as employees and who receive compensation for their services as such, shall not receive any salary or other compensation for their services as directors of the Corporation.

ARTICLE III

OFFICERS

SECTION 1.      Enumeration. The officers of the Corporation shall consist of a President, a Treasurer, a Secretary and such other officers, including, without limitation, a Chairman of the Board of Directors, a Chief Executive Officer and one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine.

SECTION 2.      Election. At the regular annual meeting of the Board of Directors following the Annual Meeting, the Board of Directors shall elect the President, the Treasurer and the Secretary. Other officers may be elected by the Board of Directors at such regular annual meeting of the Board of Directors or at any other regular or special meeting.

SECTION 3.      Qualification. No officer need be a stockholder or a director. Any person may occupy more than one office of the Corporation at any time.

SECTION 4.      Tenure. Except as otherwise provided by the Certificate or by these Bylaws, each of the officers of the Corporation shall hold office until the regular annual meeting of the Board of Directors following the next Annual Meeting and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

SECTION 5.      Resignation. Any officer may resign by delivering his or her written resignation to the Corporation addressed to the President or the Secretary, and such resignation shall be effective upon receipt, unless the resignation otherwise provides.

SECTION 6.      Removal. Except as otherwise provided by law, the Board of Directors may remove any officer with or without cause by the affirmative vote of a majority of the directors then in office.

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SECTION 7.      Absence or Disability. In the event of the absence or disability of any officer, the Board of Directors may designate another officer to act temporarily in place of such absent or disabled officer.

SECTION 8.      Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors.

SECTION 9.      President. The President shall, subject to the direction of the Board of Directors, have such powers and shall perform such duties as the Board of Directors may from time to time designate.

SECTION 10.      Chairman of the Board. The Chairman of the Board, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

SECTION 11.      Chief Executive Officer. The Chief Executive Officer, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

SECTION 12.      Vice Presidents and Assistant Vice Presidents. Any Vice President (including any Executive Vice President or Senior Vice President) and any Assistant Vice President shall have such powers and shall perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

SECTION 13.      Treasurer and Assistant Treasurers. The Treasurer shall, subject to the direction of the Board of Directors and except as the Board of Directors or the Chief Executive Officer may otherwise provide, have general charge of the financial affairs of the Corporation and shall cause to be kept accurate books of account. The Treasurer shall have custody of all funds, securities, and valuable documents of the Corporation. He or she shall have such other duties and powers as may be designated from time to time by the Board of Directors or the Chief Executive Officer. Any Assistant Treasurer shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

SECTION 14.      Secretary and Assistant Secretaries. The Secretary shall record all the proceedings of the meetings of the stockholders and the Board of Directors (including committees of the Board of Directors) in books kept for that purpose. In his or her absence from any such meeting, a temporary secretary chosen at the meeting shall record the proceedings thereof. The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other agent of the Corporation). The Secretary shall have custody of the seal of the Corporation, and the Secretary, or an Assistant Secretary shall have authority to affix it to any instrument requiring it, and, when so affixed, the seal may be attested by his or her signature or that of an Assistant Secretary. The Secretary shall have such other duties and powers as may be designated from time to time by the Board of Directors or the Chief Executive Officer. In the absence of the Secretary, any Assistant Secretary may perform his or her duties and responsibilities. Any Assistant Secretary shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

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SECTION 15.      Other Powers and Duties. Subject to these Bylaws and to such limitations as the Board of Directors may from time to time prescribe, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the Board of Directors or the Chief Executive Officer.

ARTICLE IV

CAPITAL STOCK

SECTION 1.      Certificates of Stock. Each stockholder shall be entitled to a certificate of the capital stock of the Corporation in such form as may from time to time be prescribed by the Board of Directors. Such certificate shall be signed by the Chairman of the Board, the President or a Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. The Corporation seal and the signatures by the Corporation’s officers, the transfer agent or the registrar may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law. Notwithstanding anything to the contrary provided in these Bylaws, the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares (except that the foregoing shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation), and by the approval and adoption of these Bylaws the Board of Directors has determined that all classes or series of the Corporation’s stock may be uncertificated, whether upon original issuance, re-issuance, or subsequent transfer.

SECTION 2.      Transfers. Subject to any restrictions on transfer and unless otherwise provided by the Board of Directors, shares of stock that are represented by a certificate may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate theretofore properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require. Shares of stock that are not represented by a certificate may be transferred on the books of the Corporation by submitting to the Corporation or its transfer agent such evidence of transfer and following such other procedures as the Corporation or its transfer agent may require.

SECTION 3.      Record Holders. Except as may otherwise be required by law, by the Certificate or by these Bylaws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these Bylaws.

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SECTION 4.      Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (a) in the case of determination of stockholders entitled to vote at any meeting of stockholders, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting and (b) in the case of any other action, shall not be more than sixty (60) days prior to such other action. If no record date is fixed: (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

SECTION 5.      Replacement of Certificates. In case of the alleged loss, destruction or mutilation of a certificate of stock of the Corporation, a duplicate certificate may be issued in place thereof, upon such terms as the Board of Directors may prescribe.

ARTICLE V

INDEMNIFICATION

SECTION 1.      Definitions. For purposes of this Article:

(a)           “Corporate Status” describes the status of a person who is serving or has served (i) as a Director of the Corporation, (ii) as an Officer of the Corporation, (iii) as a Non-Officer Employee of the Corporation, or (iv) as a director, partner, trustee, officer, employee or agent of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, foundation, association, organization or other legal entity which such person is or was serving at the request of the Corporation. For purposes of this Section 1(a), a Director, Officer or Non-Officer Employee of the Corporation who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be deemed to be serving at the request of the Corporation. Notwithstanding the foregoing, “Corporate Status” shall not include the status of a person who is serving or has served as a director, officer, employee or agent of a constituent corporation absorbed in a merger or consolidation transaction with the Corporation with respect to such person’s activities prior to said transaction, unless specifically authorized by the Board of Directors or the stockholders of the Corporation;

(b)           “Director” means any person who serves or has served the Corporation as a director on the Board of Directors of the Corporation;

(c)           “Disinterested Director” means, with respect to each Proceeding in respect of which indemnification is sought hereunder, a Director of the Corporation who is not and was not a party to such Proceeding;

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(d)           “Expenses” means all attorneys’ fees, retainers, court costs, transcript costs, fees of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), travel expenses, duplicating costs, printing and binding costs, costs of preparation of demonstrative evidence and other courtroom presentation aids and devices, costs incurred in connection with document review, organization, imaging and computerization, telephone charges, postage, delivery service fees, and all other disbursements, costs or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settling or otherwise participating in, a Proceeding;

(e)           “Liabilities” means judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement;

(f)           “Non-Officer Employee” means any person who serves or has served as an employee or agent of the Corporation, but who is not or was not a Director or Officer;

(g)           “Officer” means any person who serves or has served the Corporation as an officer of the Corporation appointed by the Board of Directors of the Corporation;

(h)           “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation, administrative hearing or other proceeding, whether civil, criminal, administrative, arbitrative or investigative; and

(i)           “Subsidiary” shall mean any corporation, partnership, limited liability company, joint venture, trust or other entity of which the Corporation owns (either directly or through or together with another Subsidiary of the Corporation) either (i) a general partner, managing member or other similar interest or (ii) (A) fifty percent (50%) or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, joint venture or other entity, or (B) fifty percent (50%) or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other entity.

SECTION 2.      Indemnification of Directors and Officers.

(a)           Subject to the operation of Section 4 of this Article V of these Bylaws, each Director and Officer shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), and to the extent authorized in this Section 2.

(1)           Actions, Suits and Proceedings Other than By or In the Right of the Corporation. Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses and Liabilities that are incurred or paid by such Director or Officer or on such Director’s or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein (other than an action by or in the right of the Corporation), which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good

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faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.

(2)           Actions, Suits and Proceedings By or In the Right of the Corporation. Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses that are incurred by such Director or Officer or on such Director’s or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein by or in the right of the Corporation, which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation; provided, however, that no indemnification shall be made under this Section 2(a)(2) in respect of any claim, issue or matter as to which such Director or Officer shall have been finally adjudged by a court of competent jurisdiction to be liable to the Corporation, unless, and only to the extent that, the Court of Chancery or another court in which such Proceeding was brought shall determine upon application that, despite adjudication of liability, but in view of all the circumstances of the case, such Director or Officer is fairly and reasonably entitled to indemnification for such Expenses that such court deems proper.

(3)           Survival of Rights. The rights of indemnification provided by this Section 2 shall continue as to a Director or Officer after he or she has ceased to be a Director or Officer and shall inure to the benefit of his or her heirs, executors, administrators and personal representatives.

(4)           Actions by Directors or Officers. Notwithstanding the foregoing, the Corporation shall indemnify any Director or Officer seeking indemnification in connection with a Proceeding initiated by such Director or Officer only if such Proceeding (including any parts of such Proceeding not initiated by such Director or Officer) was authorized in advance by the Board of Directors of the Corporation, unless such Proceeding was brought to enforce such Officer’s or Director’s rights to indemnification or, in the case of Directors, advancement of Expenses under these Bylaws in accordance with the provisions set forth herein.

SECTION 3.      Indemnification of Non-Officer Employees. Subject to the operation of Section 4 of this Article V of these Bylaws, each Non-Officer Employee may, in the discretion of the Board of Directors of the Corporation, be indemnified by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against any or all Expenses and Liabilities that are incurred by such Non-Officer Employee or on such Non-Officer Employee’s behalf in connection with any threatened, pending or completed Proceeding, or any claim, issue or matter therein, which such Non-Officer Employee is, or is threatened to be made, a party to or participant in by reason of such Non-Officer Employee’s Corporate Status, if such Non-Officer Employee acted in good faith and in a manner such Non-Officer Employee reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The rights of indemnification provided by this Section 3 shall exist as to a Non-Officer Employee after he or she has ceased to be a Non-Officer Employee and shall inure to the benefit of his or her heirs, personal representatives, executors and administrators. Notwithstanding the

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foregoing, the Corporation may indemnify any Non-Officer Employee seeking indemnification in connection with a Proceeding initiated by such Non-Officer Employee only if such Proceeding was authorized in advance by the Board of Directors of the Corporation.

SECTION 4.      Determination. Unless ordered by a court, no indemnification shall be provided pursuant to this Article V to a Director, to an Officer or to a Non-Officer Employee unless a determination shall have been made that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal Proceeding, such person had no reasonable cause to believe his or her conduct was unlawful. Such determination shall be made by (a) a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors, (b) a committee comprised of Disinterested Directors, such committee having been designated by a majority vote of the Disinterested Directors (even though less than a quorum), (c) if there are no such Disinterested Directors, or if a majority of Disinterested Directors so directs, by independent legal counsel in a written opinion, or (d) by the stockholders of the Corporation.

SECTION 5.      Advancement of Expenses to Directors Prior to Final Disposition.

(a)           The Corporation shall advance all Expenses incurred by or on behalf of any Director in connection with any Proceeding in which such Director is involved by reason of such Director’s Corporate Status within thirty (30) days after the receipt by the Corporation of a written statement from such Director requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Director and shall be preceded or accompanied by an undertaking by or on behalf of such Director to repay any Expenses so advanced if it shall ultimately be determined that such Director is not entitled to be indemnified against such Expenses. Notwithstanding the foregoing, the Corporation shall advance all Expenses incurred by or on behalf of any Director seeking advancement of expenses hereunder in connection with a Proceeding initiated by such Director only if such Proceeding (including any parts of such Proceeding not initiated by such Director) was (i) authorized by the Board of Directors of the Corporation, or (ii) brought to enforce such Director’s rights to indemnification or advancement of Expenses under these Bylaws.

(b)           If a claim for advancement of Expenses hereunder by a Director is not paid in full by the Corporation within thirty (30) days after receipt by the Corporation of documentation of Expenses and the required undertaking, such Director may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in whole or in part, such Director shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such advancement of Expenses under this Article V shall not be a defense to an action brought by a Director for recovery of the unpaid amount of an advancement claim and shall not create a presumption that such advancement is not permissible. The burden of proving that a Director is not entitled to an advancement of expenses shall be on the Corporation.

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(c)           In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Director has not met any applicable standard for indemnification set forth in the DGCL.

SECTION 6.      Advancement of Expenses to Officers and Non-Officer Employees Prior to Final Disposition.

(a)           The Corporation may, at the discretion of the Board of Directors of the Corporation, advance any or all Expenses incurred by or on behalf of any Officer or any Non-Officer Employee in connection with any Proceeding in which such person is involved by reason of his or her Corporate Status as an Officer or Non-Officer Employee upon the receipt by the Corporation of a statement or statements from such Officer or Non-Officer Employee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Officer or Non-Officer Employee and shall be preceded or accompanied by an undertaking by or on behalf of such person to repay any Expenses so advanced if it shall ultimately be determined that such Officer or Non-Officer Employee is not entitled to be indemnified against such Expenses.

(b)           In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Officer or Non-Officer Employee has not met any applicable standard for indemnification set forth in the DGCL.

SECTION 7.      Contractual Nature of Rights.

(a)           The provisions of this Article V shall be deemed to be a contract between the Corporation and each Director and Officer entitled to the benefits hereof at any time while this Article V is in effect, in consideration of such person’s past or current and any future performance of services for the Corporation. Neither amendment, repeal or modification of any provision of this Article V nor the adoption of any provision of the Certificate of Incorporation inconsistent with this Article V shall eliminate or reduce any right conferred by this Article V in respect of any act or omission occurring, or any cause of action or claim that accrues or arises or any state of facts existing, at the time of or before such amendment, repeal, modification or adoption of an inconsistent provision (even in the case of a proceeding based on such a state of facts that is commenced after such time), and all rights to indemnification and advancement of Expenses granted herein or arising out of any act or omission shall vest at the time of the act or omission in question, regardless of when or if any proceeding with respect to such act or omission is commenced. The rights to indemnification and to advancement of expenses provided by, or granted pursuant to, this Article V shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributes of such person.

(b)           If a claim for indemnification hereunder by a Director or Officer is not paid in full by the Corporation within sixty (60) days after receipt by the Corporation of a written claim for indemnification, such Director or Officer may at any time thereafter bring suit against

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the Corporation to recover the unpaid amount of the claim, and if successful in whole or in part, such Director or Officer shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such indemnification under this Article V shall not be a defense to an action brought by a Director or Officer for recovery of the unpaid amount of an indemnification claim and shall not create a presumption that such indemnification is not permissible. The burden of proving that a Director or Officer is not entitled to indemnification shall be on the Corporation.

(c)           In any suit brought by a Director or Officer to enforce a right to indemnification hereunder, it shall be a defense that such Director or Officer has not met any applicable standard for indemnification set forth in the DGCL.

SECTION 8.      Non-Exclusivity of Rights. The rights to indemnification and to advancement of Expenses set forth in this Article V shall not be exclusive of any other right which any Director, Officer, or Non-Officer Employee may have or hereafter acquire under any statute, provision of the Certificate or these Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise.

SECTION 9.      Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any Director, Officer or Non-Officer Employee against any liability of any character asserted against or incurred by the Corporation or any such Director, Officer or Non-Officer Employee, or arising out of any such person’s Corporate Status, whether or not the Corporation would have the power to indemnify such person against such liability under the DGCL or the provisions of this Article V.

SECTION 10.      Other Indemnification. The Corporation’s obligation, if any, to indemnify or provide advancement of Expenses to any person under this Article V as a result of such person serving, at the request of the Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount such person may collect as indemnification or advancement of Expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or enterprise (the “Primary Indemnitor”). Any indemnification or advancement of Expenses under this Article V owed by the Corporation as a result of a person serving, at the request of the Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall only be in excess of, and shall be secondary to, the indemnification or advancement of Expenses available from the applicable Primary Indemnitor(s) and any applicable insurance policies.

ARTICLE VI

MISCELLANEOUS PROVISIONS

SECTION 1.      Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors.

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SECTION 2.      Seal. The Board of Directors shall have power to adopt and alter the seal of the Corporation.

SECTION 3.      Execution of Instruments. All deeds, leases, transfers, contracts, bonds, notes and other obligations to be entered into by the Corporation in the ordinary course of its business without director action may be executed on behalf of the Corporation by the Chairman of the Board, if one is elected, the President or the Treasurer or any other officer, employee or agent of the Corporation as the Board of Directors or the executive committee of the Board may authorize.

SECTION 4.      Voting of Securities. Unless the Board of Directors otherwise provides, the Chairman of the Board, if one is elected, the President or the Treasurer may waive notice of and act on behalf of the Corporation, or appoint another person or persons to act as proxy or attorney in fact for the Corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders or shareholders of any other corporation or organization, any of whose securities are held by the Corporation.

SECTION 5.      Resident Agent. The Board of Directors may appoint a resident agent upon whom legal process may be served in any action or proceeding against the Corporation.

SECTION 6.      Corporate Records. The original or attested copies of the Certificate, Bylaws and records of all meetings of the incorporators, stockholders and the Board of Directors and the stock transfer books, which shall contain the names of all stockholders, their record addresses and the amount of stock held by each, may be kept outside the State of Delaware and shall be kept at the principal office of the Corporation, at an office of its counsel, at an office of its transfer agent or at such other place or places as may be designated from time to time by the Board of Directors.

SECTION 7.      Certificate. All references in these Bylaws to the Certificate shall be deemed to refer to the Amended and Restated Certificate of Incorporation of the Corporation, as amended and/or restated and in effect from time to time.

SECTION 8.      Amendment of Bylaws.

(a)           Amendment by Directors. Except as provided otherwise by law, these Bylaws may be amended or repealed by the Board of Directors by the affirmative vote of a majority of the directors then in office.

(b)           Amendment by Stockholders. These Bylaws may be amended or repealed at any Annual Meeting, or special meeting of stockholders called for such purpose in accordance with these Bylaws, by the affirmative vote of at least seventy-five percent (75%) of the outstanding shares entitled to vote on such amendment or repeal, voting together as a single class; provided, however, that if the Board of Directors recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of the majority of the outstanding shares entitled to vote on such amendment or repeal, voting together as a single class. Notwithstanding the foregoing, stockholder approval shall not be required unless mandated by the Certificate, these Bylaws, or other applicable law.

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SECTION 9.      Notices. If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the DGCL.

SECTION 10.      Waivers. A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business to be transacted at, nor the purpose of, any meeting need be specified in such a waiver.

Adopted [    ], 2015, subject to effectiveness immediately prior to the completion of the Company’s offering of its common stock.

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EX1A-3 HLDRS RTS

 Exhibit 3.1

Execution Version

SECOND AMENDED AND RESTATED

INVESTORS’ RIGHTS AGREEMENT

TABLE OF CONTENTS

Page

1.	Definitions	1
2.	Registration Rights	4
2.1	Demand Registration	4
2.2	Company Registration	6
2.3	Underwriting Requirements	6
2.4	Obligations of the Company	7
2.5	Furnish Information	9
2.6	Expenses of Registration	9
2.7	Delay of Registration	9
2.8	Indemnification	9
2.9	Reports Under Exchange Act	11
2.10	Limitations on Subsequent Registration Rights	12
2.11	“Market Stand-off” Agreement	12
2.12	Restrictions on Transfer	13
2.13	Termination of Registration Rights	14
3.	Information Rights	15
3.1	Delivery of Financial Statements	15
3.2	Inspection	16
3.3	Termination of Information	16
3.4	Confidentiality	16
4.	Rights to Future Stock Issuances	17
4.1	Right of First Offer	17
4.2	Termination	18
5.	Additional Covenants	18
5.1	Insurance	18
5.2	Employee Agreements	18
5.3	Employee Stock	19
5.4	Matters Requiring Series C Approval	19
5.5	Board Matters	20
5.6	Successor Indemnification	20

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TABLE OF CONTENTS

(continued)

Page

5.7	Termination of Covenants	20
6.	Miscellaneous	20
6.1	Successors and Assigns	20
6.2	Governing Law	21
6.3	Counterparts; Facsimile	21
6.4	Titles and Subtitles	21
6.5	Notices	21
6.6	Amendments and Waivers	22
6.7	Severability	22
6.8	Aggregation of Stock	22
6.9	Additional Investors	22
6.10	Entire Agreement	23
6.11	Delays or Omissions	23
6.12	Acknowledgment	23

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SECOND AMENDED AND RESTATED

INVESTORS’ RIGHTS AGREEMENT

THIS SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT is made as of the 9th day of June, 2008, by and among CrossCart, Inc., a Delaware corporation (the “Company”), each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor”, each of the stockholders listed on Schedule B hereto, each of whom is referred to herein as a “Key Holder” and any Additional Purchaser (as defined in the Purchase Agreement) that becomes a party to this Agreement in accordance with Section 6.9 hereof.

RECITALS

WHEREAS, certain of the Investors (the “Existing Investors”) hold shares of the Company’s Series A Preferred Stock and Series B Preferred Stock and possess registration rights, information rights, and other rights pursuant to an Amended and Restated Investors’ Rights Agreement dated as of October , 1999 among the Company and such Investors (the  “Prior Agreement”); and

WHEREAS, the Existing Investors are holders of at least majority of the Registrable Securities of the Company (as defined in the Prior Agreement), and desire to amend and restate the Prior Agreement in its entirety and to accept the rights created pursuant to this Agreement in lieu of the rights granted to them under the Prior Agreement; and

WHEREAS, certain of the Investors are parties to that certain Series C Preferred Stock Purchase Agreement of even date herewith between the Company and certain of the Investors (the “Purchase Agreement”), under which certain of the Company’s and such Investors’ obligations are conditioned upon the execution and delivery of this Agreement by such Investors, Existing Investors holding at least a majority of the Registrable Securities, and the Company;

NOW, THEREFORE, the Existing Investors hereby agree that the Prior Agreement shall be amended and restated, and the parties to this Agreement further agree as follows:

1.           Definitions. For purposes of this Agreement:

1.1           “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

1.2           “Common Stock” means shares of the Company’s common stock, par value $0.001 per share.

1.3           “Damages” means any loss, damage, or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other  federal or state law, insofar as such loss, damage, or liability (or any action in respect thereof)

arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

1.4           “Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including options and warrants.

1.5           “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

1.6           “Excluded Registration” means (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

1.7           “Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

1.8           “Form S-2” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

1.9           “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

1.10           “GAAP” means generally accepted accounting principles in the United States.

1.11           “Holder” means any holder of Registrable Securities who is a party to this Agreement.

1.12           “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a natural person referred to herein.

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1.13           “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.

1.14           “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.

1.15           “Key Employee” means any executive-level employee (including division director and vice president-level positions) as well as any employee who, either alone or in concert with others, develops, invents, programs, or designs any Company Intellectual Property (as defined in the Purchase Agreement).

1.16           “Major Investor” means any Investor that, individually or together with such Investor’s Affiliates, holds ten percent (10%) of the Registrable Securities, and Dr. Kevin Stone (“Stone”).

1.17           “New Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

1.18           “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

1.19           “Preferred Stock” means, collectively, shares of the Company’s Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.

1.20           “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Series A Preferred Stock; (ii) the Common Stock issuable or issued upon conversion of the Series B Preferred Stock; (iii) the Common Stock issuable or issued upon conversion of the Series C Preferred Stock; (iv) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, acquired by the Investors after the date hereof; (v) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i), (ii) and (iii) above; and (vi) the Common Stock held by Stone; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Section 6.1, and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Section 2.13 of this Agreement.

1.21           “Registrable Securities then outstanding” means the number of shares determined by adding the number of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.

1.22           “SEC” means the Securities and Exchange Commission.

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1.23           “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

1.24           “SEC Rule 144(b)(1)(i)” means Rule 144(b)(1)(i) promulgated by the SEC under the Securities Act.

1.25           “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.

1.26           “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

1.27           “Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Section 2.6.

1.28           “Series A Preferred Stock” means shares of the Company’s Series A Preferred Stock, par value $0.001 per share.

1.29           “Series B Preferred Stock” means shares of the Company’s Series B Preferred Stock, par value $0.001 per share.

1.30           “Series C Director” means any director of the Company that the holders of record of the Series C Preferred Stock are entitled to elect pursuant to the Company’s Certificate of Incorporation.

1.31           “Series C Preferred Stock” means shares of the Company’s Series C Preferred Stock, par value $0.001 per share.

2.           Registration Rights. The Company covenants and agrees as follows:

2.1           Demand Registration.

(a)           Form S-1 Demand. If at any time after the earlier of (i) three (3) years after the date of this Agreement or (ii) six (6) months after the effective date of the registration statement for the IPO, the Company receives a request from Holders of sixty percent (60%) of the Series C Preferred Stock then outstanding that the Company file a Form S-1 registration statement with respect to Registrable Securities with an anticipated offering price of at least Five Million Dollars ($5,000,000), then the Company shall (i) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Section 2.1(c) and Section 2.3.

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(b)           Form S-3 Demand. If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders of at least thirty percent (30%) of Registrable Securities then outstanding that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Section 2.1(c) and Section 2.3.

(c)           Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than ninety (90) days after the request of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than twice in any twelve (12) month period.

(d)           The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(a) (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration, provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (ii) after the Company has effected two registrations pursuant to Section 2.1(a); or (iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.1(b). The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(b) (i) during the period that is thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is six (6) months after the effective date of, a Company-initiated registration, provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective or (ii) more than registration pursuant to Section 2.1(b) in any twelve month period. A registration shall not be counted as “effected” for purposes of this Section 2.1(d) until such time as the applicable registration statement has been declared effective by the SEC with respect to all Registrable Securities sought to be included by the Initiating Holders, unless the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one demand registration

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statement pursuant to Section 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Section 2.1(d).

2.2           Company Registration. If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its Common Stock under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration. Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Section 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Section 2.6.

2.3           Underwriting Requirements.

(a)           If, pursuant to Section 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1, and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Section 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Section 2.3, if the underwriter advises the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares.

(b)           In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not

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jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, or (ii) the number of Registrable Securities included in the offering be reduced below thirty percent (30%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering. For purposes of the provision in this Section 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

(c)           For purposes of Section 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Section 2.3(a), fewer than one hundred percent (100%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.

2.4           Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

(a)           prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of

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Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to thirty (30) days, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

(b)           prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

(c)           furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

(d)           use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(e)           in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter of such offering;

(f)           use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

(g)           provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

(h)           promptly make available for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

(i)           notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

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(j)           after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

2.5           Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

2.6           Expenses of Registration. All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements, not to exceed $50,000, of one counsel for the selling Holders (“Selling Holder Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Section 2.1(a) or Section 2.1(b), as the case may be; provided further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Section 2.1(a) or Section 2.1(b). All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

2.7           Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

2.8           Indemnification. If any Registrable Securities are included in a registration statement under this Section 2:

(a)           To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably

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incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

(b)           To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Sections 2.8(b) and 2.8(d)  exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

(c)           Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the

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indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8.

(d)           To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses) paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

(e)           Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

(f)           Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

2.9           Reports Under Exchange Act. With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

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(a)           make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;

(b)           use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and

(c)           furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); (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; and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).

2.10           Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (i) to include such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are included or (ii) to initiate a demand for registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Section 6.9.

2.11           “Market Stand-off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of shares of its Common Stock or any other equity securities under the Securities Act on a registration statement on Form S-1, Form S-2, or Form S-3, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days) (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired) or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic

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consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Section 2.11 shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall be applicable to the Holders only if all officers and directors are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all stockholders individually owning more than one percent (1%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding Preferred Stock). The underwriters in connection with such registration are intended third-party beneficiaries of this Section 2.11 and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 2.11 or that are necessary to give further effect thereto. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements. The restrictions set forth in this Section 2.11 shall in any event terminate two (2) years after the date of the Company’s IPO.

2.12           Restrictions on Transfer.

(a)           The Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Preferred Stock and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

(b)           Each certificate or instrument representing (i) the Preferred Stock, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 2.12(c)) be stamped or otherwise imprinted with a legend substantially in the following form:

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

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The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Section 2.12.

(c)           The holder of each certificate representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 2.12. Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144 or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Section 2.12. Each certificate or instrument evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 2.12(b), except that such certificate shall not bear such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

2.13           Termination of Registration Rights. The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Section 2.1 or Section 2.2 shall terminate upon the earliest to occur of:

(a)           five years after the closing of the IPO;

(b)           the closing of a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation; and

(c)           when all of such Holder’s Registrable Securities could be sold without restriction under SEC Rule 144(b)(1)(i) within a ninety (90) day period.

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3.           Information Rights.

3.1           Delivery of Financial Statements. The Company shall deliver to each Major Investor, provided that the Board of Directors has not reasonably determined that such Major Investor is a competitor of the Company:

(a)           as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such year, and (iii) a statement of stockholders’ equity as of the end of such year, all such financial statements audited and certified by independent public accountants of nationally recognized standing selected by the Company;

(b)           as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income and of cash flows for such fiscal quarter, and an unaudited balance sheet and a statement of stockholders’ equity as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);

(c)           as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, a statement showing the number of shares of each class and series of capital stock and securities convertible into or exercisable for shares of capital stock outstanding at the end of the period, the Common Stock issuable upon conversion or exercise of any outstanding securities convertible or exercisable for Common Stock and the exchange ratio or exercise price applicable thereto, and the number of shares of issued stock options and stock options not yet issued but reserved for issuance, if any, all in sufficient detail as to permit the Major Investors to calculate their respective percentage equity ownership in the Company, and certified by the chief financial officer or chief executive officer of the Company as being true, complete, and correct;

(d)           as soon as practicable, but in any event within thirty (30) days of the end of each month, an unaudited income statement and statement of cash flows for such month, and an unaudited balance sheet and statement of stockholders’ equity as of the end of such month, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP); and

(e)           as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “Budget”), prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company.

If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the

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foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.

Notwithstanding anything else in this Section 3.1 to the contrary, the Company may cease providing the information set forth in this Section 3.1 during the period starting with the date sixty (60) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Section 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.

3.2           Inspection. The Company shall permit each Major Investor (provided that the Board of Directors has not reasonably determined that such Major Investor is a competitor of the Company), at such Major Investor’s expense, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Major Investor; provided, however, that the Company shall not be obligated pursuant to this Section 3.2 to provide access to any information that it reasonably and in good faith considers to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

3.3           Termination of Information. The covenants set forth in Section 3.1 and Section 3.2 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of incorporation, whichever event occurs first.

3.4           Confidentiality. Each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 3.4 by such Investor), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Section 3.4; (iii) to any Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, provided that the Investor promptly notifies the Company of such disclosure and takes

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reasonable steps to minimize the extent of any such required disclosure. For purposes of this Section 3.4 only, Stone shall be considered an “Investor” and shall be bound by the provisions of this Section 3.4 in all respects.

4.           Rights to Future Stock Issuances.

4.1           Right of First Offer. Subject to the terms and conditions of this Section 4.1 and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Major Investor. A Major Investor shall be entitled to apportion the right of first offer hereby granted to it among itself and its Affiliates in such proportions as it deems appropriate.

(a)           The Company shall give notice (the “Offer Notice”) to each Major Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

(b)           By notification to the Company within twenty (20) days after the Offer Notice is given, each Major Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by such Major Investor bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Preferred Stock and other Derivative Securities). At the expiration of such twenty (20) day period, the Company shall promptly notify each Major Investor that elects to purchase or acquire all the shares available to it (each, a “Fully Exercising Investor”) of any other Major Investor’s failure to do likewise. During the ten (10) day period commencing after the Company has given such notice, the Fully Exercising Investors may agree as among themselves to allocate and purchase any New Securities not subscribed by a Major Investor. In the absence of such agreed allocation, each Fully Exercising Investor may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the New Securities for which Major Investors were entitled to subscribe but that were not subscribed for by the Major Investors which is equal to the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of Preferred Stock and any other Derivative Securities then held, by such Fully Exercising Investor bears to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by all Fully Exercising Investors who wish to purchase such unsubscribed shares. The closing of any sale pursuant to this Section 4.1(b) shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Section 4.1(c).

(c)           If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section 4.1(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Section 4.1(b), offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price

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not less than, and upon terms no more favorable to the offeree than those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Major Investors in accordance with Section 4.1.

(d)           The right of first offer in this Section 4.1 shall not be applicable to (i) Exempted Securities (as defined in the Company’s Certificate of Incorporation); (ii) shares of Common Stock issued in the IPO; and (iii) the issuance of shares of Series C Preferred Stock to Additional Purchasers pursuant to Section 1.3 of the Purchase Agreement.

(e)           Notwithstanding any provision hereof to the contrary, in lieu of complying with the provisions of this Section 4.1, the Company may elect to give notice to the Major Investors within thirty (30) days after the issuance of New Securities. Such notice shall describe the type, price, and terms of the New Securities. Each Major Investor shall have twenty (20) days from the date notice is given to elect to purchase up to the number of New Securities that would, if purchased by such Major Investor, maintain such Major Investor’s percentage-ownership position, calculated as set forth in Section 4.1(b) before giving effect to the issuance of such New Securities. The closing of such sale shall occur within sixty (60) days of the date notice is given to the Major Investors.

4.2           Termination. The covenants set forth in Section 4.1 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, whichever event occurs first.

5.           Additional Covenants.

5.1           Insurance. The Company shall use its commercially reasonable efforts to obtain, within ninety (90) days of the date hereof, from financially sound and reputable insurers Directors and Officers liability insurance in an amount and on terms and conditions satisfactory to the Board of Directors, and will use commercially reasonable efforts to cause such insurance policy to be maintained until such time as the Board of Directors determines that such insurance should be discontinued.

5.2           Employee Agreements. The Company will cause (i) each person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or trade secrets to enter into a nondisclosure and proprietary rights assignment agreement and (ii) each Key Employee to enter into a two (2) year noncompetition and nonsolicitation agreement, each in a form reasonably acceptable to the Board of Directors and requiring that such period be extended at the request of the Board of Directors to five years after the consummation of a Deemed Liquidation Event (as defined in the Certificate) or similar sale of the Company. In addition, the Company shall not amend, modify, terminate, waive, or otherwise alter, in whole or in part, any

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of the above-referenced agreements or any restricted stock agreement between the Company and any employee, without the consent of both of the Series C Directors.

5.3           Employee Stock. Unless otherwise approved by the Board of Directors, including the Series C Directors, all future employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting on the following twelve (12) months of continued employment or service, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Section 2.11 of this Agreement. In addition, unless otherwise approved by the Board of Directors, including the Series C Directors, the Company shall retain a “right of first refusal” on employee transfers until the Company’s IPO and shall have the right to repurchase unvested shares at cost upon termination of employment of a holder of restricted stock.

5.4           Matters Requiring Series C Approval.

(a)           Series C Approval. So long as there are outstanding at least 2,000,000 shares of Series C Preferred Stock subject to adjustment for stock splits, stock dividends combinations and the like, the Company hereby covenants and agrees with each of the holders of Series C Preferred Stock that it shall not, without approval of the holder of a majority of the shares of Series C Preferred Stock outstanding:

(i)           make, or permit any subsidiary to make, any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is wholly owned by the Company;

(ii)           make, or permit any subsidiary to make, any loan or advance to any Person, including, without limitation, any employee or director of the Company or any subsidiary, except advances and similar expenditures in the ordinary course of business or under the terms of an employee stock or option plan approved by the Board of Directors;

(iii)           guarantee, directly or indirectly, or permit any subsidiary to guarantee, directly or indirectly, any indebtedness except for trade accounts of the Company or any subsidiary arising in the ordinary course of business;

(iv)           make any investment, through the direct or indirect holding of securities or otherwise, other than investments in prime commercial paper, money market funds, certificates of deposit in any United States bank having a net worth in excess of $100,000,000 or obligations issued or guaranteed by the United States of America, in each case having a maturity not in excess of two years;

(v)           incur any aggregate indebtedness in excess of $250,000 or otherwise outside the ordinary course of business that is not already included in a budget approved by the Board of Directors, other than trade credit incurred in the ordinary course of business;

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(vi)           otherwise enter into or be a party to any transaction with any director, officer, or employee of the Company or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such Person, except for transactions contemplated by this Agreement, the Purchase Agreement and the Transaction Agreements (as such term is defined in the Purchase Agreement);

(vii)           hire, terminate, or change the compensation of the executive officers, including approving any option grants or stock awards to executive officers;

(viii)           change the principal business of the Company, enter new lines of business, or exit the current line of business;

(ix)           adopt or increase the number of shares of Common Stock reserved for issuance under any stock plan of the Company to in excess of 4,700,000; or

(x)           sell, assign, license, pledge, or encumber material technology or intellectual property, other than licenses granted in the ordinary course of business.

5.5           Board Matters. Unless otherwise determined by the vote of a majority of the directors then in office, the Board of Directors shall meet at least quarterly in accordance with an agreed-upon schedule. The Company shall reimburse the nonemployee directors for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s travel policy) in connection with attending meetings of the Board of Directors.

5.6           Successor Indemnification. If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, its Certificate of Incorporation, or elsewhere, as the case may be.

5.7           Termination of Covenants. The covenants set forth in this Section 4, except for Section 5.6, shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act or (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, whichever event occurs first.

6.           Miscellaneous.

6.1           Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; or (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with

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respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Section 2.11 and Section 2.12. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

6.2           Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of law.

6.3           Counterparts; Facsimile. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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

6.5           Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule A or Schedule B (as applicable) hereto, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Section 6.5. All notices to the Company pursuant to this Section 5.5 shall be sent to CrossCart, Inc., 3727 Buchanan Street, Suite 203, San Francisco, CA 94123. If notice is given to the Investors, a copy shall also be sent to Neal, Gerber & Eisenberg LLP, Two North LaSalle Street, Suite 2200, Chicago, IL 60602, Attention: Jon Wasserman, Facsimile Number (312) 269-1747 and if notice is given to the Company, a copy shall also be given to Scott Karchmer at

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Morgan, Lewis & Bockius LLP, One Market, Spear Street Tower, 28th Floor, San Francisco, CA 94109; Facsimile Number (415) 442-1001.

6.6           Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the holders of both (a) a majority of the outstanding Series C Preferred Stock and (b) a majority of the Registrable Securities then outstanding; provided that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same fashion. Further, this Agreement may not be amended, and no provision hereof may be waived, in each case, in any way which would adversely affect the rights of the Key Holders hereunder in a manner disproportionate to any adverse effect such amendment or waiver would have on the rights of the Investors hereunder, without also the written consent of the holders of at least a majority of the Registrable Securities held by the Key Holders. The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this Section 6.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

6.7           Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

6.8           Aggregation of Stock. All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

6.9           Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Company’s Series C Preferred Stock after the date hereof, whether pursuant to the Purchase Agreement or otherwise, any purchaser of such shares of Series C Preferred Stock may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” for all purposes hereunder. No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.

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6.10           Entire Agreement. This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled. Upon the effectiveness of this Agreement, the Prior Agreement shall be deemed amended and restated and superseded and replaced in its entirety by this Agreement, and shall be of no further force or effect.

6.11           Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

6.12           Acknowledgment. The Company acknowledges that the Investors are in the business of venture capital investing and therefore review the business plans and related proprietary information of many enterprises, including enterprises which may have products or services which compete directly or indirectly with those of the Company. Nothing in this Agreement shall preclude or in any way restrict the Investors from investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company.

[Remainder of Page Intentionally Left Blank]

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

THE COMPANY:
CROSSCART, INC.
By:	______________________________________
	Name: Kevin R. Stone
	Title: Chief Executive Officer

[Signature Page to Second Amended and Restated Investors’ Rights Agreement]

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

INVESTORS:
LURIE INVESTMENT FUND, L.L.C.
By:	______________________________________
	Name:
	Title:
By:	______________________________________
	Name: William T. White III

[Signature Page to Second Amended and Restated Investors’ Rights Agreement]

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

KEY HOLDERS:

______________________________________

Kevin R. Stone

[Signature Page to Second Amended and Restated Investors’ Rights Agreement]

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

INVESTOR:
By:	______________________________________
	Name:
	Title:

[Signature Page to Second Amended and Restated Investors’ Rights Agreement]

KEY HOLDERS:

______________________________________

Signature

______________________________________

Print Name

______________________________________

Title (if applicable)

______________________________________

Entity Name (if applicable)

[Signature Page to Second Amended and Restated Investors’ Rights Agreement]

SCHEDULE A

Investors

SCHEDULE B

Key Holders

* Effective upon receipt of a signed counterpart to this Agreement, which counterpart the Company covenants and agrees to use best commercially reasonable efforts to obtain.

EX1A-3 HLDRS RTS

Exhibit 3.2

THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY, EXCEPT IN CONNECTION WITH SALES IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER THE ACT, REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

APERION BIOLOGICS, INC.

CONVERTIBLE PROMISSORY NOTE

$150,000 San Antonio, Texas

[    ]

FOR VALUE RECEIVED, APERION BIOLOGICS, INC., a Delaware corporation (the “Company”), hereby absolutely and unconditionally promises to pay to the order of CrossCart, LLC or its assigns (the “Lender,” which term shall include the holder, from time to time, of this Note (as defined below)), the principal amount of One hundred fifty thousand and 00/100 Dollars ($150,000) in legal tender of the United States, together with simple interest (computed on the basis of a 360-day year of twelve 30-day months for actual days elapsed) on such principal amount outstanding from time to time at the rate of 8.0% per annum. After the earlier of the Maturity Date (as defined below) or the occurrence of an Event of Default (as defined below), the total unpaid indebtedness under this Convertible Promissory Note (this “Note”) shall bear simple interest at a rate equal to 10.0% per annum. This Note is one of a series of convertible promissory notes (together with this Note, the “Notes”) issued pursuant to the Note Purchase Agreement dated April 17, 2014, among the Company and the investors listed therein (the “Purchase Agreement”). Capitalized terms used in this Note and not defined herein shall have the meanings ascribed to them in the Purchase Agreement.

1.           Repayments and Prepayments.

(a)           Subject to Sections 2(a) and 3(a) hereof, all principal, accrued interest and all other amounts owing under this Note shall be due and payable UPON DEMAND, at the sole option and discretion of the Lender, on or after April 17, 2016 (such demand date being the “Maturity Date”). The Company hereby acknowledges that such demand may be made hereunder (in whole or in part) by the Lender for any reason or for no reason, whether or not the Company is in compliance with this Note.

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(b)           The Company may not prepay this Note at any time, either in whole or in part, without the prior consent of the Lender, which consent may be granted or withheld at the sole discretion of the Lender.

(c)           All payments received under this Note shall be applied first to costs, expenses and other amounts incurred in connection with the collection of this Note (other than principal and interest), then to accrued interest on the date of payment, and then to the outstanding principal balance of this Note.

(d)           All payments of principal and interest shall be made to the holder of this Note not later than 1:00 p.m. (San Antonio, Texas time) on the date and at the place of payment designated by the holder hereof as aforesaid, and any payment received on such date but after such hour shall be deemed to have been paid to and received by the holder hereof on the next succeeding business day. If the date on which any payment is required to be made pursuant to this Note is not a business day, then such payment shall be due and payable on the next succeeding date which is not a Saturday, Sunday or legal holiday and such extension of time shall be included in computing interest. All payments hereunder shall be made without reduction, and shall not be subject to any claim or offset of any kind or nature whatsoever.

2.           Conversion.  The outstanding principal amount owing under this Note shall be convertible into equity securities of the Company as follows:

(a)           Optional Conversion.  The Requisite Noteholders may, in their sole discretion, convert all principal and accrued interest under this Note into shares of Series D Preferred Stock at the Conversion Price per share. “Series D Preferred Stock” shall mean the Company’s Series D Preferred Stock financing with substantially the terms set forth in Exhibit A hereto.

(i)           For the purposes of this Note: “Conversion Price” shall mean $0.25.

(ii)           The Company covenants that it shall use its reasonable efforts to cause a sufficient number of shares of Series D Preferred Stock (and common stock issuable upon conversion thereof) to be authorized and reserved under the Company’s Certificate of Incorporation, as amended, prior to any such conversion of this Note; provided, however, that if a sufficient number of such shares is not authorized and reserved at the time of such election, the conversion shall be delayed until the proper number of shares is authorized and reserved, with the Company then obligated to use its best efforts to cause a sufficient number of shares to be authorized and reserved as soon as practicable.

(b)           Mechanics of Conversion.  In connection with such conversion of this Note pursuant to Section 2(a), the Lender shall surrender this Note, duly endorsed without recourse, representation or warranty, at the principal office of the Company. At its expense, the Company shall, as soon as practicable thereafter, issue and deliver to the Lender at such principal office a certificate or certificates for the Series D Preferred Stock (bearing such legends as may be required or advisable in the reasonable opinion of counsel to the Company), together with a check payable to the Lender for any cash amounts payable as described in Section 2(c) below.

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(c)           No Fractional Shares. No fractional shares shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to the Lender upon the conversion of this Note, the Company shall pay to the Lender an amount in cash equal to the product obtained by multiplying the conversion price applied to effect such conversion by the fraction of a share not issued pursuant to the previous sentence. Upon conversion of this Note in full and the payment of the amounts specified in this Note, the Company shall be released from all of its obligations and liabilities under this Note.

3.           Events of Default.

(a)           Upon the occurrence of any Event of Default, and the written election of the Requisite Noteholders (except as provided below), the entire unpaid principal balance of this Note and all of the unpaid interest accrued thereon and all amounts owing hereunder shall be immediately due and payable and the Lender shall have all legal and equitable rights of holders of unsecured debt instruments, whether at law, in equity or under this Note (provided that such principal, interest and other amounts shall become immediately due and payable if an Event of Default listed in clause (ii) below shall occur). For purposes of this Note, the following events shall each constitute an “Event of Default”:  (i) failure to pay any amount owing by the Company hereunder when due and payable, (ii) the initiation of any bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation or dissolution by or against the Company, or a general assignment of assets by the Company for the benefit of creditors, (iii) the material breach of any representation or warranty of the Company contained in this Note or the Purchase Agreement at the time when such representation or warranty is made, (iv) the breach by the Company of any of the covenants set forth in this Note or the Purchase Agreement, or (v) any of the Company’s indebtedness for borrowed money (or any guaranty by the Company thereof) is accelerated as a result of a default or breach of or under any agreement for such borrowed money, including but not limited to loan, credit or reimbursement agreements, or any default shall occur thereunder which entitles the holder thereof to so accelerate such indebtedness, or material breach under any real property lease agreements and capital equipment lease agreements by which the Company is bound or obligated.

(b)           No remedy herein conferred upon the Lender is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and in addition to every other remedy hereunder, now or hereafter existing at law or in equity or otherwise.

4.           Notices.

(a)           All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by facsimile or email with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first class, certified or registered, postage prepaid, addressed (i) if to the Lender, at the Lender’s address set forth in the Company’s corporate records (or such other address as the Lender shall have properly furnished the Company in writing), and (ii) if to the Company, at 11969 Starcrest Drive, San Antonio, TX 78247, Fax: (210) 495-0239 (or such other address as the Company shall have properly furnished the Lender in writing), attention: Chief Executive Officer.

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(b)           Each such notice, report or other communication shall for all purposes under this Note be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or seventy-two (72) hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by overnight delivery service, the next business day, or, if sent by facsimile or email with written or electronic confirmation, at the earlier of (i) twenty-four (24) hours after confirmation of transmission by the sending facsimile machine or computer or (ii) delivery of written confirmation.

5.           Miscellaneous.

(a)           No term of this Note may be amended, modified or waived without the written consent of the Company and the Requisite Noteholders.

(b)           No failure or delay by the Lender to exercise any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other right, power or privilege. The provisions of this Note are severable and if any one provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, such invalidity or unenforceability shall affect only such provision in such jurisdiction. This Note expresses the entire understanding of the parties with respect to the transactions contemplated hereby. The Company and every endorser and guarantor of this Note, regardless of the time, order or place of signing hereby, waives presentment, demand, protest, diligence of collection and notice of every kind, and assents to any extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person primarily or secondarily liable.

(c)           If Lender retains an attorney for collection, restructuring or any “work-out” of this Note, or if any suit or proceeding is brought for the recovery of all, or any part of, or for protection of the indebtedness represented by this Note, then the Company agrees to pay all costs and expenses of the suit or proceeding, or any appeal thereof, incurred by the Lender, including without limitation, reasonable attorneys’ fees.

(d)           This Note shall for all purposes be governed by, and construed in accordance with the laws of the State of Texas (without reference to its conflicts of law principles), and the Company consents to the exclusive jurisdiction of the state and federal courts located in the State of Texas, and waives any argument that such forum is not convenient.

(e)           This Note shall be binding upon the Company’s successors and assigns, and shall inure to the benefit of the Lender’s successors and assigns. This Note may not be assigned by the Company.

(f)           Time is of the essence with respect to the performance of the obligations of the Company under this Note.

(g)           In no event shall the interest rate and other charges under this Note exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that a court determines that Lender has

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received interest and other charges under this Note in excess of the highest permissible rate applicable hereto, such excess shall be deemed received on account of, and shall automatically be applied to reduce, the outstanding principal amount hereunder and the provisions hereof shall be deemed amended to provide for the highest permissible rate. If there is no outstanding principal amount under this Note, the Lender shall refund such excess to the Company.

(h)           The Company represents and warrants to the Lender that the indebtedness evidenced by this Note is with respect to an exempt transaction under the Truth-In-Lending Act, 15 U.S.C. 1601 et seq.

(i)           The Company hereby covenants and agrees that the proceeds received by the Company in return for the issuance of this Note shall be used for the general corporate needs of the Company.

IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly authorized officer to take effect as of the date first hereinabove written.

APERION BIOLOGICS, INC.

By: _______________________________

Name:

Title:

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EXHIBIT A

Terms of Series D Preferred Stock

CHARTER

Series D Original Purchase Price:	$0.25 per share
Dividends:	The Series D Preferred will carry an annual 8% cumulative dividend compounded annually (accruing from issuance, whether or not declared), payable upon liquidation or redemption (but not upon conversion). No dividend shall be paid on the Series A Preferred Stock, Series B Preferred Stock, Series C-1 Preferred Stock (“Series C-1 Preferred”) or Series C-2 Preferred Stock (“Series C-2 Preferred” and, collectively with the Series C-1 Preferred, the “Series C Preferred”) unless and until all accrued and unpaid dividends have been paid on the Series D Preferred. For any other dividends or distributions, participation with Common Stock on an as-converted basis.
Liquidation Preference:	In the event of any liquidation, dissolution or winding up of the Company, the proceeds shall be paid as follows: first, to the holders of Series D Preferred (until each such holder has received the greater of (i) two times the Series D Original Purchase Price, plus accrued dividends on each share of Series D Preferred, or (ii) the amount payable to such shares upon such event if all Series D Preferred had been converted into Common Stock); thereafter, on a pari passu basis, to the holders of Series C-2 Preferred (until each such holder has received the greater of (i) the Series C-2 Original Purchase Price, plus accrued dividends on each share of Series C-2 Preferred, or (ii) the amount payable to such shares upon such event if all Series C-2 Preferred had been converted into Common Stock), and Series C Convertible Preferred (until each such holder has received the greater of (i) two times the Series C-1 Preferred Original Purchase Price, plus accrued dividends on each share of Series C-1 Preferred, or (ii) the amount payable to such shares upon such event if all Series C-1 Preferred had been converted into Common Stock); thereafter, on a pari passu basis, to the holders of Series A Preferred (until each such holder has received $1.00 per share, plus accrued dividends on each share of Series A Preferred) and Series B Preferred (until each such holder has received the Series B Original Purchase Price, plus accrued dividends on each share of Series B

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	Preferred); and thereafter, to the holders of Common Stock. A merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) and a sale, lease, transfer or other disposition of all or substantially all of the assets of the Company will be treated as a liquidation event (a “Deemed Liquidation Event”), thereby triggering payment of the liquidation preferences described above unless the holders of at least 50% of the Series D Preferred elect otherwise.
Voting Rights:	The Series D Preferred shall vote together with the Series A Preferred, Series B Preferred and Series C Preferred, and Common Stock on an as-converted basis, and not as a separate class, except (i) the Series D Preferred as a class shall be entitled to elect two (2) members of the Board (the “Series D Directors”), (ii) as provided under “Protective Provisions” below or (iii) as required by law. The Company’s Certificate of Incorporation will provide that the number of authorized shares of Common Stock may be increased or decreased with the approval of a majority of the Preferred and Common Stock, voting together as a single class, and without a separate class vote by the Common Stock.
Protection Provisions:	So long as at least 50% of the initially issued shares of Series D Preferred are outstanding, the Company will not, without the written consent of the holders of at least 50% of the Company’s Series D Preferred (voting together as a single class on as-converted basis), either directly or by amendment, merger, consolidation, or otherwise: (i) liquidate, dissolve or wind-up the affairs of the Company, or effect any Deemed Liquidation Event; (ii) amend, alter, or repeal any provision of the Certificate of Incorporation or Bylaws; (iii) create or authorize the creation of or issue any other security convertible into or exercisable for any equity security, having rights, preferences or privileges senior to or on parity with the Series D Preferred, or increase the authorized number of shares of Series D Preferred; (iv) purchase or redeem or pay any dividend on any capital stock prior to the redemption of the Series D Preferred, other than stock repurchased from former employees or consultants in connection with the cessation of their employment/services, at the lower of fair market value or cost; (v) create or authorize the creation of any debt security other than debt in an aggregate amount not exceeding $250,000 and with no equity

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	feature; (vi) increase the number of shares reserved for issuance or grant under the stock option plan to more than 9,100,000 shares of Common Stock; or (vii) increase or decrease the size of the Board of Directors.
Optional Conversion:	The Series D Preferred initially converts 1:1 to Common Stock at any time at option of holder, subject to adjustments for cash dividends and for stock dividends, splits, combinations and similar events and as described below under “Anti-dilution Provisions.” Existing investors will waive any anti-dilution rights that may arise as a result of the issuance of Series D Preferred prior to the initial closing.
Anti-dilution Provisions:	In the event that the Company issues additional securities at a purchase price less than the current Series D Preferred conversion price, such conversion price shall be adjusted in accordance with the following formula: CP2         = CPI * (A+B) / (A+C) CP2         = New Series D Conversion Price CPI          = Series D Conversion Price in effect immediately prior to new issue A             = Number of shares of Common Stock deemed to be outstanding immediately prior to new issue (includes all shares of outstanding common stock, all shares of outstanding preferred stock on an as-converted basis, and all outstanding options on an as-exercised basis; and does not include any convertible securities converting into this round of financing) B             = Aggregate consideration received by the Corporation with respect to the new issue divided by CP] C             = Number of shares of stock issued in the subject transaction The following issuances shall not trigger anti-dilution adjustment: (i) securities issuable upon conversion of any of the Preferred, or as a dividend or distribution on the Preferred; (ii) securities issued upon the conversion of any debenture, warrant, option, or other convertible security; (iii) Common Stock issuable upon a stock split, stock dividend, or any subdivision of shares of Common Stock; (iv) up to 9,100,000 shares of Common Stock (or options to purchase such shares of Common Stock) issued or issuable to

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	employees or directors of, or consultants to, the Company pursuant to any plan approved by the Company’s Board of Directors including at least one (1) Series D Director; and (v) shares of Common Stock issued or issuable to banks, equipment lessors pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board of Directors of the Corporation, including at least one (1) Series D Director. Neither the Series A Preferred Stock nor the Series B Preferred Stock have anti-dilution protection (other than in connection with stock dividends, splits, combinations and similar events).
Mandatory Conversion:	Each share of Preferred Stock will automatically be converted into Common Stock at the then applicable conversion rate in the event of the closing of an underwritten public offering with a price of five (5) times the Series D Original Purchase Price (subject to adjustments for cash dividends and for stock dividends, splits, combinations and similar events) and proceeds to the Company of not less than $50,000,000 (a “QPO”), or (ii) upon the written consent of the holders of at least 50% of the Series D Preferred (voting together as a single class on as-converted basis).
Redemption Rights:	The Series D Preferred shall be redeemable from funds legally available for distribution at the option of holders of at least 50% of the Series D Preferred (voting together as a single class on as-converted basis) commencing any time after April 30, 2015 at a price equal to the liquidation preference amount.  Redemption shall occur in one installment.  Upon a redemption request from the holders of the required percentage of the Series D Preferred, all Series D Preferred shares shall be redeemed.  The Series C Preferred will also reset its redemption date to coincide with the Series D Preferred redemption timing; Series D Preferred will have priority over the Series C Preferred with respect to any such redemption.

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INVESTOR RIGHTS AGREEMENT

Registration Rights:
Registrable Securities:	All shares of Common Stock issuable upon conversion of the Series D Preferred, Series C Preferred, Series B Preferred and Series A Preferred will be deemed “Registrable Securities.”
Demand Registration:	Upon earliest of (i) the third anniversary of the closing of the Series D Preferred financing or (ii) six (6) months following an initial public offering (“IPO”), persons holding 60% of the Series D Preferred (voting together as a single class on as-converted basis) may request two (2) registrations by the Company of their shares. The aggregate offering price for such registration may not be less than $5 million. A registration will count for this purpose only if (i) all Registrable Securities requested to be registered are registered and (ii) it is closed, or withdrawn at the request of the requesting Investors (other than as a result of a material adverse change to the Company).
Registration on Form S-3:	The holders of 30% of the Registrable Securities will have the right to require the Company to register on Form S-3, if available for use by the Company, Registrable Securities for an aggregate offering price of at least $2 million. There will be no limit on the aggregate number of such Form S-3 registrations, provided that there are no more than two (2) per year.
Piggyback Registration:	The holders of Registrable Securities will be entitled to “piggyback” registration rights on all registration statements of the Company, subject to the right, however, of the Company and its underwriters to reduce the number of shares proposed to be registered to a minimum of 30% on a pro rata basis and to complete reduction on an IPO at the underwriter’s discretion. In all events, the shares to be registered by holders of Registrable Securities will be reduced only after all other stockholders’ shares are reduced.
Expenses:	The registration expenses (exclusive of stock transfer taxes, underwriting discounts and commissions) will be borne by the Company. The Company will also pay the reasonable fees and expenses of one special counsel to represent all the participating stockholders.
Lock-up:	Investors shall agree in connection with the IPO, if requested by the managing underwriter, not to sell or transfer any shares of Common Stock of the Company (excluding shares acquired in or following the IPO) for a period of up to 180 days following the IPO (provided all directors and officers of the Company and 1% stockholders agree to

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	the same lock-up).  Such lock-up agreement shall provide that any discretionary waiver or termination of the restrictions of such agreements by the Company or representatives of the underwriters shall apply to Investors, pro rata, based on the number of shares held.
Termination of Registration Rights:	Earlier of five (5) years after IPO or upon a Deemed Liquidation Event. No future registration rights may be granted without consent of the holders of a majority of the Registrable Securities unless subordinate to the granted hereunder rights.
Management and .Information Rights:	Any “Major Investor” (defined as a holder who, together with its affiliates, owns at least 10% of Registrable Securities and Dr. Kevin Stone) will be granted access to Company facilities and personnel during normal business hours and with reasonable advance notification. The Company will deliver to each such Major Investor (1) annual, quarterly, and monthly financial statements, and other information as determined by the Board; (ii) thirty days prior to the end of each fiscal year, a comprehensive operating budget forecasting the Company’s revenues, expenses, and cash position on a month-to-month basis for the upcoming fiscal year; and (iii) promptly following the end of each quarter an up-to-date capitalization table, certified by a Company senior executive officer.
Right to Participate Pro Rata in Future Rounds:	All Major Investors shall have a pro rata right, based on their percentage equity ownership in the Company (assuming the conversion of all outstanding Preferred Stock into Common Stock and the exercise of all options outstanding under the Company’s stock plans), to participate in subsequent issuances of equity securities of the Company (excluding those issuances listed at the end of the “Anti-dilution Provisions” section of this Term Sheet and issuances in connection with acquisitions by the Company).  In addition, should any Major Investor choose not to purchase its full pro rata share, the remaining Major Investors shall have the right to purchase the remaining pro rata shares.
Other Matters Requiring Series D Approval:	So long as there are outstanding at least 50% of the initially issued sharesof Series D Preferred (subject to adjustment), the Company will not, without the approval of the holder of a majority of the shares of Series D Preferred (voting together as a single class on as-converted basis): (i) make any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is wholly owned by the Company; (ii) make any loan or

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advance to any person, including, any employee or director, except advances and similar expenditures in the ordinary course of business or under the terms of a employee stock or option plan approved by the Board of Directors;

(iii)           guarantee any indebtedness except for trade accounts of the Company or any subsidiary arising in the ordinary course of business;

(iv)           make any investment other than investments in prime commercial paper, money market funds, certificates of deposit in any United States bank having a net worth in excess of $100,000,000 or obligations issued or guaranteed by the United States of America, in each case having a maturity not in excess of two (2) years; (v) incur any aggregate indebtedness in excess of $250,000 that is not already included in a Board-approved budget, other than trade credit incurred in the ordinary course of business; (vi) enter into or be a party to any transaction with any director, officer or employee of the Company or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such person; (vii) hire, fire, or change the compensation of the executive officers, including approving any option plans; (viii) change the principal business of the Company, enter new lines of business, or exit the current line of business; or (ix) sell, transfer, license, pledge or encumber technology or intellectual property, other than licenses granted in the ordinary course of business.

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RIGHT OF FIRST REFUSAL/CO-SALE AGREEMENT AND VOTING AGREEMENT

Right of first Refusal/ Right of Co-Sale (Take-me-Along):	Company first and holders of Series D Preferred second (to the extent assigned by the Board of Directors,) have a right of first refusal with respect to any shares of capital stock of the Company proposed to be sold by “Key Holders” and employees holding greater than 1% of Company Common Stock (assuming conversion of Preferred Stock), with a right of oversubscription for holders of Series D Preferred of shares unsubscribed by the other holders. Before any such person may sell Common Stock, he will give the holders of Series D Preferred an opportunity to participate in such sale on a basis proportionate to the amount of securities held by the seller and those held by the participating holders.
Board of Directors:	A seven (7) member Board shall be authorized, comprising (i) two Stone designees, (ii) the CEO, and (iii) four other persons designated by holders of a majority of the Company’s common stock, on a fully converted and diluted basis, currently including Kevin Stone, Mike Ward, Francis Dixon Helfer, Al Holcomb, Daniel Lee and David Anderson. The Investors shall cause the directors to appoint as chairman of the Board a designee of holders of a majority of the shares of Series D Preferred and Series C Preferred, voting together as a single class on an as-converted basis.
Drag Along:	All current and future holders of Preferred Stock, Common Stock and stock options shall be required to enter into an agreement with the Investors that provides that such stockholders will vote their shares in favor of a Deemed Liquidation Event or transaction in which 50% or more of the voting power of the Company is transferred, approved by the holders of at least 50% of the outstanding shares of Preferred Stock, on an as-converted basis.
Termination:	All rights under the Right of First Refusal/Co-Sale and Voting Agreements shall terminate upon an IPO, a Deemed Liquidation Event or a transfer of more than 50% of the Company’s voting power.

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EX1A-3 HLDRS RTS

Exhibit 3.3

THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY, EXCEPT IN CONNECTION WITH SALES IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER THE ACT, REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

APERION BIOLOGICS, INC.

CONVERTIBLE PROMISSORY NOTE

$[           ] San Antonio, Texas

[   ]

FOR VALUE RECEIVED, APERION BIOLOGICS, INC., a Delaware corporation (the “Company”), hereby absolutely and unconditionally promises to pay to the order of [     ] or its assigns (the “Lender,” which term shall include the holder, from time to time, of this Note (as defined below)), the principal amount of [    ] Dollars ($[     ]) in legal tender of the United States, together with simple interest (computed on the basis of a 360-day year of twelve 30-day months for actual days elapsed) on such principal amount outstanding from time to time at the rate of 8.0% per annum. After the earlier of the Maturity Date (as defined below) or the occurrence of an Event of Default (as defined below), the total unpaid indebtedness under this Convertible Promissory Note (this “Note”) shall bear simple interest at a rate equal to 10% per annum.

1.           Repayments and Prepayments.

(a)           Subject to Sections 2(a) and 3(a) hereof, all principal, accrued interest and all other amounts owing under this Note shall be due and payable on [    ] (the “Maturity Date”).

(b)           The Company may not prepay this Note at any time, either in whole or in part, without the prior consent of the Lender, which consent may be granted or withheld at the sole discretion of the Lender.

(c)           All payments received under this Note shall be applied first to costs, expenses and other amounts incurred in connection with the collection of this Note (other than principal and interest), then to accrued interest on the date of payment, and then to the outstanding principal balance of this Note.

(d)           All payments of principal and interest shall be made to the holder of this Note not later than 1:00 p.m. (Chicago time) on the date and at the place of payment designated by the holder hereof as aforesaid, and any payment received on such date but after such hour shall be deemed to have been paid to and received by the holder hereof on the next succeeding business day. If the date on which any payment is required to be made pursuant to this Note is not a business day, then such payment shall be due and payable on the next succeeding date which is not a Saturday, Sunday or legal holiday and such extension of time shall be included in computing interest. All payments hereunder shall be made without reduction, and shall not be subject to any claim or offset of any kind or nature whatsoever.

2.           Conversion.  The outstanding principal amount owing under this Note shall be convertible into equity securities of the Company as follows:

(a)           Optional Conversion.

(i)           After [          ], so long as a Change of Control (as defined below) has not yet occurred, at the written election of the Lender, the outstanding principal amount of this Note shall be converted into that number of shares of the Company’s Series [   ] Convertible Preferred Stock, par value $0.001 per share (“Series [   ] Preferred Stock”), equal to the quotient obtained by dividing (A) the outstanding principal amount of this Note by (B) $[   ] (the “Series [   ] Price”).  The Company covenants that it shall use its reasonable efforts to cause a sufficient number of shares of Series [   ] Preferred Stock (and common stock issuable upon conversion thereof) to be authorized and reserved under the Company’s Certificate of Incorporation, as amended, prior to any such conversion of this Note; provided, however, that if a sufficient number of such shares is not authorized and reserved at the time of such election, the conversion shall be delayed until the proper number of shares is authorized and reserved, with the Company then obligated to use its best efforts to cause a sufficient number of shares to be authorized and reserved as soon as practicable.

In the event of a Change of Control prior to the conversion or full repayment of this Note, the Company shall give the Lender written notice of the Change of Control at least twenty (20) days prior to the consummation thereof For purposes hereof, a “Change of Control” shall mean any one of the following: (a) the sale by the Company’s stockholders of 50% or more of the Company’s voting capital stock outstanding in any transaction or series of related transactions; (b) the consummation of a reorganization, merger or consolidation of the Company in any transaction or series of related transactions, unless in any such case all or substantially all of the individuals and entities who were the beneficial owners of the Company’s capital stock immediately prior thereto beneficially own, directly or indirectly, more than 50% of the voting power of the surviving or resulting corporation (or if the surviving or resulting corporation is a wholly-owned subsidiary of another corporation immediately following such reorganization, merger or consolidation, the parent corporation of such surviving or resulting corporation); (c) the complete liquidation or dissolution of the Company; or (d) the consummation of a sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, of all or substantially all of the assets of the Company to a third party; provided that in no event shall a Change of Control be deemed to have occurred solely as a result of (x) a sale by the Company of equity securities in transactions the primary purpose of which is to raise capital for the Company’s operations and activities, including without limitation a public

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offering or (y) any reduction (other than a transaction described in clause (a) above) in ownership of the Company’s outstanding Common Stock or voting securities by stockholders of the Company as of the date of this Note (or their affiliates).

(ii)           If, at any time, the number of outstanding shares of Series [   ] Preferred Stock is (A) increased by a stock dividend payable in shares of Series [   ] Preferred Stock or by a subdivision or split-up of such shares, or (B) decreased by a combination of such shares, then, following the record date fixed for the determination of holders of such shares entitled to receive the benefits of such stock dividend, subdivision, split-up, or combination, the Series [   ] Price shall be adjusted to a new amount equal to the product of (x) the Series [   ] Price in effect on such record date and (y) the quotient obtained by dividing (1) the number of shares of Series [   ] Preferred Stock outstanding on such record date (without giving effect to the event referred to in the foregoing clause (A) or (B)), by (2) the number of shares of Series [   ] Preferred Stock which would be outstanding immediately after the event referred to in the foregoing clause (A) or (B), if such event had occurred immediately following such record date.

(iii)           Upon each adjustment of the Series [   ] Price as provided in Section 2(a)(ii), the Lender shall thereafter be entitled to convert the outstanding principal amount hereunder at the Series [   ] Price resulting from such adjustment, into the number of shares of Series [   ] Preferred Stock equal to the product of (A) the number of such shares issuable hereunder prior to such adjustment and (B) the quotient obtained by dividing (x) the Series [   ] Price existing prior to such adjustment by (y) the new Series [   ] Price resulting from such adjustment.

(b)           Mechanics of Conversion. In connection with such conversion of this Note pursuant to Section 2(a), the Lender shall surrender this Note, duly endorsed without recourse, representation or warranty, at the principal office of the Company. At its expense, the Company shall, as soon as practicable thereafter, issue and deliver to the Lender at such principal office a certificate or certificates for the Series [   ] Preferred Stock (bearing such legends as may be required or advisable in the reasonable opinion of counsel to the Company), together with a check payable to the Lender for any cash amounts payable as described in Section 2(c) below, plus all accrued but unpaid interest to such date and all other amounts owing hereunder.

(c)           No Fractional Shares. No fractional shares shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to the Lender upon the conversion of this Note, the Company shall pay to the Lender an amount in cash equal to the product obtained by multiplying the conversion price applied to effect such conversion by the fraction of a share not issued pursuant to the previous sentence. Upon conversion of this Note in full and the payment of the amounts specified in this Note, the Company shall be released from all of its obligations and liabilities under this Note.

3.           Events of Default.  Upon the occurrence of any Event of Default, and the written election of the Lender (except as provided below), the entire unpaid principal balance of this Note and all of the unpaid interest accrued thereon and all amounts owing hereunder shall be immediately due and payable and the Lender shall have all legal and equitable rights of holders of unsecured debt instruments, whether at law, in equity or under this Note (provided that such principal, interest and other amounts shall become immediately due and payable if an Event of

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Default listed in clause (ii) below shall occur). For purposes of this Note, the following events shall each constitute an “Event of Default”:  (i) failure to pay any amount owing by the Company hereunder when due and payable, (ii) the initiation of any bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation or dissolution by or against the Company, or a general assignment of assets by the Company for the benefit of creditors, (iii) the material breach of any representation or warranty of the Company contained in this Note at the time when such representation or warranty is made, (iv) the breach by the Company of any of the covenants set forth in this Note, or (v) any of the Company’s indebtedness for borrowed money (or any guaranty by the Company thereof) is accelerated as a result of a default or breach of or under any agreement for such borrowed money, including but not limited to loan, credit or reimbursement agreements, or any default shall occur thereunder which entitles the holder thereof to so accelerate such indebtedness, or material breach under any real property lease agreements and capital equipment lease agreements by which the Company is bound or obligated.

(a)           No remedy herein conferred upon the Lender is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and in addition to every other remedy hereunder, now or hereafter existing at law or in equity or otherwise.

4.           Notices.

(a)           All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by facsimile or email with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed (i) if to the Lender, at the Lender’s address set forth in the Company’s corporate records (or such other address as the Lender shall have properly furnished the Company in writing), and (ii) if to the Company, at 11969 Starcrest Drive, San Antonio, TX 78247, Fax: (210) 495-0239 (or such other address as the Company shall have properly furnished the Lender in writing), attention: Chief Executive Officer.

(b)           Each such notice, report or other communication shall for all purposes under this Note be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or seventy-two (72) hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by overnight delivery service, the next business day, or, if sent by facsimile or email with written or electronic confirmation, at the earlier of (i) twenty-four (24) hours after confirmation of transmission by the sending facsimile machine or computer or (ii) delivery of written confirmation.

5.           Representations and Warranties of the Company.  In connection with the transactions provided for herein, the Company hereby represents and warrants to the Lender that:  The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.

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(a)           All corporate action on the part of the Company, its officers, directors, and stockholders necessary for the authorization, execution, and delivery of this Note and that certain warrant issued to the Lender, dated as of the date hereof (the “Warrant”), the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance and delivery of the Note, the Warrant and the equity securities issuable hereunder and thereunder (collectively, the “Securities”) has been taken; provided, however, that the Company has not reserved for issuance under its Certificate of Incorporation, as amended, the Series [   ] Preferred Stock issuable upon conversion of this Note.

(b)           Each of this Note and the Warrant has been duly and validly executed by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent limited by bankruptcy, insolvency or other similar laws affecting creditors’ rights generally.

(c)           The Securities, when issued, sold, and delivered in accordance with the terms of this Note and the Warrant for the consideration expressed therein, shall be duly and validly issued, fully paid, and nonassessable and will be issued in compliance with all applicable federal and state securities laws.

(d)           Except as required to comply with applicable securities law exemptions from registration, no consent, approval, authorization, order, filing, registration or qualification of or with any court, governmental authority or third person is required to be obtained by the Company in connection with, and, except as contemplated by Section 6(j), the Company is not required to offer any third-party the right to make a loan upon the same terms as provided for in this Note as a result of, the execution and delivery of this Note and the Warrant or the performance of the Company’s obligations hereunder or thereunder.

(e)           The execution, delivery and performance of this Note and the Warrant by the Company does not and will not conflict with, or result in a breach of, any of the terms, conditions or provisions of any mortgage, lien or other security arrangement, or any agreement, instrument, order, judgment, decree or any other similar restriction, to which the Company is a party or is otherwise bound.

6.           Miscellaneous.

(a)           Without the prior written consent of the Lender, (i) the obligations of the Company and the rights of the Lender under this Note may not be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and (ii) the Company may not enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Note. Neither this Note nor any provisions hereof may be changed, amended, waived, discharged or terminated orally, but only by a signed statement in writing executed by the Lender.

(b)           No failure or delay by the Lender to exercise any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other right, power or privilege. The provisions of this Note are severable

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and if any one provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, such invalidity or unenforceability shall affect only such provision in such jurisdiction. This Note expresses the entire understanding of the parties with respect to the transactions contemplated hereby. The Company and every endorser and guarantor of this Note, regardless of the time, order or place of signing hereby, waives presentment, demand, protest, diligence of collection and notice of every kind, and assents to any extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person primarily or secondarily liable.

(c)           If Lender retains an attorney for collection, restructuring or any “work-out” of this Note, or if any suit or proceeding is brought for the recovery of all, or any part of, or for protection of the indebtedness represented by this Note, then the Company agrees to pay all costs and expenses of the suit or proceeding, or any appeal thereof, incurred by the Lender, including without limitation, reasonable attorneys’ fees.

(d)           This Note shall for all purposes be governed by, and construed in accordance with the laws of the State of Illinois (without reference to its conflicts of law principles), and the Company consents to the exclusive jurisdiction of the state and federal courts located in the State of Illinois, and waives any argument that such forum is not convenient.

(e)           This Note shall be binding upon the Company’s successors and assigns, and shall inure to the benefit of the Lender’s successors and assigns.  This Note may not be assigned by the Company.

(f)           Time is of the essence with respect to the performance of the obligations of the Company under this Note.

(g)           In no event shall the interest rate and other charges under this Note exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that a court determines that Lender has received interest and other charges under this Note in excess of the highest permissible rate applicable hereto, such excess shall be deemed received on account of, and shall automatically be applied to reduce, the outstanding principal amount hereunder and the provisions hereof shall be deemed amended to provide for the highest permissible rate. If there is no outstanding principal amount under this Note, the Lender shall refund such excess to the Company.

(h)           The Company represents and warrants to the Lender that the indebtedness evidenced by this Note is with respect to an exempt transaction under the Truth-In-Lending Act, 15 U.S.C. 1601 et seq.

(i)           The Company covenants that it shall take all reasonable actions within its control to incorporate all shares of Series [   ] Preferred Stock issuable upon conversion of this Note and all Securities issuable upon exercise of the Warrant (and common stock issuable upon conversion thereof) into that certain Second Amended and Restated Investors’ Rights Agreement, dated as of June 9, 2008, as amended, among ‘the Company and the investors party thereto (the “Rights Agreement”).

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(j)           The Company and the Lender agree that, subsequent to the date hereof, the Company shall offer the right to participate in this convertible debt financing, on substantially the same terms as those contained herein and in the Warrant, to current stockholders of the Company possessing rights of first offer under Section 4.1 of the Rights Agreement, in accordance with the terms of such agreement.

(k)           The Company hereby covenants and agrees that the proceeds received by the Company in return for the issuance of this Note shall be used for the general corporate needs of the Company.

IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly authorized officer to take effect as of the date first hereinabove written.

APERION BIOLOGICS, INC.

By: _______________________________

Name:

Title:

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EX1A-3 HLDRS RTS

Exhibit 3.4

OFFER TO PURCHASE

APERION LINE OF CREDIT NOTE

Aperion Biologics, Inc., a Delaware corporation (the "Company") hereby offers CrossCart LLC, a California limited liability company ("CrossCart") the right to purchase a line of credit note with a principal balance of up to One Hundred Thousand Dollars ($100,000), in substantially the form attached as Exhibit A to this offer letter (the "Note").

The Company shall grant to CrossCart on the Closing Date the contractual right to receive royalties equal to 5% of all the Company's Net Sales above the initial $12,000,000 in Net Sales (where "Net Sales" is determined in accordance with generally accepted accounting principles) from products manufactured using the Company's Z-Process (the "Royalty Right"). Royalty payments made to CrossCart pursuant to the Royalty Right shall be made by the Company within 90 days of the Company's receipt of proceeds from the sale of its products manufactured using the Company's Z-Process. As soon as is practicable after the Closing Date, the Company shall take all actions necessary to grant CrossCart the Royalty Right.

This offer shall remain open until 5:00pm PST on May 10, 2015. Delivery by CrossCart to the Company of cash in an amount equal to or greater than Ten Thousand Dollars ($10,000) on or before 5:00pm PST on May 10, 2015, shall constitute acceptance of this offer. The date of CrossCart's acceptance of the offer shall be deemed the Closing Date as such term is used in this offer letter.

APERION BIOLOGICS, INC.

a Delaware Corporation

By:
Name:	Daniel Lee
Title:	President and Chief Executive Officer
Date:	10 May 2015

Address:	11969 Starcrest Drive
	San Antonio, Texas
Email:	dlee@aperionbiologics.com

with a copy to:

Scott D. Karchmer

Morgan, Lewis & Bockius LLP One Market-Spear Street Tower San Francisco, CA 94105

email: skarchmer@morganlewis.com

Exhibit A

Form of Line of Credit Promissory Note

LINE OF CREDIT NOTE

$100,000.00  Date: May 1, 2015

San Francisco, CA

1.           FOR VALUE RECEIVED, the undersigned, Aperion Biologics, Inc., a Delaware corporation ("Borrower") promises to pay to the order of CrossCart LLC, a California limited liability company, or its assigns ("Lender") at 3727 Buchanan Street, San Francisco, California, or at such other place as Lender may designate in writing, in lawful money of the United States of America, the principal sum of One Hundred Thousand Dollars ($100,000.00) or so much thereof as may be advanced and outstanding with interest on each advance under this Note from the date it is disbursed until maturity, whether scheduled or accelerated together with simple interest thereon at the annual rate of ten percent (10%).

2.           During the term of this Note, Borrower may request to borrow in minimum amounts of Ten Thousand Dollars ($10,000.00), which requests may be granted or denied at Lender's sole discretion, subject to all limitations, terms and conditions contained herein and in any other agreements or documents executed in connection with this Note; provided, however, that the outstanding principal balance of this Note shall at no time exceed the maximum principal amount stated above. During the term of this Note, Borrower may repay any and all amounts of principal and interest outstanding at Borrower's sole discretion.

3.           Interest shall accrue and be payable on May 1, 2016 (the "Maturity Date"), on which date all accrued interest and principal remaining unpaid shall be due and payable in full. Principal, interest, and all other sums owed Lender shall be evidenced by entries in records maintained by Lender for such purpose. Each payment on and any other credits with respect to principal, interest and all other sums outstanding under this Note shall be evidenced by entries in such records. Lender's records shall be conclusive evidence thereof.

4.           Advances may be requested in writing, by telephone, telex or otherwise on behalf of Borrower.

5.           The unpaid principal balance and all payments of interest on this Note shall bear interest from their respective maturities, whether scheduled or accelerated at the annual rate of ten percent (10%), or, as provided in Section 9 hereof, at the annual rate of twelve percent (12%), until paid in full, whether before or after judgment.

6.           The occurrence of any of the following shall (i) terminate any obligation of Lender to make or continue the line of credit evidenced by this Note, and shall, at Lender's option, (ii) make all sums of interest, principal and any other amounts owing under this Note immediately due and payable without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor or any other notices or demands, and (iii) give Lender the right to exercise any other right or remedy provided by contract or applicable law:

(a)           Borrower shall fail to make any payment of principal or interest when due under this Note;

(b)           Borrower shall fail to pay its debts generally as they become due or shall file any petition or action for relief under any bankruptcy, insolvency, reorganization, moratorium, creditor composition law, or any other law for the relief of or relating to debtors; an involuntary petition shall be filed under any bankruptcy law against Borrower, or a custodian, receiver, trustee, assignee for the benefit of creditors, or other similar official, shall be appointed to take possession, custody or control of the properties of Borrower; or

(c)           Any judgment(s) shall be entered against Borrower, or any involuntary lien(s) of any kind or character shall attach to any assets or property of Borrower, any of which, in the judgment of Lender, might have a material adverse effect on the financial condition or business of Borrower.

7.           No failure or delay on the part of Lender in exercising any power, right or privilege under this Note shall operate as a waiver thereof, and no single or partial exercise of any such power, right or privilege shall preclude any further exercise thereof or the exercise of any other power, right or privilege.

8.           Borrower shall reimburse Lender for all costs and expenses, including, without limitation, reasonable attorneys' fees, expended or incurred by Lender in any arbitration, judicial reference, legal action or otherwise in connection with collecting any sum which becomes due Lender under this Note.

9.           All amounts due hereunder shall be due and fully paid on the Maturity Date. If there remains any outstanding principal or interest due hereunder after the Maturity Date, interest shall accrue on said sums at the annual rate of twelve percent (12%), and such interest shall be compounded monthly.

10.           The undersigned hereby waives presentment, demand for payment, notice of dishonor, and any and all other notices or demands in connection with the delivery, acceptance, performance, default or enforcement of this Note, and hereby consents to any extensions of time, renewals, releases of any party to this Note, waivers or modifications that may be granted or consented to by the Lender in respect of the time of payment or any other provisions of the Note.

11.           This Note shall be governed by and construed in accordance with the laws of the State of California.

BORROWER:
APERION BIOLOGICS, INC.
By:	Daniel R. Lee
Its:	Chief Executive Officer

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EX1A-3 HLDRS RTS

Exhibit 3.5

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY, EXCEPT IN CONNECTION WITH SALES IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER THE SECURITIES ACT, REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

Warrant No. [   ]

WARRANT

to Purchase Equity Securities of

APERION BIOLOGICS, INC.,

a Delaware corporation

THIS WARRANT IS TO CERTIFY THAT [   ] or its designee (“Purchaser”), is entitled to purchase from Aperion Biologics, Inc., a Delaware corporation (the “Company”), an aggregate of up to the number of Exercise Shares (as defined below) calculated by dividing [     ] Dollars and no cents ($[      ]) by the Exercise Price (as defined below), all on the terms and conditions hereinafter provided.

Section 1.      Certain Definitions. As used in this Warrant, unless the context otherwise requires:

“Exercise Price” shall mean (a) if the Company consummates a Next Qualified Financing, the lowest price per share at which the Company sells any shares of Qualified Preferred Stock prior to the relevant exercise event hereunder; or (b) otherwise, $0.48 per share; provided, however, when and if the Exercise Shares become shares of the Company’s common stock, $0.001 par value per share (“Common Stock”), by reason of the application of the last clause of the definition of Exercise Shares, then the preexisting Exercise Price will be adjusted by dividing it by the conversion rate of such Exercise Shares into Common Stock as of the time of conversion (e.g. if the pre-existing exercise price is $0.48 and the relevant Exercise Shares convert such that 2 shares of Common Stock are issued for every share of Exercise Shares, then the new Exercise Price will be $0.24).

“Exercise Shares” shall mean a class (and series) of the equity securities of the Company determined as follows: (a) if the Company consummates a Next Qualified Financing

after the date hereof, shares of Qualified Preferred Stock; or (b) otherwise, shares of Series C Convertible Preferred Stock, $0.001 par value per share; provided, however, in each case, if at the time of exercise hereof, no shares of the applicable series of Preferred Stock are outstanding due to conversion into Common Stock or otherwise, then Exercise Shares will mean shares of Common Stock.

“Next Qualified Financing” shall mean the closing, in one transaction or a series of related transactions, of the Company’s first equity financing after the date hereof with aggregate gross offering proceeds of no less than five million dollars ($5,000,000) (excluding amounts received on conversion of promissory notes or exercise of any warrants).

“Qualified Preferred Stock” shall mean the series of preferred stock of the Company issued in the Next Qualified Financing.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Warrant” shall mean this Warrant and all additional or new warrants issued upon division or combination of, or in substitution for, this Warrant. All such additional or new warrants shall at all times be identical as to terms and conditions and date, except as to the number of Exercise Shares for which they may be exercised.

“Warrantholder” shall mean the Purchaser, as the initial holder of this Warrant, and its nominees, successors or assigns, including any subsequent holder of this Warrant to whom it has been legally transferred.

Section 2.      Exercise of Warrant.

(a)           The Warrantholder may exercise this Warrant, in whole or in part, at any time and from time to time from the date hereof until the earlier to occur of (the “Expiration Date”): (i) October 18, 2020, or (ii) one of the following transactions: (1) the purchase or other acquisition of shares of the Company’s capital stock by any person, entity or group of persons, within the meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any comparable successor provisions (other than stockholders of the Company as of the date of this Warrant or their affiliates), such that its resulting beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) will be 100% of either the outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities entitled to vote generally; (2) a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of the Company immediately prior to such reorganization, merger or consolidation or their affiliates do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then outstanding securities; or (3) the sale of all or substantially all of the Company’s assets; provided that in no event shall a Sale Event be deemed to have occurred solely as a result of (x) a sale by the Company of equity securities in transactions the primary purpose of which is to raise capital for the Company’s operations and activities, including without limitation a public offering or (y) any reduction (other than a transaction described in clause (1) above) in ownership of the Company’s outstanding Common Stock or voting securities by stockholders of

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the Company as of the date of this Warrant or their affiliates (each, a “Sale Event”). The Company shall provide the Warrantholder with fifteen (15) days’ advance written notice of any Sale Event.

(b)           (i)           The Warrantholder shall exercise this Warrant by means of delivering to the Company at its office identified in Section 15 hereof (i) a written notice of exercise, including the number of Exercise Shares to be delivered pursuant to such exercise, (ii) this Warrant and (iii) payment equal to the Exercise Price in accordance with Section 2(b)(ii). In the event that any exercise shall not be for all Exercise Shares purchasable hereunder, a new Warrant registered in the name of the Warrantholder, of like tenor to this Warrant and for the remaining Exercise Shares purchasable hereunder, shall be delivered to the Warrantholder within ten (10) days of any such exercise. Such notice of exercise shall be in the Subscription Form set out at the end of this Warrant.

(ii)           The Warrantholder may elect to pay the Exercise Price to the Company either (1) by cash, certified check or wire transfer, (2) by converting the Warrant into Exercise Shares (“Warrant Conversion”) or (3) any combination of the foregoing, and specifying such election(s) in the Subscription Form attached to this Warrant. If the Warrantholder elects to pay the Exercise Price through Warrant Conversion, the Company shall deliver to the Warrantholder (without payment by the Warrantholder of any cash or other consideration) that number of Exercise Shares equal to the difference of (A) the total number of Exercise Shares into which this Warrant is exercisable minus (B) that number of Exercise Shares having an aggregate Spread (as defined herein) equal to the aggregate Exercise Price. For purposes of this Section 2, “Spread” shall be the difference, as of the date of exercise, between the Exercise Price and the fair market value of an Exercise Share, multiplied by the applicable number of Exercise Shares.

(c)           Upon exercise of this Warrant and delivery of the Subscription Form with proper payment relating thereto, the Company shall cause to be executed and delivered to the Warrantholder a certificate or certificates representing the aggregate number of fully-paid and nonassessable Exercise Shares issuable upon such exercise.

(d)           The stock certificate or certificates for Exercise Shares to be delivered in accordance with this Section 2 shall be in such denominations as may be specified in said notice of exercise and shall be registered in the name of the Warrantholder or such other name or names as shall be designated in said notice. Such certificate or certificates shall be deemed to have been issued and the Warrantholder or any other person so designated to be named therein shall be deemed to have become the holder of record of such shares, including to the extent permitted by law the right to vote such shares or to consent or to receive notice as stockholders, as of the time said notice is delivered to the Company as aforesaid.

(e)           The Company shall pay all reasonable expenses payable in connection with the preparation, issue and delivery of stock certificates under this Section 2, including any transfer taxes resulting from the exercise of the Warrant and the issuance of Exercise Shares hereunder.

(f)           All Exercise Shares issuable upon the exercise of this Warrant in accordance with the terms hereof shall be validly issued, fully paid and nonassessable, and free

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from all liens and other encumbrances thereon, other than liens or other encumbrances created by the Warrantholder, and restrictions on transfer provided for herein or under applicable federal and state securities laws or in any stockholders or investors’ rights agreement to which the Warrantholder is a party.

(g)           In no event shall any fractional share of Exercise Shares of the Company be issued upon any exercise of this Warrant. If, upon any exercise of this Warrant, the Warrantholder would, except as provided in this paragraph, be entitled to receive a fractional Exercise Share, then the Company shall deliver in cash to such holder an amount equal to such fractional interest.

Section 3.      Adjustment of Exercise Price and Exercise Shares.

(a)           If, at any time prior to the Expiration Date, the number of outstanding Exercise Shares is (i) increased by a stock dividend payable in Exercise Shares or by a subdivision or split-up of Exercise Shares, or (ii) decreased by a combination of Exercise Shares, then, following the record date fixed for the determination of holders of Exercise Shares entitled to receive the benefits of such stock dividend, subdivision, split-up, or combination, the Exercise Price shall be adjusted to a new amount equal to the product of (A) the Exercise Price in effect on such record date and (B) the quotient obtained by dividing (x) the number of Exercise Shares outstanding on such record date (without giving effect to the event referred to in the foregoing clause (i) or (ii)), by (y) the number of shares of Exercise Shares which would be outstanding immediately after the event referred to in the foregoing clause (i) or (ii), if such event had occurred immediately following such record date.

(b)           Upon each adjustment of the Exercise Price as provided in Section 3(a), the Warrantholder shall thereafter be entitled to subscribe for and purchase, at the Exercise Price resulting from such adjustment, the number of Exercise Shares equal to the product of (i) the number of Exercise Shares issuable hereunder prior to such adjustment and (ii) the quotient obtained by dividing (A) the Exercise Price existing prior to such adjustment by (B) the new Exercise Price resulting from such adjustment.

Section 4.      Division and Combination. This Warrant may be divided or combined with other warrants upon presentation at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new warrants are to be issued, signed by the Warrantholder or its agent or attorney. The Company shall pay all reasonable expenses in connection with the preparation, issue and delivery of warrants under this Section 4, including any transfer taxes resulting from the division or combination hereunder. The Company agrees to maintain at its aforesaid office books for the registration of such warrants.

Section 5.      Reclassification, Etc.  In case of any reclassification or change of the outstanding Exercise Shares of the Company (other than as a result of a subdivision, combination or stock dividend), or in case of any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a Sale Event) at any time prior to the Expiration Date, then, as a condition of such reclassification, reorganization, change, consolidation or merger, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered

4

to the Warrantholder, so that the Warrantholder shall have the right prior to the Expiration Date to purchase, at a total price not to exceed that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable upon such reclassification, reorganization, change, consolidation or merger by a holder of the number of Exercise Shares of the Company which might have been purchased by the Warrantholder immediately prior to such reclassification, reorganization, change, consolidation or merger, in any such case appropriate provisions shall be made with respect to the rights and interest of the Warrantholder to the end that the provisions hereof (including provisions for the adjustment of the Exercise Price and of the number of shares purchasable upon exercise of this Warrant) shall thereafter be applicable in relation to any shares of stock and other securities and property thereafter deliverable upon exercise hereof.

Section 6.      Reservation and Authorization of Capital Stock.  The Company shall at all times reserve and keep available for issuance (a) such number of its authorized but unissued Exercise Shares as will be sufficient to permit the exercise in full of this Warrant and (b) such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the conversion of all such Exercise Shares.

Section 7.      Stock and Warrant Books.  The Company will not at any time, except upon dissolution, liquidation or winding up, close its stock books or warrant books so as to result in preventing or delaying the exercise of any Warrant.

Section 8.      Limitation of Liability.  No provisions hereof, in the absence of affirmative action by the Warrantholder to purchase Exercise Shares hereunder, shall give rise to any liability of the Warrantholder to pay the Exercise Price or as a stockholder of the Company (whether such liability is asserted by the Company or creditors of the Company).

Section 9.      Registration Rights.  The Company will use commercially reasonable efforts to ensure that the shares of Common Stock issuable upon conversion of the Exercise Shares issuable upon exercise of this Warrant become subject to the provisions of that certain Second Amended and Restated Investors’ Rights Agreement, dated as of June 9, 2008, by and among the Company, the Purchaser and the other parties named therein.

Section 10.      Limited Stockholder Rights.  Until the Exercise Shares subject to this Warrant are issued to the Warrantholder upon exercise of the Warrant, the Warrantholder shall have no right to vote same in connection with any matters to which holders of Exercise Shares are entitled to vote and shall have no other rights as a stockholder of the Company with respect to the Exercise Shares.

Section 11.      Transfer.  Subject to compliance with the Securities Act and the applicable rules and regulations promulgated thereunder, this Warrant and all rights hereunder shall be transferable in whole or in part. Any such transfer shall be made at the office or agency of the Company at which this Warrant is exercisable, by the registered holder hereof in person or by its duly authorized attorney, upon surrender of this Warrant together with the assignment hereof properly endorsed, and promptly thereafter a new warrant shall be issued and delivered by the Company, registered in the name of the assignee. Until registration of transfer hereof on the

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books of the Company, the Company may treat the Purchaser as the owner hereof for all purposes.

Section 12.      Investment Representations; Restrictions on Transfer of Warrant Stock.  Unless a current registration statement under the Securities Act shall be in effect with respect to the Exercise Shares to be issued upon exercise of this Warrant, the Warrantholder, by accepting this Warrant, covenants and agrees that, at the time of exercise hereof, and at the time of any proposed transfer of Exercise Shares acquired upon exercise hereof, such Warrantholder will deliver to the Company a written statement that the securities acquired by the Warrantholder upon exercise hereof are for the account of the Warrantholder or are being held by the Warrantholder as trustee, investment manager, investment advisor or as any other fiduciary for the account of the beneficial owner or owners for investment and are not acquired with a view to, or for sale in connection with, any distribution thereof (or any portion thereof) and with no present intention (at any such time) of offering and distributing such securities (or any portion thereof).

Section 13.      Loss, Destruction of Warrant Certificates.  Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity and/or security satisfactory to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same aggregate number of Exercise Shares.

Section 14. Amendments.  The terms of this Warrant may be amended, and the observance of any term herein may be waived, but only with the written consent of the Company and the Warrantholder.

Section 15.      Notices Generally.  Any notice, request, consent, other communication or delivery pursuant to the provisions hereof shall be in writing and shall be sent by one of the following means: (i) by registered or certified first class mail, postage prepaid, return receipt requested; (ii) by facsimile transmission with confirmation of receipt; (iii) by overnight courier service; or (iv) by personal delivery, and shall be properly addressed to the Warrantholder at the last known address or facsimile number appearing on the books of the Company, or, except as herein otherwise expressly provided, to the Company at its principal executive office at 11969 Starcrest Drive, San Antonio, TX  78247, Fax: (210) 495-0239, attention: Chief Executive Officer or such other address or facsimile number as shall have been furnished to the party giving or making such notice, demand or delivery.

Section 16.      Successors and Assigns.  This Warrant shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective permitted successors and assigns.

Section 17.      Governing Law.  In all respects, including all matters of construction, validity and performance, this Warrant and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware (without regard to its conflicts of law principals) applicable to contracts made and performed in such State.

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Section 18.      Value.  This Warrant is being issued to the Purchaser in connection with a Convertible Promissory Note being issued by the Company as of the date hereof to the Purchaser. After consideration of all relevant factors, the Company and the Purchaser agree that the aggregate exercise price of this Warrant is equal to the fair market value of this Warrant.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name by its Chief Executive Officer.

Dated:
	APERION BIOLOGICS, INC.,
	a Delaware corporation
	By:
	Name:
	Title:

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SUBSCRIPTION FORM

(to be executed only upon exercise of Warrant)

To:           Aperion Biologics, Inc.

[Choose one or both of the paragraphs, as applicable]

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

[The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ____), hereby irrevocably elects to exercise the right of conversion represented by the attached Warrant for Exercise Shares, and as payment therefor hereby directs the Company to withhold Exercise Shares that the undersigned would otherwise be entitled thereunder.]

Attached hereto as Exhibit A is the Investment Representation Statement executed by the undersigned.

Dated:	Name:
	Signature
	Address:

9

INVESTMENT REPRESENTATION STATEMENT

Purchaser:
Company:	APERION BIOLOGICS, INC.
Security:	Exercise Shares
Amount:
Date:

In connection with the purchase of the above-listed securities (collectively, the “Securities”), the undersigned (the “Purchaser”) represents to the Company as follows:

The Purchaser is acquiring the Securities for its own account for investment purposes, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. The Purchaser does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Securities. The Purchaser has not been formed for the specific purpose of acquiring the Securities.

The Purchaser has been furnished with all information which it deems necessary to evaluate the merits and risks of acquiring the Securities and has had the opportunity to ask questions concerning the Securities and the Company and all questions posed have been answered to its satisfaction. The Purchaser has been given the opportunity to obtain any additional information it deems necessary to verify the accuracy of any information obtained concerning the Securities and the Company. The Purchaser has such knowledge and experience in financial and business matters that it is able to evaluate the merits and risks of acquiring the Securities and to make an informed decision relating thereto.

The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”).

The Purchaser understands that the Securities have not been, and will not be, registered under the Act, by reason of a specific exemption from the registration provisions of the Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser understands that the Securities are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Securities indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. The Purchaser acknowledges that the Company has no obligation to register or qualify the Securities for resale except as set forth in the Second Amended and Restated Investors’ Rights Agreement, dated June 9, 2008, by and among the Corporation and the investors named therein (the “Investor Rights Agreement”). The Purchaser further acknowledges that if an exemption from registration

or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities, and on requirements relating to the Company which are outside of the Purchaser’s control, and which the Company is under no obligation and may not be able to satisfy.

The Purchaser agrees to execute and deliver a counterpart signature page, and become a party, to the Investor Rights Agreement, the Voting Agreement, dated June 9, 2008, by and among the Corporation and the investors named therein, and the Right of First Refusal and Co-Sale Agreement, dated June 9, 2008, by and among the Corporation and the investors named therein, as may be requested by the Company if the Purchaser is not already a party to such agreements.

The Purchaser understands that no public market now exists for the Securities, and that the Company has made no assurances that a public market will ever exist for the Securities.

The Purchaser understands that the Securities and any securities issued in respect of or exchange for the Securities, may bear one or all of the following legends:

(a)           Any legend set forth in, or required by, the Convertible Promissory Note or the Warrant, as applicable.

(b)           Any legend required by the securities laws of any state to the extent such laws are applicable to the Securities represented by the certificate so legended.

Purchaser:

Date: , 20            

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EX1A-3 HLDRS RTS

 Exhibit 3.6

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE WARRANT UNDER SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

No. WB -

Date of Issuance:

WARRANT TO PURCHASE COMMON STOCK

of

APERION BIOLOGICS, INC.

Void after [   ]

This certifies that, for value received, [   ] or registered assigns (“Holder”) is entitled, subject to the terms set forth below, to purchase from APERION BIOLOGICS, INC (the “Company”), a Delaware corporation, [   ] shares (“Warrant Shares”) of common stock, $.001 par value per share (the “Common Stock”) of the Company upon surrender hereof,. at the principal office of the Company referred to below, with the Notice of Exercise attached to this Warrant duly executed, and simultaneous payment in lawful money of the United States, at the Exercise Price as set forth in Section 2 below.  The number, character and Exercise Price of such shares of Common Stock are subject to determination and adjustment as provided below.  The term “Warrant” includes this Warrant, and any warrants delivered in substitution or exchange for this Warrant as provided below.  This Warrant is issued in connection with a distribution to holders of Series B Preferred Stock as of immediately prior to the closing of the Company’s Series C Preferred Stock Financing and is one of a number of similar warrants issued under similar circumstances on the date hereof (the “2008 Warrants”).

1.           Term of Warrant.  On the terms and subject to conditions set forth in this Warrant, this Warrant shall be exercisable, in whole or in part, during the term commencing on the date of this Warrant (the “Warrant Issue Date”) occurs and ending at 5:00 p.m., Pacific time, on [    ] (the “Term”), and shall be void thereafter.

2.           Exercise Price.  The Exercise Price for each of the Warrant Shares at which this Warrant may be exercised is one cent ($.01) per share of Common Stock, as adjusted from time to time pursuant to Section 11.

3.           Exercise of Warrant.

(a)           The purchase rights represented by this Warrant are exercisable by the Holder in whole or in part, at any time during the Term, by the surrender of this Warrant and the Notice of Exercise annexed to this Warrant duly completed and executed on behalf of the Holder, at the office of the Company (or such other office or agency as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company), upon payment in cash or by check acceptable to the Company or by wire transfer.

(b)           This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the Warrant Shares shall be treated for all purposes as the holder of record of such Warrant Shares as of the close of business on such date.  As promptly as practicable on or after such date and in any event within ten (10) days thereafter, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of Warrant Shares issuable upon such exercise.

(c)           Without implication that the contrary would otherwise be true, no transaction by the Company, including a public offering nor the status of the Company as a public company will affect the right of the Holder to exercise this Warrant at any time during the Term or change the Term.

4.           Fractional Shares or Scrip.  Fractional shares or scrip representing fractional shares shall not be issued upon the exercise of this Warrant and instead, the Company shall pay to the Holder cash equal to the fair market value of such fraction of a share, as determined by the Board of Directors of the Company in good faith.

5.           Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

6.           Rights of Stockholders.  The Holder shall not be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company that may at any time be issuable on the exercise of this Warrant for any purpose whatsoever, nor shall any provision be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been properly exercised.

7.           Transfer of Warrant.

(a)           Warrant Register.  The Company will maintain a register (the “Warrant Register”) containing the names and addresses of all Holder or Holders.  Any Holder of this

2

Warrant or any portion thereof may change his or her address as shown on the Warrant Register by written notice to the Company requesting such change.  Any notice or written communication required or permitted to be given to the Holder may be delivered or given by mail to such Holder as shown on the Warrant Register and at the address shown on the Warrant Register.  Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

(b)           Warrant Agent.  The Company may, by written notice to the Holder, appoint an agent for the purpose of maintaining the Warrant Register referred to in Section 7(a) above, issuing the Common Stock or other securities then issuable upon the exercise of this Warrant, exchanging this Warrant, replacing this Warrant, or any or all of the foregoing.  Thereafter, any such registration, issuance, exchange, or replacement, as the case may be, shall be made at the office of such agent.

(c)           Transferability and Nonnegotiability of Warrant.  This Warrant may not be transferred or assigned in whole or in part without compliance with all applicable federal and state securities laws by the transferor and the transferee.  Subject to the provisions of this Warrant with respect to compliance with the Securities Act of 1933, as amended (the “Act”), title to this Warrant may be transferred by endorsement (by the Holder executing the Form of Assignment annexed hereto) and delivery in the same manner as a negotiable instrument transferable by endorsement and delivery, to any person or entity selected by the Holder.  Holder acknowledges that the transfer of this Warrant may be subject to contractual restrictions.

(d)           Exchange of Warrant Upon a Transfer.  On surrender of this Warrant for exchange, properly endorsed on the Form of Assignment and subject to the provisions of this Warrant with respect to compliance with the Act and with the limitations on assignments and transfers contained in this Section 7, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for shares in an amount calculated in a manner consistent herewith and issuable upon exercise hereof.

(e)           Compliance with Securities Laws.

(i)           The Holder of this Warrant acknowledges that this Warrant and the Warrant Shares are being acquired solely for the Holder’s own account for investment purposes, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Common Stock issued upon exercise hereof except under circumstances that will not result in a violation of the Act by Holder or the Company or any state securities laws.  Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the shares of Common Stock so purchased are being acquired solely for the Holder’s own account, for investment purposes, and not with a view toward distribution or resale.

(ii)           This Warrant and all Warrant Shares shall be stamped or imprinted with a legend in substantially the following form (in addition to any legend required by state securities laws):

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THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.  SUCH SECURITIES AND ANY SECURITIES ISSUED HEREUNDER OR THEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND APPLICABLE LAWS.  COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.

8.           Reservation of Stock.  The Company covenants that during the Term, the Company will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares and for payment of dividends thereon and, from time to time, will take all steps necessary to amend its Certificate of Incorporation (the “Certificate”) to provide sufficient reserves of Common Stock issuable upon exercise of the Warrant and for payment of dividends thereon.  The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges in respect of the issue of such shares (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein).  The Company agrees that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the exercise of this Warrant.

9.           Notices.

(a)           Whenever the Exercise Price or number of Warrant Shares shall be determined or adjusted pursuant to Section 11 hereof, the Company shall issue a certificate signed by an executive officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and number of shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be mailed (by first-class mail, postage prepaid) to the Holder of this Warrant.

(b)           In case:

(i)           the Company, shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or

(ii)           of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into

4

another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation, or

(iii)           of any voluntary dissolution, liquidation or winding-up of the Company,

then, and in each such case, the Company will mail or cause to be mailed to the Holder or Holders a notice specifying, as the case may be, (A) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (B) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up.  Such notice shall be mailed at least twenty (20) days prior to the date therein specified.

(c)           All such notices, advices and communications delivered hereunder shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery and (ii) in the case of mailing, on the third business day following the date of such mailing.

10.           Amendments; Waivers.

(a)           Any term of this Warrant may be amended with the written consent of the Company and the holders of the 2008 Warrants issued by the Company (the “Majority Holders”) that upon the hypothetical exercise of all such warrants would result in the issuance of a majority of the number of shares of Common Stock issuable in respect thereof.  Any amendment effected in accordance with this Section 10 shall be binding upon each future holder of this Warrant, all such other holders of 2008 Warrants issued within such sixty day period, and the Company.

(b)           No waivers of, or exceptions to, any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

11.           Adjustments.  The Exercise Price and the number of Warrant Shares purchasable hereunder shall be determined and are subject to adjustment from time to time as follows:

(a)           Merger, Sale of Assets, etc.  If at any time while this Warrant, or any portion hereof, is outstanding and unexpired there shall be (i) a reorganization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, or a reverse triangular merger in which the Company is the surviving entity but the shares of the Company’s capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or (iii) a sale or transfer of the Company’s properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger,

5

consolidation, sale or transfer, lawful provision shall be made so that the holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the Term and upon payment of the Exercise Price then in effect, the number of shares of stock or other securities or property of the successor corporation resulting from such reorganization, merger, consolidation, sale or transfer that a holder of the shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 11.  The foregoing provisions of this Section 11(a) shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to the stock or securities of any other corporation that are at the time receivable upon the exercise of this Warrant.  If the per-share consideration payable to the Holder for shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company’s Board of Directors.  In all events, appropriate adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.

(b)           Reclassification, etc.  If the Company, at any time while this Warrant, or any portion hereof, remains outstanding and unexpired, by reclassification of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 11.

(c)           Split, Subdivision or Combination of Shares.  If the Company at any time while this Warrant, or any portion hereof, remains outstanding and unexpired shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, the Exercise Price for such securities shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination, and the number of Warrant Shares subject to this Warrant will be proportionately increased or decreased, respectively.

(d)           Adjustments for Dividends in Stock or Other Securities or Property.  If while this Warrant, or any portion hereof, remains outstanding and unexpired, the holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than

6

cash) of the Company that such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 11.

(e)           Certificate as to Adjustments.  Upon the occurrence of each determination, adjustment or readjustment pursuant to this Section 11, the Company at its expense shall promptly compute such determination, adjustment or readjustment in accordance with the terms hereof and furnish to each Holder of this Warrant a certificate setting forth such determination, adjustment or readjustment and showing in detail the facts upon which such determination, adjustment or readjustment is based.  The Company shall, upon the written request, at any time, of any such Holder, furnish or cause to be furnished to such Holder a like certificate setting forth:  (i) such determinations, adjustments and readjustments and number of Warrant Shares for which this Warrant is then exercisable; (ii) the Exercise Price at the time in effect; and (iii) the number of shares and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant.

(f)           No Impairment.  The Company will not, by any voluntary action or inaction, avoid or seek to avoid the observance or performance of any of the terms of this Warrant to be observed or performed by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 11 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Warrant against impairment.

12.           Miscellaneous.

(a)           Remedies.  The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

(b)           Weekends and Holidays.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

(c)           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to it conflict of laws principles.

(d)           Headings.  The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

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 (e)           Nouns and Pronouns.  All nouns and pronouns used herein shall be deemed to refer to the masculine, feminine or neuter, as the identity of the person or persons to whom reference is made herein may require.

(f)           Notices.  Except as otherwise provided herein, any notice provided for in this Warrant shall be in writing and shall be either personally delivered, sent by reputable overnight courier service (charges prepaid) or sent by facsimile transmission (confirmed by the facsimile operator) to the Company and the Holder at the addresses set forth below, or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.  Notices shall be deemed to have been given hereunder when delivered personally, one day after deposit with a reputable overnight courier service and when sent by facsimile transmission (confirmed by the facsimile operator).

If to the Company:

Aperion Biologics, Inc.

3727 Buchanan

San Francisco, CA 94123

Attention:  President

Facsimile Number:  (415) 923-9989

If to the Holder, at its address in the records of the Company

IN WITNESS WHEREOF, APERION BIOLOGICS, INC. has caused this Warrant to be executed by its officers thereunto duly authorized.

APERION BIOLOGICS, INC.

By:__________________________________

Its:

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NOTICE OF EXERCISE

To:           APERION BIOLOGICS, INC.

(1)           The undersigned hereby elects to purchase the number of shares of Common Stock of APERION BIOLOGICS, INC. equal to the number of Warrant Shares (as defined in the attached Warrant), pursuant to the provisions of Section 3(a) of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full.

(2)           In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares of Common Stock to be issued are being acquired solely for the account of the undersigned and not as a nominee for any other party, and for investment, and that the undersigned will not offer, sell or otherwise dispose of any such shares of Common Stock except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any applicable state securities laws.

(3)           Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

______________________________________

(Name)

______________________________________

(Name)

(4)           Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below:

	______________________________________ (Name)
______________________________________ (Date)	______________________________________ (Name)

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FORM OF ASSIGNMENT

FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under the within Warrant as set forth below:

Name of Assignee Address No. of Shares

and does hereby irrevocably constitute and appoint ____________________ Attorney to make such transfer on the books of APERION BIOLOGICS, INC., maintained for the purpose, with full power of substitution in the premises.

The undersigned also represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the shares of stock to be issued upon exercise hereof or conversion thereof are being acquired for investment and that the Assignee will not offer, sell or otherwise dispose of this Warrant or any shares of stock to be issued upon exercise hereof or conversion thereof except under circumstances which will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws.  Further, the Assignee has acknowledged that upon exercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the shares of stock so purchased are being acquired for investment and not with a view toward distribution or resale.

______________________________________ (Date) ______________________________________ (Signature of Holder)  

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EX1A-6 MAT CTRCT

Exhibit 6.1

NOTE:  Portions of this Exhibit are the subject of a Confidential Treatment Request by the Registrant to the Securities and Exchange Commission (the “Commission”).  Such portions have been redacted and are marked with a “[***]” in the place of the redacted language.  The redacted information has been filed separately with the Commission.

LICENSE AGREEMENT

THIS AGREEMENT is made and entered into this 8th day of January, 2009 (“EFFECTIVE DATE”), by and between THE CURATORS OF THE UNIVERSITY OF MISSOURI, a public corporation of the State of Missouri having a principal office at The Office of Technology Management and Industry Relations, 340A Bond Life Sciences Center, Columbia, MO 65211, (“UNIVERSITY”) and CrossCart, Inc. having offices at 3727 Buchanan Street, San Francisco, CA 94123 (“LICENSEE”).
WHEREAS, UNIVERSITY has an ownership interest in PATENT RIGHTS related to LICENSED SUBJECT MATTER all as defined below; and

WHEREAS, LICENSEE is desirous of obtaining a license to practice the LICENSED SUBJECT MATTER; and

WHEREAS, UNIVERSITY is desirous of granting such a license to LICENSEE in accordance with the terms of this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the covenants, representations and warranties contained herein, the Parties agree as follows:

ARTICLE I

DEFINITIONS

1.01         “AFFILIATE” means any business entity more than fifty percent (50%) owned by LICENSEE, any business entity which owns more than fifty percent (50%) of LICENSEE, or any business entity that is more than fifty percent (50%) owned by a business entity that owns more than fifty percent (50%) of LICENSEE.

1.02         “LICENSED FIELD” means each of the following business areas:

(a)           xenotransplantation.

1.03         “LICENSED PRODUCT” means any product or part thereof made using alpha -galactosidase within the scope of one or more claims of PATENT RIGHTS and/or made using a method or process within the LICENSED SUBJECT MATTER.

1.04         “LICENSED SUBJECT MATTER” means inventions and discoveries within the scope of the TECHNOLOGY and PATENT RIGHTS, if any, within LICENSED FIELD.

1.05         “LICENSED TERRITORY” means worldwide.

1.06         “NET SALES” means the amount received for the Sale of LICENSED PRODUCTS, less:

(a)           Customary trade, quantity or cash discounts;

(b)           Amounts repaid or credited by reason of rejection or return;

(c)           Charges for transportation or delivery to be paid by or on behalf of LICENSEE’s customer, to the extent such charges are separately stated on purchase orders, invoices or other documents of Sale; and/or

e)           Samples, demonstration or units provided at no cost for R&D and clinical studies.

1.07         “PATENT RIGHTS” means UNIVERSITY’s aggregate rights in the US patents identified in Appendix A, made a part of this Agreement, ; and continuing applications thereof including divisions, substitutions, continuations, but not including continuations-in-part; and any patents issuing on said continuing applications, including reissues, reexaminations and extensions; and any corresponding foreign applications or patents. All of the foregoing will be automatically incorporated in and added to this Agreement and shall periodically be added to Appendix A attached to this Agreement and made part thereof.

1.08         “Sale”, Sell”, or “Sold” means the, transfer, distribution or disposition of a product for monetary value to a party other than LICENSEE, or SUBLICENSEE as the case may be.

1.09         “SUBLICENSEE” means any person or entity to whom LICENSEE transfers any right or interest granted to LICENSEE by UNIVERSITY under this Agreement.

1.10         “TECHNOLOGY” means the information or discoveries developed prior to the date of this Agreement as disclosed in University of Missouri (UM) Disclosure No. 94UMC039 entitled “Buffer System for Increasing Seroconversion Efficiency” dated 04/26/1994, copy attached hereto as Exhibit A.

ARTICLE II

GRANT

2.01         University hereby grants to LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, a royalty-bearing, exclusive license under LICENSED SUBJECT MATTER to make, have made, use, Sell, have Sold, import, distribute, or otherwise transfer LICENSED PRODUCT within the LICENSED TERRITORY for use within LICENSED FIELD for a term extending to the end of the term of the last to expire patent within the PATENT RIGHTS.

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2.02         The license granted in Section 2.01 above shall include the right to grant sublicenses, but without the right of SUBLICENSEE to grant further sublicenses, subject to UNIVERSITY’s approval, which approval shall not be unreasonably withheld. In determining whether to approve a sublicense, UNIVERSITY will consider, among other things, whether the provisions of the proposed sublicense are consistent with and similar to those required of the LICENSEE by this Agreement. LICENSEE must deliver to UNIVERISTY a true and correct copy of each fully executed sublicense granted by LICENSEE, and any modification or termination thereof, within thirty (30) days after execution, modification, or termination. LICENSEE shall, at such times as UNIVERSITY directs and at UNIVERSITY’s expense, request the inspection of the sublicensee’s records by an independent certified public accountant.

2.03         Notwithstanding the exclusivity of the license granted in Section 2.01 above, UNIVERSITY shall have the right to make and to use the LICENSED SUBJECT MATTER for research and educational purposes only.

2.04         LICENSEE agrees that UNIVERSITY shall have a right to publish the research results related to the LICENSED SUBJECT MATTER in accordance with UNIVERSITY’s general policies and that this Agreement shall not restrict, in any fashion, UNIVERSITY’s right to publish.

ARTICLE III

PAYMENTS

3.01         License Payments:  In consideration of rights granted by UNIVERSITY to LICENSEE under this Agreement, LICENSEE will pay UNIVERSITY the following:

a. A nonrefundable license fee in the amount of fifteen thousand ($15,000.00) dollars, due and payable when this Agreement is fully executed;

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b. A SALES ROYALTY of:

(a) [***]% ([***] percent) on Net Sales of less than $10 million, and

(b) [***]% ([***] percent) on Net Sales greater than $10 million

of LICENSED PRODUCTS made by or for LICENSEE and/or are sold by LICENSEE, in a country in which there is a valid patent within the PATENT RIGHTS and

(c) [***]% ([***] percent) on Net Sales less than $10 million, and

(d) [***]% ([***] percent) on Net Sales greater than $10 million, of any LICENSED PRODUCT made or sold in a country by LICENSEE in which there is no valid patent within the PATENT RIGHTS at the time of such making or Sale,

of LICENSED PRODUCTS made by or for LICENSEE and/or are sold by LICENSEE, in a country in which there is no valid patent within the PATENT RIGHTS.

c. A minimum annual royalty of thirty-five thousand dollars ($35,000) for each year beginning eighteen (18) months from the EFFECTIVE DATE of this Agreement, due and payable within thirty (30) days from the end of each such one year period. Each minimum annual royalty payment shall be creditable against SALES ROYALTY due the UNIVERSITY during Calendar Year of payment. For the avoidance of doubt, such minimum annual royalty shall be considered a payment in advance of royalties yet to accrue.

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*** CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION

d. Upon payment of an amount pursuant to paragraphs 3.01a - d above and paragraph 3.02 below which is cumulatively equal to [***] dollars ($[***]) (Maximum Payment), then the license granted hereunder to LICENSEE will automatically become fully paid-up, royalty free, perpetual and irrevocable. Upon payment by LICENSEE of the Maximum Payment, LICENSEE shall have no further obligation to make any further payments, provide any reports or provide access to any records as described in Article IV.

3.02         Sublicense Payments:  In consideration of rights granted by UNIVERSITY to LICENSEE under this Agreement, LICENSEE further agrees to pay UNIVERSITY the following after the execution of a sublicense hereunder:

Within thirty (30) days from LICENSEE’s receipt, LICENSEE shall pay to UNIVERSITY an additional royalty of [***] percent ([***]%) of all revenue received from any SUBLICENSEE. Such revenue shall include, but not be limited to, all option fees, license issue fees (up-front payments), license maintenance fees, equity, and all royalty payments. Such revenue shall not include research funding provided to LICENSEE by SUBLICENSEE.

3.03         Payment of taxes and/or other governmental charges or fees on SALES ROYALTY payments made to UNIVERSITY shall be the responsibility of UNIVERSITY and shall not be deducted from SALES ROYALTY payments due UNIVERSITY.

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*** CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION

3.04         All payments to the UNIVERSITY pursuant to this Agreement shall be paid in U.S. Dollars.  Conversion of foreign currency to U. S. Dollars shall be made at the conversion rate existing in the United States (as reported in the in the Wall Street Journal) on the last working day of each royalty period. Such payments shall be without deduction of exchange, collection or other charges. Such payments shall be made payable to The Curators of the University of Missouri and shall be mailed to The Office of Technology Management and Industry Relations, 340A Bond Life Sciences Center, Columbia, MO 65211.

3.05         Unless stipulated otherwise, all payments due the University hereunder for SALES ROYALTIES for a calendar quarter, shall be made within forty-five (45) days after the end of such calendar quarter. Late payments shall be subject to an interest charge of one and one half percent (1 1/2%) per month.

ARTICLE IV

REPORTING

4.01         Prior to signing this Agreement, LICENSEE has provided to UNIVERSITY a written plan (hereinafter “COMMERCIALIZATION PLAN”) for LICENSED PRODUCT within the respective LICENSED FIELD and within the respective country or countries of the LICENSED TERRITORY to be introduced by LICENSEE into commercial use.  The COMMERCIALIZATION PLAN includes, 1) planned research and development activities, 2) milestones and evidence of sufficient financial resources to successfully implement the COMMERCIALIZATION PLAN and ensure that LICENSED PRODUCT will be kept reasonably available to the public, and 3) projection of Sales of LICENSED PRODUCTS and

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proposed marketing efforts, Such COMMERCIALIZATION PLAN is incorporated as Appendix B.

4.02         LICENSEE shall report to UNIVERSITY the date of first Sale of LICENSED PRODUCTS in each country of LICENSED TERRITORY within forty-five (45) days of occurrence.

4.03         Within 45 days after each March 31, June 30, September 30, and December 31 following the first Sale of LICENSED PRODUCT, whether Sold by LICENSEE or its SUBLICENSEE, if any exists, LICENSEE shall deliver to UNIVERSITY a true and accurate written report, even if no payments are due UNIVERSITY, giving the particulars of the business conducted by LICENSEE and its SUBLICENSEE(s), during the preceding three (3) calendar months under this Agreement as are pertinent to calculating payments hereunder. This report will include at least:

a. total NET SALES;

b. offsets of minimum annual royalties or other offsets allowed under this Agreement; and

c. total SALES ROYALTY computed and due UNIVERSITY.

LICENSEE shall provide sufficient data for UNIVERSITY to verify the calculations, and any reasonable additional information UNIVERSITY requires to determine LICENSEE’s satisfaction of the reporting requirements hereunder or to clarify the information contained in reports provided by LICENSEE. LICENSEE shall provide such additional information within thirty (30) days of receiving a request from UNIVERSITY. Simultaneously with the delivery of each report, LICENSEE must pay to UNIVERSITY the amount, if any, due for the period of each report.

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4.04         On or before each anniversary of the EFFECTIVE DATE, irrespective of having a first Sale or offer for Sale, LICENSEE must deliver to UNIVERSITY a written annual report as to LICENSEE’s (and any SUBLICENSEE’s) efforts and accomplishments during the preceding year in diligently commercializing LICENSED PRODUCT in the LICENSED FIELD, including but not limited to, progress on research and development, regulatory approvals, manufacturing, sublicensing, marketing and Sales and LICENSEE’s (and, if applicable, SUBLICENSEE’s) commercialization plans for the upcoming year. LICENSEE shall also provide any reasonable additional information UNIVERSITY requires to evaluate LICENSEE’S performance under this Agreement.

4.05         LICENSEE agrees to keep records for a period of three (3) years following termination of this Agreement showing the manufacturing, Sales, use, sublicense, and other disposition of LICENSED PRODUCT, Sold or otherwise disposed of under the license herein granted in sufficient detail to enable the royalties payable hereunder by LICENSEE to be determined. LICENSEE agrees to permit UNIVERSITY or its representatives, at UNIVERSITY’s expense, to periodically examine its books, ledgers, and records during regular business hours for the purpose of and to the extent necessary to verify any report required under this Agreement. If the amounts due to UNIVERSITY are determined to have been underpaid, LICENSEE will pay the amount of such underpayment and interest on the amount of such underpayment, calculated in accordance with Section 3.05 with interest accruing from the date such payment was originally due the UNIVERSITY. Such examination is to be made by UNIVERSITY at the expense of UNIVERSITY, except in the event that the results of the audit reveal a discrepancy in

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UNIVERSITY’S favor of five percent (5%) or more, then the audit fees shall be paid by LICENSEE.

ARTICLE V

DUE DILIGENCE

5.01         LICENSEE shall use reasonable efforts to effect introduction of the LICENSED PRODUCT into the commercial market as soon as practicable, consistent with sound and reasonable business practices and judgment; thereafter, until the expiration of this Agreement, LICENSEE shall keep LICENSED PRODUCT reasonably available to the public.

5.02         UNIVERSITY shall have the right, at UNIVERSITY’s sole discretion, to either terminate or render this license nonexclusive in an individual LICENSED FIELD and/or individual country or countries within the LICENSED TERRITORY if LICENSEE or its SUBLICENSEE:

(a)           Has not within six (6) months of the EFFECTIVE DATE presented to and obtained UNIVERSITY’S approval, which approval shall not be unreasonably withheld, a new COMMERCIALIZATION PLAN for LICENSED PRODUCT within the respective LICENSED FIELD and within the respective country or countries of the LICENSED TERRITORY not previously introduced by LICENSEE into commercial use,

(b)           Has not within five (5) years of EFFECTIVE DATE obtained necessary regulatory approval to put LICENSED PRODUCT into commercial use in the respective LICENSED FIELD and within one or more country or countries of the LICENSED TERRITORY, or

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(c)           Unless prevented by failure to obtain necessary regulatory approvals, has not within two (2) years of the EFFECTIVE DATE put LICENSED PRODUCT into commercial use in the respective LICENSED FIELD and within the respective country or countries of the LICENSED TERRITORY and is not keeping the LICENSED PRODUCT reasonably available to the public.

ARTICLE VI

LIABILITY, WARRANTIES AND INSURANCE

6.01         LICENSEE shall at all times during the term of this Agreement and thereafter, indemnify, defend and hold UNIVERSITY, its current or former Curators, officers, employees and affiliates, harmless from any judgments and against all claims and expenses, including legal expenses and reasonable attorneys’ fees, arising out of the death of or injury to any person or persons or out of any damage to property and against any other claim, proceeding, demand, expense and liability of any kind whatsoever resulting from 1) the development, manufacture, use, or Sale of LICENSED PRODUCT by LICENSEE, its subsidiaries, and SUBLICENSEEs, or 2) from the use by the end users of LICENSED PRODUCT, or 3) arising from any obligation of LICENSEE hereunder. If any such claims or causes of action are made, UNIVERSITY shall be defended by counsel selected by LICENSEE, subject to UNIVERSITY’s approval, which shall not be unreasonably withheld. UNIVERSITY reserves the right to be represented by its own counsel at its own expense.

6.02         At such time as any product, process, or service relating to, or developed pursuant to, this Agreement is being commercially distributed or Sold (other than for the purpose of obtaining regulatory approvals) by LICENSEE, a SUBLICENSEE, or a subsidiary or agent of LICENSEE, LICENSEE shall at its sole cost and expense, procure and maintain comprehensive general

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liability insurance in amounts not less than $1,000,000 per incident and naming the UNIVERSITY, its Curators, trustees, officers, agents, employees and affiliates, as additional insureds. Such commercial general liability insurance shall provide (i) product liability coverage and (ii) broad form contractual liability coverage for LICENSEE’s indemnification under this Agreement. Such insurance will be considered primary as to any other valid and collectible insurance, but only as to acts of the named insured. Any carrier providing coverage shall have a minimum “Best” rating of “A-XII”. The minimum amounts of insurance coverage required shall not be construed to create a limit of LICENSEE’s liability with respect to its indemnification under this Agreement.

LICENSEE shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during (i) the period that any product, process, or service, relating to, or developed pursuant to this Agreement is being commercially distributed or Sold by LICENSEE, or its SUBLICENSEE, subsidiary or agent of LICENSEE and (ii) a reasonable period after the period referred to in (i) above which in no event shall be less than 10 (ten) years.

LICENSEE shall provide UNIVERSITY with written evidence of the insurance requirements of this Section 6.02 within thirty (30) days after execution of this Agreement. LICENSEE shall provide UNIVERSITY with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if LICENSEE does not obtain replacement insurance providing comparable coverage within such fifteen (15) day period, UNIVERSITY shall have the right to terminate this Agreement effective at the end of such fifteen (15) day period without notice or any additional waiting periods. It is agreed that the insurance required is required in the public interest and the UNIVERSITY does not assume any liability for acts of

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LICENSEE, their officers, agents, and employees or of a SUBLICENSEE, their officers, agents, and employees, in connection with the granting of this Agreement.

LICENSEE shall require in any sublicense in which LICENSEE grants to a third party the right to make, have made, use, import, offer to Sell or Sell any LICENSED PRODUCT, provisions that provide the UNIVERSITY, its Curators, trustees, officers, agents, employees and affiliates, comparable protections as those provided the UNIVERSITY in this Article VI.

6.03         University warrants that patents listed in Appendix A are current and have had all United States Patent and Trademark Office (USPTO) maintenance fees paid as of the EFFECTIVE DATE.

6.04         EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS LICENSE, UNIVERSITY MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING, OR THAT THE MANUFACTURE, USE, OR SALE OF THE LICENSED SUBJECT MATTER WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS.

ARTICLE VII

DOMESTIC AND FOREIGN PATENT FILING AND MAINTENANCE

7.01         LICENSEE shall reimburse UNIVERSITY for all out-of-pocket expenses UNIVERSITY has incurred for the preparation, filing, prosecution and maintenance of PATENT RIGHTS (hereinafter “PATENT EXPENSES”) and for all such future PATENT EXPENSES as a separate payment apart from any royalties or other revenues owed UNIVERSITY. To enable payment of

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such expenses, UNIVERSITY shall report to LICENSEE any and all payments already made as of the date of this agreement (listed in Exhibit B) for the preparation, filing, prosecution and maintenance of PATENT RIGHTS related to those listed in Appendix A and on a monthly basis, the current unpaid balance of such expenses, in such detail, so that LICENSEE can verify the accuracy of such report, including copies of invoices from counsel related to the same, such reimbursement shall be made within thirty (30) days of the end of each Calendar Year at a rate of $50,000 per Calendar Year until the balance of such expenses is zero. The initial reimbursement by LICENSEE for Patent Rights and Expenses incurred by the University shall be due June 30, 2010. Late payment of invoices of PATENT EXPENSES received by LICENSEE from UNIVERSITY shall be subject to interest charges of one and one-half percent (1 1/2%) per month. A payment due under this Section 7.01 is considered late if payment is not received by UNIVERSITY within thirty (30) days from the end of each calendar year.

7.02         UNIVERSITY shall be solely responsible for the preparation, filing, prosecution and maintenance of any and all U. S. and foreign patent applications and patents included in PATENT RIGHTS mutually agreed upon by UNIVERSITY and LICENSEE. UNIVERSITY shall first consult with LICENSEE as to the preparation, filing, prosecution, and maintenance of such patent applications and patents and shall furnish to LICENSEE copies of documents relevant to any such preparation, filing, prosecution or maintenance.

7.03         If LICENSEE elects not to continue paying future PATENT EXPENSES, for a patent within the PATENT RIGHTS, LICENSEE shall notify UNIVERSITY immediately in writing, and, provided UNIVERSITY provides written notice to LICENSEE more than ninety (90) days before any deadline for such patent(s), such notice by LICENSEE shall be not less than sixty (60) days prior to any deadline which should or must be met in order to maintain the patent or

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patent application in force (a “deadline” includes a date by which an action must be taken to avoid payment of a late fee). Such notice by LICENSEE shall constitute a waiver of and relinquishment of all of LICENSEE’s rights under this Agreement related to such patent or patent application.

ARTICLE VIII

INFRINGEMENT

8.01         LICENSEE, at its expense, shall have the right to enforce PATENT RIGHTS against infringement by third parties and it is entitled to retain the recovery from such enforcement, including any cash or other consideration received by way of judgment, settlement or compromise (hereinafter RECOVERY). However, any RECOVERY, other than enhanced damages arising from intentional infringement, or punative damages, less direct out-of-pocket legal expenses incurred by LICENSEE for such enforcement (“NET RECOVERY”), shall be considered lost Sales and LICENSEE shall pay UNIVERSITY an amount equal to the applicable percentage of NET RECOVERY as specified in Section 3.01b above, in lieu of any SALES ROYALTY which might otherwise be due as a result of said NET RECOVERY.. Before LICENSEE commences a formal legal proceeding with respect to any infringement of PATENT RIGHTS, LICENSEE shall consult with UNIVERSITY regarding the potential effects such legal proceeding may have on the public interest. LICENSEE shall keep UNIVERSITY informed on all actions taken by LICENSEE in its enforcement against an infringer and shall furnish to UNIVERSITY copies of all documents related thereto.

8.02         In any infringement suit or dispute, UNIVERSITY agrees to cooperate reasonably with LICENSEE. At the request and expense of LICENSEE, the UNIVERSITY will permit access to all relevant personnel, records, papers, information, samples, specimens, etc., during regular

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business hours on UNIVERSITY premises as reasonably necessary for LICENSEE to vigorously conduct such proceeding. In the event that travel is required, LICENSEE agrees to reimburse UNIVERSITY for such travel.

8.03         In the event that LICENSEE elects not to exercise its right to prosecute an infringement of the PATENT RIGHTS pursuant to the above paragraphs, UNIVERSITY may do so at its own expense, controlling such action and retaining all RECOVERY therefrom. LICENSEE agrees to cooperate reasonably with UNIVERSITY in any such infringement suit or dispute.

ARTICLE IX

CONFIDENTIALITY

9.01         LICENSEE agrees that all patent prosecution information and all other information contained in documents marked “confidential” received from UNIVERSITY shall (i) be received in strict confidence, (ii) be used only for the purposes of this Agreement, and (iii) not be disclosed by LICENSEE, its employees, agents, successors or assigns, without the prior written consent of UNIVERSITY, except to the extent that the LICENSEE can establish competent written proof that such information:

a. was in the public domain at the time of disclosure;

b. later became part of the public domain through no act or omission of LICENSEE, its employees, agents, successors or assigns;

c. was lawfully disclosed to LICENSEE by a third party having the right to disclose it;

d. was already known by LICENSEE at the time of disclosure;

e. was independently developed by LICENSEE; or

f. is required by law or regulation to be disclosed.

9.02         LICENSEE’s obligation of confidence hereunder shall be fulfilled by using at least the same degree of care with UNIVERSITY’s confidential information as LICENSEE uses to

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protect its own confidential information, but not less than reasonable care. This obligation shall exist during the term of this Agreement and for a period of five (5) years thereafter.

9.03         UNIVERSITY agrees that all reports received from LICENSEE pursuant to this Agreement and all other information contained in documents marked “confidential” received from LICENSEE shall (i) be received in strict confidence, (ii) be used only for the purposes of this Agreement, and (iii) not be disclosed by UNIVERSITY, its employees, agents, successors or assigns, without the prior written consent of LICENSEE, except to the extent that the UNIVERSITY can establish competent written proof that such information:

a. was in the public domain at the time of disclosure;

b. later became part of the public domain through no act or omission of UNIVERSITY, its employees, agents, successors or assigns;

c. was lawfully disclosed to UNIVERSITY by a third party having the right to disclose it;

d. was already known by UNIVERSITY at the time of disclosure;

e. was independently developed by UNIVERSITY; or

f. is required by law or regulation to be disclosed.

9.04         UNIVERSITY’s obligation of confidence hereunder shall be fulfilled by using at least the same degree of care with LICENSEE’s confidential information as UNIVERSITY uses to protect its own confidential information, but not less than reasonable care. This obligation shall exist during the term of this Agreement and for a period of five (5) years thereafter.

ARTICLE X

TERM AND TERMINATION

10.01         This Agreement shall become effective upon the EFFECTIVE DATE and, unless sooner terminated in accordance with any of the provisions herein, shall remain in full force in the LICENSED TERRITORY during the life of the last to expire patents under PATENT RIGHTS.

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10.02         In the event that either Party defaults or breaches any of the provisions of this Agreement, the other Party shall have the right to terminate this Agreement by giving written notice to the defaulting Party; provided, however, that if the said defaulting Party cures said default within sixty (60) days after said notice shall have been given, this Agreement shall continue in full force and effect. The failure on the part of either of the Parties hereto to exercise or enforce any right conferred upon it hereunder shall not be deemed to be a waiver of any such right nor operate to bar the exercise or enforcement thereof at any time or times thereafter.

10.03         Upon termination of this Agreement, LICENSEE’s interest in sublicenses granted by it under this Agreement shall at UNIVERSITY’s option, terminate or be assigned to UNIVERSITY. LICENSEE shall make provision for the UNIVERSITY’s rights under the preceding sentence to be included in all sublicenses granted by it under this Agreement.

10.04         In the event that LICENSEE shall become insolvent, shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it, this Agreement shall automatically terminate.

10.05         Termination of this Agreement for any reason shall not release either Party from any obligation theretofore accrued. Articles III, VI, and IX and Sections 4.03, 4.05, 10.03, 11.07, and 11.13 shall survive the termination of this Agreement.

ARTICLE XI

GENERAL

11.01         Prior to the issuance of patents under PATENT RIGHTS, LICENSEE agrees to mark LICENSED PRODUCTS (or their containers or labels) Sold by LICENSEE, or a SUBLICENSEE, under the license granted in this Agreement with the numbers of the patent(s) within the PATENT RIGHTS covering the LICENSED PRODUCTS.

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11.02         LICENSEE agrees to comply with all applicable federal, state, and local laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations among other things, prohibit or require a license for the export of certain types of technical data to certain specified countries. LICENSEE hereby agrees and gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by LICENSEE, its AFFILIATE, or SUBLICENSEES, and that it will defend and hold UNIVERSITY harmless in the event of any legal action of any nature occasioned by such violation.

11.03         LICENSEE agrees not to identify UNIVERSITY in any promotional advertising or other promotional materials to be disseminated to the public or any portion thereof or to use the name of any UNIVERSITY faculty member, employee, or student or any trademark, service mark, trade name, or symbol of UNIVERSITY, without UNIVERSITY’S prior written consent.

11.04         Except in connection with the sale of substantially all of LICENSEE’s assets to a third party, this Agreement may not be assigned by LICENSEE without the prior written consent of UNIVERSITY, which will not be unreasonably withheld.

11.05         If LICENSEE desires UNIVERSITY participation in performing research and development activities directed towards PATENT RIGHTS, negotiation for such assistance shall be separate and apart from this Agreement, and shall be performed according to UNIVERSITY’S procedures related to research grant and contract activities.

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11.06         In the event LICENSEE wishes to engage the inventors as consultants, such an arrangement shall be separate and apart from this Agreement, but shall be in keeping with UNIVERSITY’S policy on consulting and ownership of intellectual property developed by UNIVERSITY employees.

11.07         Any payment, notice, or other communication given under this Agreement (except for correspondence relating to patent filing, prosecution and/or maintenance matters under Article VII herein) shall be in writing and shall be deemed delivered when sent by certified first class mail, registered mail, or overnight courier, or by facsimile, provided that a copy of such facsimile is promptly sent by certified first class mail, registered or overnight courier, addressed to the Parties as follows (or at such other addresses as the Parties may notify each other in writing):

If to UNIVERSITY:

The Office of Technology Management & Industry Relations

340 A, Bond Life Sciences Center

Columbia, MO  65211

If to LICENSEE:

Chief Executive Officer
CrossCart, Inc.

3727 Buchanan Street

San Francisco, CA  94123

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11.08         This Agreement constitutes the entire and only agreement between the Parties for LICENSED SUBJECT MATTER and all other prior negotiations, representations, agreements, and understandings are superseded hereby. No agreements altering or supplementing the terms hereof may be made except by a written document signed by both Parties.

11.09         None of the terms, covenants, and conditions of this Agreement can be waived except by the written consent of the Party waiving compliance.

11.10         A failure by one of the Parties to this Agreement to assert its rights for or upon any breach or default of this Agreement shall not be deemed a waiver of such rights nor shall any such waiver be implied from acceptance of any payment. No such failure or waiver in writing by any one of the Parties hereto with respect to any rights, shall extend to or affect any subsequent breach or impair any right consequent thereon.

11.11         If any sentence, paragraph, clause or combination of the same is found by a court of competent jurisdiction to be in violation of any applicable law or regulation, or is unenforceable or void for any reason whatsoever, such sentence, paragraph, clause or combinations of the same shall be severed from the Agreement and the remainder of the Agreement shall remain binding upon the Parties.

11.12         The headings of the paragraphs of this Agreement are inserted for convenience only and shall not constitute a part hereof.

11.13         This Agreement shall be construed, interpreted, and applied in accordance with the laws of the State of Missouri. Any action to enforce the provisions of the Agreement shall be brought in a court of competent jurisdiction and proper venue in the State of Missouri.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in duplicate originals by their duly authorized officers or representatives.

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THE CURATORS OF THE	LICENSEE:  CrossCart, Inc.
UNIVERSITY OF MISSOURI
BY:      /s/ Christopher M. Fender	BY:       /s/ Daniel R. Lee
NAME:     Christopher M. Fender	NAME:     Daniel R. Lee
TITLE:      Interim Director, OTMIR	TITLE:      CEO
DATE       1/8/09	DATE       11/23/09

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Appendix A

(list of technologies licensed)

US Patent No.: 5,606,042 - Glycine a.-D-galactosidases

US Patent No.: 5,633,130 – Buffer system for seroconversion efficiency

US Patent No.: 5,731,426 - Phaseolus a-D-galactosidases

US Patent No.: 6,184,017 – Glycine and phaseolus a-D-galactosidases

US Patent No.: 6,630,339 - Glycine and phaseolus a-D-galactosidases

Appendix B

Commercialization Plan

EXHIBIT A

University of Missouri (UM) Disclosure No. 94UMC039 entitled “Buffer System for Increasing Seroconversion Efficiency” dated 04/26/1994

EXHIBIT B

(as of 1/8/2009)

Patent Expenses for US Patents under UM Disclosure No.

94UMC039

Patent Number	Total Expense
5,633,130 (08/303,156) Attny Ref #00014 (P-311)	$18,689.29
6,184,017 (08/973,297) Attny Ref #00077	$10,446.58
6,630,339 (08/303,156) Attny Ref #00127	$11,255.84
5,731,426 (08/654,246) Attny Ref #00052	$6,489.01
5,606,042 (08/488,961) Attny Ref #00022 (P-319)	$12,515.50
	$59,396.22

EX1A-6 MAT CTRCT

Exhibit 6.2

December 23, 2013

Kevin Stone, MD

The Stone Clinic

3727 Buchanan

San Francisco CA 94123

Dear Dr. Stone:

In connection with your service and a prior Convertible Promissory Note investment in CrossCart, Inc., a California corporation (“CrossCart”), you were issued common stock options and warrants to purchase Series C Preferred Stock of Aperion Biologics, Inc. (as successor in interest to CrossCart) with the following specifications:

Warrant Issue Date	# of Series C Shares	Exercise Price / Share	Warrant Expiration Date
7/25/2007	10,625	$            0.48	7/25/2012
8/14/2007	6,250	$            0.48	8/14/2012

Option Issue Date	# of Common Stock Shares	Exercise Price / Share	Option Expiration Date
2/11/2003	100,000	$            0.45	2/11/2013

Please let this letter serve as an acknowledgment of our discussion and agreement that the expiration dates of the aforementioned common stock options and warrants will be extended five (5) years as follows:

Warrant Issue Date	# of Series C Shares	Exercise Price / Share	Modified Warrant Expiration Date
7/25/2007	10,625	$            0.48	7/25/2017
8/14/2007	6,250	$            0.48	8/14/2017

Option Issue Date	# of Common Stock Shares	Exercise Price / Share	Modified Option Expiration Date
2/11/2003	100,000	$            0.45	2/11/2018

If the foregoing meets with your approval, please sign below to acknowledge your acceptance and approval of this change. Please keep a copy of this correspondence as evidence of the modification.

Best regards,	Accepted and agreed:
Daniel R. Lee	Kevin R. Stone, MD

CEO

EX1A-6 MAT CTRCT

Exhibit 6.3

Aperion Management Retention Plan

1.	Immediate new options ($0.016/share):
	a.	Lance	100,000
	b.	Richard	100,000
	c.	Nilda	45,000 (due to discrepancy with options from 4/15/10)
	d.	Adam Eldridge	82,500
	e.	All vesting to be over 12 months with accelerated vesting upon an external financing (which satisfies the parameters below in Section 2(a)) or Liquidation Event (as defined in the Certificate of Incorporation).

2.	Management bonus plans
	a.	Upon an external financing (beyond CrossCart LLC which is not a Liquidation Event) of at least $2 million funding or signing of a license/distribution deal with at least $2 million of upfront payments or milestones achievable within 12 months of signing
		i.	D. Lee	$35,000 plus Salary Delta Amount
		ii.	D.  Cocke	$15,000 plus Salary Delta Amount
		iii.	L.  Johnson	$25,000 plus Salary Delta Amount
		iv.	R. Robinson	$25,000 plus Salary Delta Amount
		v.	N. Agron	$10,000 plus Salary Delta Amount
	b.	Upon a Liquidation Event which results in proceeds to the holders of convertible promissory notes and stockholders of at least $15 million and less than $25 million
		i.	D. Lee	$300,000 plus Salary Delta Amount
		ii.	D.  Cocke	$150,000 plus Salary Delta Amount
		iii.	L.  Johnson	$250,000 plus Salary Delta Amount
		iv.	R. Robinson	$250,000 plus Salary Delta Amount
		v.	N. Agron	$50,000 plus Salary Delta Amount
		vi.	DA/AH	$100,000 plus Salary Delta Amount

c.	Upon a liquidation event  which results in proceeds to the holders of convertible promissory notes and stockholders equal to or greater than $25 million and less than $100 million
	i.	D. Lee		$750,000 plus Salary Delta Amount
	ii.	D.  Cocke		$300,000 plus Salary Delta Amount
	iii.	L.  Johnson		$400,000 plus Salary Delta Amount
	iv.	R. Robinson		$400,000 plus Salary Delta Amount
	v.	N. Agron		$100,000 plus Salary Delta Amount
	vi.	DA/AH		$250,000 plus Salary Delta Amount
d.	Upon a liquidation event which results in proceeds to the holders of convertible promissory notes and stockholders equal to or greater than $100 million
	i.	4% of the proceeds split as follows:
		1.	D. Lee	30% plus Salary Delta Amount
		2.	D.  Cocke	15% plus Salary Delta Amount
		3.	L. Johnson	20% plus Salary Delta Amount
		4.	R. Robinson	20% plus Salary Delta Amount
		5.	N. Agron	5% plus Salary Delta Amount
		6.	DA/AH	10% plus Salary Delta Amount
	ii.	The bonus (excluding the Salary Delta Amount) will be capped at a total of $10 million or an exit value of $250 million.  The Salary Delta Amount will be paid in addition to the bonus amount of $10 million if the bonus is at or above the maximum amount.
e.	The Salary Delta Amount is calculated as the difference between the salary received by such person after July 1, 2013 and the amount such person would have received if his or her salary in effect during June 2013 had continued from July 1, 2013 until the foregoing bonus is earned.  For the avoidance of doubt, if an external financing occurs that triggers a bonus under Section 2(a) above and then upon a Liquidation Event that triggers a bonus under Section 2(b), (c) and (d) shall not include a Salary Delta Amount.  Salary return to levels pre July 1, 2013 levels post external financing or liquidation event.

f. A participant in the management bonus plans must continue as an employee or consultant through the bonus event in order to earn a bonus under the foregoing provisions.

EX1A-6 MAT CTRCT

Exhibit 6.4

Aperion Amended and Restated Management Retention Plan

1.	Immediate new options ($0.016/share):
a.	Lance	100,000
b.	Richard	100,000
c.	Nilda	45,000 (due to discrepancy with options from 4/15/10)
d.	Adam Eldridge	82,500
e.	All vesting to be over 12 months with accelerated vesting upon an external financing (which satisfies the parameters below in Section 2(a)) or Liquidation Event (as defined in the Certificate of Incorporation).
2.	Management bonus plans
a.	Upon an external financing (beyond CrossCart LLC which is not a Liquidation Event) of at least $2 million funding or signing of a license/distribution deal with at least $2 million of upfront payments or milestones achievable within 12 months of signing
i.	D. Lee	$35,000 plus Salary Delta Amount
ii.	D.  Cocke	$15,000 plus Salary Delta Amount
iii.	L.  Johnson	$25,000 plus Salary Delta Amount

iv.	R. Robinson	$25,000 plus Salary Delta Amount
v.	N. Agron	$10,000 plus Salary Delta Amount
	In the event that the Aperion completes a public offering of shares of its common stock (the “Public Offering”) pursuant to Regulation A of the Securities Act of 1933, as amended, the bonus amount for each participant list above shall be paid by the issuance of such number of shares of common stock equaling to the bonus amount based on the public offering price set forth in the final offering circular related to the Public Offering.
b.	Upon a Liquidation Event which results in proceeds to the holders of convertible promissory notes and stockholders of at least $15 million and less than $25 million
i.	D. Lee	$300,000 plus Salary Delta Amount
ii.	D.  Cocke	$150,000 plus Salary Delta Amount
iii.	L.  Johnson	$250,000 plus Salary Delta Amount
iv.	R. Robinson	$250,000 plus Salary Delta Amount
v.	N. Agron	$50,000 plus Salary Delta Amount
vi.	DA/AH	$100,000 plus Salary Delta Amount
c.	Upon a liquidation event  which results in proceeds to the holders of convertible promissory notes and stockholders equal to or greater than $25 million and less than $100 million
i.	D. Lee	$750,000 plus Salary Delta Amount
ii.	D.  Cocke	$300,000 plus Salary Delta Amount
iii.	L.  Johnson	$400,000 plus Salary Delta Amount
iv.	R. Robinson	$400,000 plus Salary Delta Amount
v.	N. Agron	$100,000 plus Salary Delta Amount
vi.	DA/AH	$250,000 plus Salary Delta Amount
d.	Upon a liquidation event which results in proceeds to the holders of convertible promissory notes and stockholders equal to or greater than $100 million
i.	4% of the proceeds split as follows:
	1.      D. Lee	30% plus Salary Delta Amount
	2.      D.  Cocke	15% plus Salary Delta Amount
	3.      L. Johnson	20% plus Salary Delta Amount
	4.      R. Robinson	20% plus Salary Delta Amount
	5.      N. Agron	5% plus Salary Delta Amount
	6.      DA/AH	10% plus Salary Delta Amount
ii.	The bonus (excluding the Salary Delta Amount) will be capped at a total of $10 million or an exit value of $250 million.  The Salary Delta Amount will be paid in addition to the bonus amount of $10 million if the bonus is at or above the maximum amount.
e.	The Salary Delta Amount is calculated as the difference between the salary received by such person after July 1, 2013 and the amount such person would have received if his or her salary in effect during June 2013 had continued from July 1, 2013 until the foregoing bonus is earned.  For the avoidance of doubt, if an external financing occurs that triggers a bonus under Section 2(a) above and then upon a Liquidation Event that triggers

	a bonus under Section 2(b), (c) and (d) shall not include a Salary Delta Amount.  Salary return to levels pre July 1, 2013 levels post external financing or liquidation event.
f.	A participant in the management bonus plans must continue as an employee or consultant through the bonus event in order to earn a bonus under the foregoing provisions.

EX1A-6 MAT CTRCT

Exhibit 6.5

STANDARD INDUSTRIAL/COMMERCIAL MULTI-LESSEE LEASE — MODIFIED NET AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1.           Basic Provisions (“Basic Provisions”).

1.1           Parties:  This Lease (“Lease”) dated for reference purposes only, December 17, 2008, is made by and between TITAN MAC FUND I, LP, a Texas limited partnership or its assigns (“Lessor”) and CrossCart, Inc., a Delaware corporation (“Lessee”), (collectively the “Parties,” or individually a “Party”).

1.2(a)      Premises: That certain portion of the Building, including all improvements therein or to be provided by Lessor under the terms of this Lease, located on the real property described on Exhibit “A” commonly known by the street address of 11969 Starcrest, San Antonio, Texas 78247, as outlined on Exhibit “B” attached hereto consisting of 4,000 square feet (“Premises”). The “Building” is that certain building containing the Premises and generally described as:

The building known as Blossom Park containing 137,858± square feet of which the Premises are a part located at 11945 Starcrest, San Antonio, Texas 78247.

In addition to Lessee’s rights to use and occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as hereinafter specified, but shall not have any rights to the roof, exterior walls or utility raceways of the Building or to any other buildings in the Industrial Center. The Premises, the Building, the Common Areas, the land upon which they are located, along with all other buildings and improvements thereon, are herein collectively referred to as the “Industrial Center.” (Also see Paragraph 2.)

1.2(b)      Parking: [number to be inserted prior to execution of lease] unreserved vehicle parking spaces per code (“Unreserved Parking Spaces”); and no reserved vehicle parking spaces (“Reserved Parking Spaces”). (Also see Paragraph 2.6.)

1.3           Term:           Forty (40) months (“Original Term”) commencing March 1, 2009, (“Commencement Date”) and ending June 30, 2012 (“Expiration Date”). (Also see Paragraph 3.)

1.4           Early Possession Date: December ___, 2008 (“Early Possession Date”). (Also see Paragraphs 3.2 and 3.3.)

1.5           Base Rent:

Term	Amt Per Square Foot	Annual Rent	Monthly Rent
Original Term:
Months 1-4	0	0	0
Months 5-16	$6.00	$24,000.00	$2,000.00
Months 17-28	$6.18	$24,720.00	$2,060.00
Months 29-40	$6.37	$25,480.00	$2,123.33

First Option Term	$6.56	$26,240.00	$2,186.67
Second Option Term	FMV	FMV	FMV
Third Option Term	FMV	FMV	FMV

As used herein, the term “FMV” shall mean the then prevailing fair market rentals for comparable premises in comparable industrial centers in the greater San Antonio, Texas area, as initially determined by Lessor, subject to the reasonable approval of Lessee. Lessor and Lessee shall use good faith in determining and approving the amount of such rentals efforts to come to an agreement on the amount of such rentals; provided, however, in the event Lessor and Lessee are unable to agree upon the amount of such rentals within sixty (60) days prior to the expiration of the Option Term then in effect, Lessee may either (i) revoke its exercise of its option to extend the next succeeding Option Term, whereupon this Lease shall expire upon the termination of the Option Term then in effect or (ii) require the FMV of the Premises for the next succeeding Option Term to be determined by a third party agreed upon by representatives of each of Lessor and Lessee, respectively.

(“Base Rent”), payable on the 1st day of each month commencing July 1, 2009 (Also see Paragraph 4.)

1.6(a)      Base Rent Paid Upon Execution: $2,000.00 as Base Rent as an advance payment of the first payment of Base Rent due hereunder.

1.6(b)      Lessee’s Share of Common Area Operating Expenses: Two and 90/100 percent (2.9%) (“Lessee’s Share”) as determined by 4,000 pro rata square footage of the Premises as compared to the total square footage of the Building as set forth in Paragraph 1.2(a). The monthly amount to be paid by Lessee as Lessee’s Share of Common Area Operating Expenses shall initially be $743.33.

1.7           Security Deposit. [Intentionally Omitted]

1.8           Permitted Use: Lessee shall be entitled to use and occupy the Premises for conducting a start-up company which will operate a bio-tech manufacturing lab and uses associated therewith. Lessee shall use the Premises for no other purposes whatsoever without Lessor’s prior written consent, not to be unreasonably withheld. (“Permitted Use”). (Also see Paragraph 6.)

1.9           Insuring Party. Lessor is the “Insuring Party.” (Also see Paragraph 8.)

1.10(a)    Real Estate Brokers. The following real estate broker(s) (collectively, the “Brokers”) and brokerage relationships exist in this transaction and are consented to by the Parties:

Lessee is represented by NAI REOC Partners (Arnie Jacob). Lessor is represented by NAI REOC Partners (Reagan Hicks). Lessor will pay any commissions or other amounts due to NAI REOC Partners (Reagan Hicks) and to NAI REOC Partners (Arnie Jacob) as a result of this

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transaction pursuant to terms of separate agreements. Except for the aforementioned representations of Lessor and Lessee, respectively, Lessor and Lessee each warrant to the other Party that no other finders or brokers have been involved with the introduction of Lessor and Lessee and/or the lease of the Premises and no other party is entitled to any commission as a result of the transaction contemplated herein resulting from the actions of such Party. In the event of a breach of the foregoing warranties, the breaching Party agrees to save, defend, indemnify and hold harmless the non-breaching Party from and against any claims, losses, damages, liabilities and expenses, including but not limited to reasonable attorneys’ fees. The obligations of this paragraph shall survive the termination of this Lease.

1.11           Guarantor. [Intentionally Omitted]

1.12           Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of Exhibits “A” through “C,” all of which constitute a part of this Lease.

2.           Premises, Parking and Common Areas.

2.1           Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein, any statement of square footage set forth in this Lease, or that may have been used in calculating rental and/or Common Area Operating Expenses, is an approximation which Lessor and Lessee agree is reasonable and the rental and Lessee’s Share (as defined in Paragraph 1.6(b)) based thereon is not subject to revision whether or not the actual square footage is more or less.

2.2           Condition. Lessor shall deliver the Premises to Lessee clean and free of debris on the Early Possession Date and warrants to Lessee that the existing plumbing, electrical systems, fire sprinkler system, lighting, air conditioning and heating systems and loading doors, if any, in the Premises, other than those constructed by Lessee, shall be in good operating condition on the Early Possession Date. If a non-compliance with said warranty exists as of the Early Possession Date Lessor shall, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify same at Lessor’s expense. If Lessee does not give Lessor written notice of a non-compliance with this warranty within ninety (90) days after the Early Possession Date, correction of that non-compliance shall be the obligation of Lessee at Lessee’s sole cost and expense.

2.3           Compliance with Covenants, Restrictions and Building Code. Lessor warrants that any improvements (other than those constructed by Lessee or at Lessee’s direction) on or in the Premises which have been constructed or installed by Lessor or with Lessor’s consent or at Lessor’s direction shall comply with all applicable covenants or restrictions of record and applicable building codes, regulations and ordinances as the same are in effect on the Commencement Date. Lessor further warrants to Lessee that Lessor has no knowledge of any claim having been made by any governmental agency that a violation or violations of applicable building codes, regulations, or ordinances exist with regard to the Premises as of the Commencement Date. Said warranties shall not apply to any Alterations or Utility Installations (defined in Paragraph 7.3(b)) made or to be made by Lessee. If the Premises do not comply with said warranties, Lessor shall, except as otherwise provided in this Lease, promptly after receipt

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of written notice from Lessee given within six (6) months following the Commencement Date and setting forth with specificity the nature and extent of such non-compliance, take such action, at Lessor’s expense, as may be reasonable or appropriate to rectify the non-compliance. Lessor makes no warranty that the Permitted Use in Paragraph 1.8 is permitted for the Premises under Applicable Laws (as defined in Paragraph 2.4); provided, however Lessor represents and warrants to Lessee that (a) the use of the Premises for the Permitted Use in Paragraph 1.8 is not prohibited by any other lease affecting any area within either the Building or the Industrial Center, (b) the Permitted Use does not violate any applicable covenants or restrictions of record as of the Early Possession Date, (c) Lessor will neither amend or nor permit the amendment of such covenants and restrictions in any manner which would prevent Lessee from operating its business in the Premises for the Permitted Use.

2.4           Acceptance of Premises. Lessee hereby acknowledges: (a) that it has been advised by the Broker(s) and Lessor to satisfy itself with respect to the condition of the Premises (including but not limited to the electrical and fire sprinkler systems, security, environmental aspects, seismic and earthquake requirements, and compliance with the Americans with Disabilities Act and applicable zoning, municipal, county, state and federal laws, ordinances and regulations and any covenants or restrictions of record (collectively, “Applicable Laws”) and the present and future suitability of the Premises for Lessee’s intended use; (b) that Lessee has made such investigation as it deems necessary with reference to such matters, is satisfied with reference thereto, and assumes all responsibility thereto as the same relate to Lessee’s occupancy of the Premises and/or the terms of this Lease; and (c) that neither Lessor, nor any of Lessor’s agents, has made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease.

2.5           Lessee as Prior Owner/Occupant. [Intentionally Omitted]

2.6           Vehicle Parking. Lessee shall be entitled to use the number of Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than said number. Said parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called “Permitted Size Vehicles.” Vehicles other than Permitted Size Vehicles shall be parked and loaded or unloaded as directed by Lessor in the Rules and Regulations (as defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)

(a)           Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee’s employees, suppliers, shippers or contractors to be loaded, unloaded, or parked in areas other than those designated by Lessor for such activities.

(b)           If Lessee permits or allows any of the prohibited activities described in this Paragraph 2.6, then Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to the owner of the vehicle.

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(c)           Lessor shall at the Early Possession Date and at all time during the Original Term and each Option Term (as hereinafter defined and, together with the Original Term, the “Term”), provide the parking facilities required by Applicable Law.

2.7           Common Areas - Definition. The term “Common Areas” is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Industrial Center and interior utility raceways within the Premises that are provided and designated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and other lessees of the Industrial Center and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways and landscaped areas.

2.8           Common Areas - Lessee’s Rights. Lessor hereby grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the Term, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Industrial Center. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or Lessor’s designated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur then Lessor shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.

2.9           Common Areas - Rules and Regulations. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable Rules and Regulations with respect thereto in accordance with Paragraph 40. Lessee agrees to abide by and conform to all such Rules and Regulations, and to cause its employees, suppliers, shippers and contractors to so abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said rules and regulations by other lessees of the Industrial Center; provided, however, Lessor shall use commercially reasonable efforts to cause other lessees of the Industrial Center and their respective employees, suppliers, shippers, customers, contractors and invitees to comply with all such Rules and Regulations.

2.10           Common Areas - Changes. Lessor shall have the right, in Lessor’s sole discretion, from time to time:

(a)           Subject to the provisions of Paragraph 2.6, to make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways;

(b)           To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available;

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(c)           To designate other land contiguous to but outside the boundaries of the Industrial Center to be a part of the Common Areas;

(d)           To add additional buildings and improvements to the Common Areas;

(e)           To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Industrial Center, or any portion thereof; and

(f)           To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Industrial Center as Lessor may, in the exercise of sound business judgment, deem to be appropriate.

3.           Term.

3.1           Term. The Commencement Date, Expiration Date and Original Term are as specified in Paragraph 1.3.

3.2           Early Possession. If an Early Possession Date is specified in Paragraph 1.4 and if Lessee totally or partially occupies the Premises after the Early Possession Date but prior to the Commencement Date, the obligation to pay Base Rent and Lessee’s Share of Common Area Operating Expenses shall be abated for the period of such early occupancy. All other terms of this Lease, however, (including but not limited to Lessee’s obligation to carry the insurance required by Paragraph 8.2(a)) shall be in effect during such period. Any such early possession shall not affect nor advance the Expiration Date of the Original Term.

3.3           Delay in Possession. If for any reason Lessor cannot deliver possession of the Premises to Lessee by the Early Possession Date, if one is specified in Paragraph 1.4, or if no Early Possession Date is specified, by the Commencement Date, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease, or the obligations of Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not, except as otherwise provided herein, be obligated to pay rent or perform any other obligation of Lessee under the terms of this Lease until Lessor delivers possession of the Premises to Lessee. If possession of the Premises is not delivered to Lessee within thirty (30) days after the Early Possession Date, Lessee may, at its option, by notice in writing to Lessor within thirty (30) days after the end of said thirty (30) day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder, provided further, however, that if such written notice of Lessee is not received by Lessor within said thirty (30) day period, Lessee’s right to cancel this Lease hereunder shall terminate and be of no further force or effect. Except as may be otherwise provided, and regardless of when the Original Term actually commences, if possession is not tendered to Lessee when required by this Lease and Lessee does not terminate this Lease, as aforesaid, the period free of the obligation to pay Base Rent, if any, that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to the period during which the Lessee would have otherwise enjoyed under the terms hereof.

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4.           Rent.

4.1           Base Rent. Lessee shall pay Base Rent and other rent or charges, as the same may be adjusted from time to time, to Lessor in lawful money of the United States, without offset or deduction on or before the Commencement Date. Base Rent and all other rent and charges for any period during the Term which is for less than one full month shall be prorated based upon the actual number of days of the month involved. Payment of Base Rent, Lessee’s Share of Common Area Operating Expenses and other charges shall be made to Lessor at its address stated herein or to such other persons or at such other addresses as Lessor may from time to time designate in writing to Lessee.

4.2           Common Area Operating Expenses. Lessee shall pay to Lessor during the Term, in addition to the Base Rent, Lessee’s Share (as specified in Paragraph 1.6(b)) of all Common Area Operating Expenses, as hereinafter defined, during each calendar year of the Term, in accordance with the following provisions:

(a)           “Common Area Operating Expenses” are defined, for purposes of this Lease, as all costs incurred by Lessor relating to the ownership and operation of the Industrial Center, including, but not limited to, the following:

(i)           The operation, repair and maintenance, in neat, clean, good order and condition, of the following:

(aa)           The Common Areas, including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators and roof.

(bb)           Exterior signs and any Lessee directories.

(cc)           Fire detection and sprinkler systems.

(ii)           The cost of water, gas, electricity and telephone to service the Common Areas.

(iii)           Trash disposal, property management and security services and the costs of any environmental inspections.

(iv)           Reserves set aside for maintenance and repair of Common Areas.

(v)           Real Property Taxes (as defined in Paragraph 10.2) to be paid by Lessor for the Building and the Common Areas under Paragraph 10 hereof.

(vi)           The cost of the premiums or the insurance policies maintained by Lessor under Paragraph 8 hereof.

(vii)           Any deductible portion of an insured loss concerning the Building or the Common Areas up to $5,000.00 per occurrence.

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(viii)           Management fees, not to exceed four percent (4%) of Base Rent.

(ix)           Any other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area Operating Expense.

(b)           Any Common Area Operating Expenses and Real Property Taxes that are specifically attributable to the Building or to any other building in the Industrial Center or to the operation, repair and maintenance thereof, shall be allocated entirely to the Building or to such other building. However, any Common Area Operating Expenses and Real Property Taxes that are not specifically attributable to the Building or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Industrial Center.

(c)           The inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or facilities or to provide those services unless the Industrial Center already has the same, Lessor already provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of them.

(d)           Lessee’s Share of Common Area Operating Expenses shall be payable by Lessee within thirty (30) days after a reasonably detailed statement of actual expenses is presented to Lessee by Lessor. At Lessor’s option, however, an amount may be estimated by Lessor from time to time of Lessee’s Share of annual Common Area Operating Expenses and the same shall be payable monthly or quarterly, as Lessor shall designate, during each 12-month period of the Term, on the same day as the Base Rent is due hereunder. Lessor shall deliver to Lessee within sixty (60) days after the expiration of each calendar year a reasonably detailed statement showing Lessee’s Share of the actual Common Area Operating Expenses incurred during the preceding year. If Lessee’s payments under this Paragraph 4.2(d) during said preceding year exceed Lessee’s Share as indicated on said statement, Lessee shall be credited the amount of such overpayment against Lessee’s Share of Common Area Operating Expenses next becoming due; provided, however, if and to the extent applicable, Lessor shall refund to Lessee any balance due Lessee upon the expiration of this Lease whether at the end of the Original Term or the end of the Option Term then in effect, as the case may be. If Lessee’s payments under this Paragraph 4.2(d) during said preceding year were less than Lessee’s Share as indicated on said statement, Lessee shall pay to Lessor the amount of the deficiency within thirty (30) days after delivery by Lessor to Lessee of said statement.

5.           Security Deposit. [Intentionally Omitted]

6.           Use.

6.1           Permitted Use.

(a)           Lessee shall use and occupy the Premises only for the Permitted Use set forth in Paragraph 1.8, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates waste or a nuisance, or that disturbs owners and/or occupants of, or causes damage to the Premises or neighboring premises or properties.

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(b)           Lessor hereby agrees to not unreasonably withhold or delay its written consent to any written request by Lessee, Lessee’s assignees or sublessees, and by prospective assignees and sublessees of Lessee, its assignees and sublessees, for a modification of said Permitted Use, so long as the same will not impair the structural integrity of the improvements on the Premises or in the Building or the mechanical or electrical systems therein, does not conflict with exclusive uses granted other lessees under leases presently in full force and effect, is not significantly more burdensome to the Premises or the Building and the improvements thereon, and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within five (5) business days after such request give a written notification of same, which notice shall include an explanation of Lessor’s reasonable objections to the change in use.

6.2           Hazardous Substances.

(a)           Reportable Uses Require Consent.  The term “Hazardous Substance” as used in this Lease shall mean any product, substance, chemical, material or waste whose presence, nature, quantity and or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, could reasonably be expected to be: (i) injurious to the public health, safety or welfare, the environment, or the Premises; (ii) regulated or monitored by any governmental authority; or (iii) a basis for liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substance shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products or by-products thereof. Lessee shall not engage in any activity in or about the Premises which constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances without the express prior written consent of Lessor and compliance in a timely manner (at Lessee’s sole cost and expense) with all Applicable Requirements (as defined in Paragraph 6.3). “Reportable Use” shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and (iii) the presence in, on or about the Premises of a Hazardous Substance with respect to which any Applicable Laws require that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may, without Lessor’s prior consent, but upon notice to Lessor and in compliance with all Applicable Requirements, use any ordinary and customary materials reasonably required to be used by Lessee in the normal course of the Permitted Use, so long as such use is not a Reportable Use and could not reasonably be expected to (1) expose the Premises or neighboring properties to any meaningful risk of contamination or damage or (2) expose Lessor to any liability therefor. In addition, Lessor may (but without any obligation to do so) condition its consent to any Reportable Use of any Hazardous Substance by Lessee upon Lessee’s giving Lessor such additional assurances as Lessor, in its reasonable discretion, deems reasonably necessary to protect itself, the public, the Premises and the environment against damage, contamination or injury and/or liability therefor, including but not limited to the installation (and, at Lessor’s option, removal on or before Lease expiration or earlier termination) of reasonably necessary protective modifications to the Premises (such as concrete encasements) and/or the deposit of an additional Security Deposit under Paragraph 5 hereof.

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(b)           Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Reportable Use of a Hazardous Substance has occurred, Lessee shall immediately give Lessor written notice thereof, together with a copy of any statement, report, notice, registration, application, permit, business plan, license, claim, action, or proceeding given to, or received from, any governmental authority or private party concerning the presence, spill, release, discharge of, or exposure to, such Hazardous Substance including but not limited to all such documents as may be involved in such Reportable Use involving the Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under or about the Premises (including, without limitation, through the plumbing or sanitary sewer system).

(c)           Indemnification. Lessee shall indemnify, protect, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, and the Premises, harmless from and against any and all damages, liabilities, judgments, costs, claims, liens, expenses, penalties, loss of permits and reasonable attorneys’ and consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee or by anyone under Lessee’s control. Lessee’s obligations under this Paragraph 6.2(c) shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation (including reasonable consultants’ and reasonable attorneys’ fees and testing), removal, remediation, restoration and/or abatement thereof, or of any contamination therein involved, and shall survive the expiration or earlier termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement. Lessor shall indemnify, protect, defend and hold Lessee, its agents, employees, officers and directors harmless from and against any and all damages, liabilities, judgments, costs, claims, liens, expenses, penalties, loss of permits and reasonable attorneys’ and consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises Lessor or anyone under Lessor’s control. Lessor’s obligations under this Paragraph 6.2(c) shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation (including reasonable consultants’ and reasonable attorneys’ fees and testing), removal, remediation, restoration and/or abatement thereof, or of any contamination therein involved, and shall survive the expiration or earlier termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessor from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessee in writing at the time of such agreement.

6.3           Lessee’s Compliance with Requirements. Lessee shall, at Lessee’s sole cost and expense, fully, diligently and in a timely manner, comply with all “Applicable Requirements” which term is used in this Lease to mean all laws, rules, regulations, ordinances, directives, covenants, easements and restrictions of record, permits, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or consultants, relating in any manner to the Premises (including but not limited to matters pertaining to (i) industrial hygiene, (ii) environmental conditions on, in, under or about the Premises, including soil and groundwater conditions, and (iii) the use, generation, manufacture, production, installation, maintenance, removal, transportation, storage, spill, or release of any Hazardous Substance), now in effect or which may hereafter come into effect. Lessee shall, within five (5) business days after receipt of Lessor’s written request, provide Lessor with copies

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of all documents and information, including but not limited to permits, registrations, manifests, applications, reports and certificates, evidencing Lessee’s compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving failure by Lessee or the Premises to comply with any Applicable Requirements.

6.4           Inspection; Compliance with Law. Lessor, Lessor’s agents, employees, contractors and designated representatives, and the holders of any mortgages, deeds of trust or ground leases on the Premises (“Lenders”) shall have the right to enter the Premises at any time in the case of an emergency, and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease and all Applicable Requirements (as defined in Paragraph 6.3), and Lessor shall be entitled to employ experts and/or consultants in connection therewith to advise Lessor with respect to Lessee’s activities, including but not limited to Lessee’s installation, operation, use, monitoring, maintenance, or removal of any Hazardous Substance on or from the Premises. The costs and expenses of any such inspections shall be paid by the party requesting same, unless a Breach of this Lease by Lessee or a violation of Applicable Requirements or a contamination, caused or materially contributed to by Lessee, is found to exist or to be imminent, or unless the inspection is requested or ordered by a governmental authority as the result of any such existing or imminent violation or contamination. In such case, Lessee shall upon request reimburse Lessor or Lessor’s Lender, as the case may be, for the reasonable costs and expenses of such inspections.

7.           Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations.

7.1           Lessee’s Obligations.

(a)           Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor’s Obligations) 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole cost and expense and at all times, keep the Premises and every part thereof in good order, condition and repair (whether or not such portion of the Premises requiring repair, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior use, the elements or the age of such portion of the Premises), including, without limiting the generality of the foregoing, all equipment or facilities specifically serving the Premises, such as plumbing, heating, air conditioning, ventilating, electrical, lighting facilities, boilers, fired or unfired pressure vessels, fire hose connections if within the Premises, fixtures, interior walls, interior surfaces of exterior walls, ceilings), floors, windows, doors, plate glass, and skylights, but excluding any items which are the responsibility of Lessor pursuant to Paragraph 7.2 below. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices. Lessee’s obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Notwithstanding any provisions of this Lease to the contrary, Lessee’s obligations for maintenance and repairs pursuant to this Paragraph 7.1 shall be at all time subject to and exclude reasonable wear and tear.

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(b)           Lessee shall, at Lessee’s sole cost and expense, procure and maintain a contract, with copies to Lessor, in customary form and substance for and with a contractor specializing and experienced in the inspection, maintenance and service of the heating, air conditioning and ventilation system for the Premises. However, Lessor reserves the right, upon notice to Lessee, to procure and maintain the contract for the heating, air conditioning and ventilating systems, and if Lessor so elects, Lessee shall reimburse Lessor, upon demand, for the cost thereof. Notwithstanding the foregoing, all costs incurred for such services shall be reasonable and customery for the work procured.

(c)           If Lessee fails to perform Lessee’s obligations under this Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days’ prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee’s behalf, and put the Premises in good order, condition and repair; in accordance with Paragraph 13.2 below.

7.2           Lessor’s Obligations.

(a)           Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler and/or standpipe and hose (if located in the Common Areas) or other automatic fire extinguishing system including fire alarm and/or smoke detection systems and equipment fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises.

(b)           Notwithstanding any provision of this Lease to the contrary, Lessor hereby represents and warrants to Lessee that the heating and air conditioning system in the Premises shall be in good working order as of the Early Possession Date. Furthermore, Lessor agrees that any and all repairs and maintenance (including without limitation, any and all maintenance agreements required hereunder) shall be performed by Lessor, at Lessor’s sole cost and expense, for the period commencing on the Early Possession Date and continuing through the expiration of the twelfth (12th) full calendar month after the Commencement Date.

7.3           Lessee’s Construction Work, Utility Installations, Trade Fixtures, Alterations.

(a)           Lessee’s Construction Work. All construction work done by Lessee within the Premises shall be performed at Lessee’s sole cost and expense and in a good and workmanlike manner, in compliance with the provisions listed in Exhibit “C”, in compliance with all governmental requirements, in accordance with plans and specifications submitted to and approved by the Lessor, and conducted in such manner as to cause a minimum of

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interference with other construction in progress and with the transaction of business in the Building.

(b)           Definitions; Consent Required. The term “Utility Installations” is used in this Lease to refer to all air lines, power panels, electrical distribution, security, fire protection systems, communications systems, lighting fixtures, heating, ventilating and air conditioning equipment, plumbing, and fencing in, on or about the Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment which can be removed without doing material damage to the Premises and includes, without limitation, any clean room(s) installed by Lessee. The term “Alterations” shall mean any modification of the improvements on the Premises which are provided by Lessor under the terms of this Lease other than Utility Installations or Trade Fixtures. “Lessee-Owned Alterations and/or Utility Installations” are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause to be made any Alterations or Utility Installations in, on, under or about the Premises without Lessor’s prior written consent. Lessee may, however, make non-structural Utility Installations to the interior of the Premises (excluding the roof) without Lessor’s consent but upon notice to Lessor, so long as they are not visible from the outside of the Premises, do not involve puncturing, relocating or removing the roof or any existing walls, or changing or interfering with the fire sprinkler or fire detection systems and the cumulative cost thereof during the Term does not exceed $5,000.00.

(c)           Consent. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. All consents given by Lessor, whether by virtue of Paragraph 7.3(b) or by subsequent specific consent, shall be deemed conditioned upon: (i) Lessee’s acquiring all applicable permits required by governmental authorities; (ii) the furnishing of copies of such permits together with a copy of the plans and specifications for the Alteration or Utility Installation to Lessor prior to commencement of the work thereon, and (iii) the compliance by Lessee with all conditions of said permits in a prompt and expeditious manner. Any Alterations or Utility Installations by Lessee during the Term shall be done in a good and workmanlike manner, with good and sufficient materials, and be in compliance with all Applicable Requirements. Lessee shall promptly upon completion thereof furnish Lessor with as-built plans and specifications therefor. Lessor may, (but without obligation to do so) condition its consent to any requested Alteration or Utility Installation that costs $10,000.00 or more upon Lessee’s providing Lessor with a lien and completion bond in an amount equal to one and one-half times the estimated cost of such Alteration or Utility Installation. In the event Lessor fails to notify Lessee within fifteen (15) days of Lessor’s receipt of Lessee’s request for such consent that Lessor shall not consent to any request of Lessee under this Paragraph 7, Lessor shall be deemed to have consented to such request.

(d)           Lien Protection. Lessee shall pay when due all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic’s or materialmen’s lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days’ notice prior to the commencement of any work in, on, or about the Premises, and Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law. If Lessee shall, in good faith, contest the validity of any such lien, claim or demand, then Lessee shall, at

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its sole expense, defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises. If Lessor shall require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to one and one-half times the amount of such contested lien claim or demand, indemnifying Lessor against liability for the same, as required by law for the holding of the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor’s attorneys’ fees and costs in participating in such action if Lessor shall decide it is to its best interest to do so.

7.4           Ownership, Removal, Surrender and Possession.

(a)           Ownership. All Alterations and Utility Installations made to the Premises by Lessee shall be the property of and owned by Lessee, but considered a part of the Premises. All Lessee-Owned Alterations and Utility Installations shall, at the expiration or earlier termination of this Lease, become the property of Lessor and remain upon the Premises and be surrendered with the Premises by Lessee.

(b)           Removal. [Intentionally Omitted]

(c)           Surrender/Restoration. Subject to the provisions of Paragraphs 9 and 14, Lessee shall surrender the Premises by the end of the last day of the Term or any earlier termination date, clean and free of debris and in good operating order, condition and state of repair, ordinary wear and tear excepted. Ordinary wear and tear shall not include any damage or deterioration that could reasonably be expected to have been prevented by commercially reasonable maintenance practice or by Lessee performing all of its obligations under this Lease. Except as otherwise agreed or specified herein, the Premises, as surrendered, shall include the Alterations and Utility Installations. The obligation of Lessee shall include the repair of any damage occasioned by the installation, maintenance or removal of Lessee’s Trade Fixtures, furnishings, equipment, alarm systems and Lessee-Owned Alterations and Utility Installations, as well as the removal of any storage tank installed by or for Lessee, and the removal, replacement, or remediation of any soil, material or ground water contaminated by Lessee, all as may then be required by Applicable Requirements and/or good practice. Lessee’s Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee subject to its obligation to repair and restore the Premises per this Lease.

8.           Insurance; Indemnity.

8.1           Payment of Premiums. The cost of the premiums for the insurance policies maintained by Lessor under this Paragraph 8 shall be a Common Area Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods commencing prior to, or extending beyond, the Term shall be prorated to coincide with the corresponding Commencement Date or expiration of the Term.

8.2           Liability Insurance.

(a)           Carried by Lessee. Lessee shall obtain and keep in force during the Term a Commercial General Liability policy of insurance protecting Lessee, Lessor and any Lender(s) whose names have been provided to Lessee in writing (as additional insureds) against claims for

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bodily injury, personal injury and property damage based upon, involving or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $2,000,000 per occurrence with an “Additional Insured-Managers or Lessors of Premises” endorsement and contain the “Amendment of the Pollution Exclusion” endorsement for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an “Insured Contract” for the performance of Lessee’s indemnity obligations under this Lease. The limits of said insurance required by this Lease or as carried by Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance to be carried by Lessee shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only.

(b)           Carried by Lessor. Lessor shall also maintain liability insurance described in Paragraph 8.2(a) above, in addition to and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein.

8.3           Property Insurance-Building, Improvements and Rental Value.

(a)           Building and Improvements. Lessor shall obtain and keep in force during the Term a policy or policies in the name of Lessor, with loss payable to Lessor and to any Lender(s), insuring against loss or damage to the Premises. Such insurance shall be for full replacement cost, as the same shall exist from time to time, or the amount required by any Lender(s), but in no event more than the commercially reasonable and available insurable value thereof if, by reason of the unique nature or age of the improvements involved such latter amount is less than full replacement cost. Lessee-Owned Alterations and Utility Installations, Trade Fixtures and Lessee’s personal property shall be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and commercially appropriate, Lessor’s policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for any additional costs resulting from debris removal and reasonable amounts of coverage for the enforcement of any ordinance or law regulating the reconstruction or replacement of any undamaged sections of the Building required to be demolished or removed by reason of the enforcement of any building, zoning, safety or land use laws as the result of a covered loss, but not including plate glass insurance. Said policy or policies shall also contain an agreed valuation provision in lieu of any co-insurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located.

(b)           Rental Value. Lessor shall also obtain and keep in force during the Term a policy or policies in the name of Lessor, with loss payable to Lessor and any Lender(s), insuring the loss of the full rental and other charges payable by all lessees of the Building to Lessor for one year (including all Real Property Taxes, insurance costs, all Common Area Operating Expenses and any scheduled rental increases). Said insurance may provide that in the event the Lease is terminated by reason of an insured loss the period of indemnity for such

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coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for one full year’s loss of rental revenues from the date of any such loss. Said insurance shall contain an agreed valuation provision in lieu of any co-insurance clause, and the amount of coverage shall be adjusted annually to reflect the projected rental income, Real Property Taxes, insurance premium costs and other expenses, if any, otherwise payable, for the next 12-month period. Common Area Operating Expenses shall include any deductible amount up to $5,000.00 per occurrence in the event of such loss.

(c)           Adjacent Premises. Lessee shall pay for any increase in the premiums for the property insurance of the Building and for the Common Areas or other buildings in the Industrial Center if said increase is solely caused by Lessee’s acts, omissions, use or occupancy of the Premises.

(d)           Improvements. Since Lessor is the Insuring Party, Lessor shall not be required to insure Lessee-Owned Alterations and Utility Installations unless the item in question has become the property of Lessor under the terms of this Lease.

8.4           Lessee’s Property Insurance. Subject to the requirements of Paragraph 8.5, Lessee at its cost shall either by separate policy or, at Lessor’s option by endorsement to a policy already carried, maintain insurance coverage on all of Lessee’s personal property, Trade Fixtures and Lessee-Owned Alterations and Utility Installations including, without limitation, offices, light fixtures, alarm systems, telephone systems, and fire protection systems in, on, or about the Premises similar in coverage to that carried by Lessor as the Insuring Party under Paragraph 8.3(a). Such insurance shall be no less than eighty percent (80%) of the full replacement cost coverage with a deductible not to exceed $5,000 per occurrence.  Subject to the provisions of Paragraphs 9 and 14, the proceeds from any such insurance shall be used by Lessee for the replacement of personal property and the restoration of Trade Fixtures and Lessee-Owned Alterations and Utility Installations. Upon request from Lessor, Lessee shall provide Lessor with written evidence that such insurance is in force.

8.5           Insurance Policies. Insurance required hereunder shall be in companies duly licensed to transact business in the state where the Premises are located, and maintaining during the policy term a General Policyholders Rating of at least B+, V, or such other rating as may be required by a Lender as set forth in the most current issue of “Best’s Insurance Guide.” Lessee shall not do or permit to be done within the Premises anything which shall solely cause the insurance policies referred to in this Paragraph 8 to become invalid. Lessee shall cause to be delivered to Lessor, within seven (7) days after the earlier of the Early Possession Date or the Commencement Date, certificates evidencing the existence and amounts of, the insurance required under Paragraph 8.2(a) and 8.4. No such policy shall be cancelable or subject to modification except after thirty (30) days’ prior written notice to Lessor. Lessee shall at least thirty (30) days prior to the expiration of such policies, furnish Lessor with evidence of renewals or insurance binders evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand.

8.6           Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages (whether in contract or in tort) against the other, for loss or damage to their respective

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property(ies) arising out of or incident to the perils which are to be insured against under the terms of any insurance policies referred to herein, regardless of cause or origin, and negligence which could be covered by commercial general liability insurance or the broadest available form of “all risks” or “special form” property insurance (utilizing the then prevailing “ISO Special Form” property insurance form) with no exclusions permitted thereunder with respect to vandalism, malicious mischief or sprinkler leakage and including an agreed amount endorsement for not less than one hundred percent (100%) of the full replacement cost of the covered items and property. The Parties agree that no insurer shall hold any rights of subrogation against such other Party. The Parties agree that their respective insurance policies shall provide that no insurer shall hold any rights of subrogation against such other Party

8.7           Indemnity. Except for Lessor’s negligence and/or breach of express warranties, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, costs, liens, judgments, penalties, loss of permits, attorneys’ and consultants’ fees, expenses and/or liabilities solely arising out of, involving, or in connection with, the occupancy of the Premises by Lessee, the conduct of Lessee’s business, any act, omission or neglect of Lessee, its agents, contractors, employees or invitees, and out of any Breach by Lessee in the performance in a timely manner of any obligation on Lessee’s part to be performed under this Lease. The foregoing shall include, but not be limited to, the defense or pursuit of any claim or any action or proceeding involved therein, and whether or not (in the case of claims made against Lessor) litigated and/or reduced to judgment. In case any action or proceeding be brought against Lessor by reason of any of the foregoing matters Lessee upon notice from Lessor shall defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be so indemnified.

8.8           Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures or from any other cause, whether said injury or damage results from conditions arising upon the Premises or upon other portions of the Building of which the Premises are a part, from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is accessible or not. Lessor shall not be liable for any damages arising from any act or neglect of any other lessee of Lessor nor from the failure by Lessor to enforce the provisions of any other lease in the Industrial Center. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to Lessee’s business or for any loss of income or profit therefrom.

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9.           Damage or Destruction.

9.1           Definitions.

(a)           “Premises Partial Damage” shall mean damage or destruction to the Premises, other than Lessee-Owned Alterations and Utility Installations, the repair cost of which damage or destruction is less than thirty-three percent (33%) of the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises (excluding Lessee-Owned Alterations and Utility Installations and Trade Fixtures) immediately prior to such damage or destruction.

(b)           “Premises Total Destruction” shall mean damage or destruction to the Premises, other than Lessee-Owned Alterations and Utility Installations, the repair cost of which damage or destruction is thirty-three percent (33%) or more of the then Replacement Cost of the Premises (excluding Lessee-Owned Alterations and Utility Installations and Trade Fixtures) immediately prior to such damage or destruction. In addition, damage or destruction to the Building, other than Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any lessees of the Building, the cost of which damage or destruction is thirty-three percent (33%) or more of the then Replacement Cost (excluding Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any lessees of the Building) of the Building shall, at the option of Lessor, be deemed to be Premises Total Destruction.

(c)           “Insured Loss” shall mean damage or destruction to the Premises, other than Lessee-Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a) irrespective of any deductible amounts or coverage limits involved.

(d)           “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of applicable building codes, ordinances or laws, and without deduction for depreciation.

(e)           “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the Premises.

9.2           Premises Partial Damage. If Premises Partial Damage occurs, whether or not an Insured Loss, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or Lessee-Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect. In the event, however, that there is a shortage of insurance proceeds and such shortage is due to the fact that, by reason of the unique nature of the improvements in the Premises, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within ten (10) days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said ten (10) day period, Lessor shall complete them

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as soon as reasonably possible and this Lease shall remain in full force and effect. If Lessor does not receive such funds or assurance within said period, Lessor may nevertheless elect by written notice to Lessee within ten (10) days thereafter to make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect. If Lessor does not receive such funds or assurance within such ten (10) day period, and if Lessor does not so elect to restore and repair, then this Lease shall terminate sixty (60) days following the occurrence of the damage or destruction. Unless otherwise agreed, Lessee shall in no event have any right to reimbursement from Lessor for any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.

9.3           [Intentionally Omitted]

9.4           Total Destruction. Notwithstanding any other provision hereof, if Premises Total Destruction occurs (including any destruction required by any authorized public authority), this Lease shall terminate sixty (60) days following the date of such Premises Total Destruction, whether or not the damage or destruction is an Insured Loss or was caused by a negligent or willful act of Lessee.

9.5           Damage Near End of Term. If at any time during the last six (6) months of the Original Term or the Option Term then in effect, as the case may be, there is damage for which the cost to repair exceeds two (2) months’ Base Rent, whether or not an Insured Loss, Lessor may, at Lessor’s option, terminate this Lease effective sixty (60) days following the date of occurrence of such damage by giving written notice to Lessee of Lessor’s election to do so within thirty (30) days after the date of occurrence of such damage. Provided, however, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by (a) exercising such option, and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is ten (10) days after Lessee’s receipt of Lessor’s written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s expense repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate as of the date set forth in the first sentence of this Paragraph 9.5.

9.6           Abatement of Rent; Lessee’s Remedies.

(a)           In the event of (i) Premises Partial Damage or (ii) Hazardous Substance Condition for which Lessee is not legally responsible, the Base Rent, Lessee’s Share of Common Area Operating Expenses and other charges, if any, payable by Lessee hereunder for the period during which such damage or condition, its repair, remediation or restoration continues, shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but not in excess of proceeds from insurance required to be carried under paragraph 8.3(b). Except for

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abatement of Base Rent, Lessee’s Share of Common Area Operating Expenses and other charges, if any, as aforesaid, all other obligations of Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim against Lessor for any damage suffered by reason of any such damage, destruction, repair, remediation or restoration.

(b)           If Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not commence, in a substantial and meaningful way, the repair or restoration of the Premises within sixty (60) days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice of Lessee’s election to terminate this Lease on a date not less than thirty (30) days following the giving of such notice. If Lessee gives such notice to Lessor and such Lenders and such repair or restoration is not commenced within thirty (30) days after receipt of such notice, this Lease shall terminate as of the date specified in said notice. If Lessor or a Lender commences the repair or restoration of the Premises within thirty (30) days after the receipt of such notice and proceeds with diligence to complete such repair or restoration within a reasonable time thereafter, this Lease shall continue in full force and effect. “Commence” as used in this Paragraph 9.6 shall mean the beginning of the actual work on the Premises.

9.7           Hazardous Substance Conditions. If a Hazardous Substance Condition occurs, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof required by Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor’s rights under Paragraph 6.2(c) and Paragraph 13), Lessor may at Lessor’s option either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to investigate and remediate such condition exceeds twelve (12) times the then monthly Base Rent or $100,000 whichever is greater, give written notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition of Lessor’s desire to terminate this Lease as of the date sixty (60) days following the date of such notice. In the event Lessor elects to give such notice of Lessor’s intention to terminate this Lease, Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee’s commitment to pay for the excess costs of (a) investigation and remediation of such Hazardous Substance Condition to the extent required by Applicable Requirements, over (b) an amount equal to twelve (12) times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with the funds required of Lessee or satisfactory assurance thereof within thirty (30) days following said commitment by Lessee. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such investigation and remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time period specified above, this Lease shall terminate as of the date specified in Lessor’s notice of termination.

9.8           Termination - Advance Payments. Upon termination of this Lease pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment made by Lessee to Lessor and so much of Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor under the terms of this Lease.

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9.9           Waiver of Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises and the Building with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent it is inconsistent herewith.

10.           Real Property Taxes.

10.1           Payment of Taxes. Lessor shall pay the Real Property Taxes, as defined in Paragraph 10.2, applicable to the Industrial Center, and except as otherwise provided in Paragraph 10.3, any such amounts shall be included in the calculation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2.

10.2           Real Property Tax Definition. As used herein, the term “Real Property Taxes” shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental tax, assessment bond or bonds including, without limitation, bonds to pay for infrastructure, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed upon the Industrial Center or any portion thereof by any authority having the direct or indirect power to tax, including any county, city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage, or other improvement district thereof, levied against any legal or equitable interest of Lessor in the Industrial Center or any portion thereof, Lessor’s right to rent or other income therefrom, and/or Lessor’s business of leasing the Premises. The term “Real Property Taxes” shall also include any tax, fee, levy, assessment or charge, or any increase therein, imposed by reason of events occurring, or changes in Applicable Law taking effect, during the Term, including but not limited to a change in the ownership of the Industrial Center or in the improvements thereon, the execution of this Lease, or any modification, amendment or transfer thereof, and whether or not contemplated by the Parties. In calculating Real Property Taxes for any calendar year, the Real Property Taxes for any real estate tax year shall be included in the calculation of Real Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have in common. In no event shall “Real Property Taxes” include penalties or interest imposed for late payment of any Real Property Taxes.

10.3           Additional Improvements. Common Area Operating Expenses shall not include Real Property Taxes specified in the tax assessor’s records and work sheets as being caused by additional improvements placed upon the Industrial Center by other lessees or by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to Lessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee’s request.

10.4           Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned in the assessor’s work sheets or such other information as may be reasonably available. Lessor’s reasonable determination thereof, in good faith, shall be conclusive.

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10.5           Lessee’s Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee-Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises or stored within the Industrial Center. When possible, Lessee shall cause its Lessee-Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee’s said property shall be assessed with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to Lessee’s property within thirty (30) days after receipt of a written statement setting forth the taxes applicable to Lessee’s property.

11.           Utilities. Lessee shall pay directly for all utilities and services supplied to the Premises, including but not limited to electricity, telephone, security, gas and Cleaning of the Premises, together with any taxes thereon. If any such utilities or services are not separately metered to the Premises or separately billed to the Premises, Lessee shall pay to Lessor a reasonable proportion to be determined by Lessor of all such charges jointly metered or billed with other premises in the Building, in the manner and within the time periods set forth in Paragraph 4.2(d).

12.           Assignment and Subletting.

12.1           Lessor’s Consent Required.

(a)           Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or otherwise transfer or encumber (collectively, ‘‘assign”) or sublet all or any part of Lessee’s interest in this Lease or in the Premises without Lessor’s prior written consent given under and subject to the terms of Paragraph 36.

(b)           A change in the control of Lessee shall constitute an assignment requiring Lessor’s consent. The transfer, on a cumulative basis, of fifty percent (50%) or more of the voting control of Lessee to persons other than the current majority shareholder shall constitute a change in control for this purpose.

(c)           The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or will result in a reduction of the Net Worth of Lessee, as hereinafter defined, by an amount equal to or greater than twenty-five percent (25%) of such Net Worth of Lessee as it was represented to Lessor at the time of full execution and delivery of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, at whichever time said Net Worth of Lessee was or is greater, shall be considered an assignment of this Lease by Lessee to which Lessor may reasonably withhold its consent. “Net Worth of Lessee” for purposes of this Lease shall be the net worth of Lessee established under generally accepted accounting principles consistently applied.

(d)           An assignment or subletting of Lessee’s interest in this Lease without Lessor’s specific prior written consent shall, at Lessor’s option, be a Breach curable after notice per Paragraph 13.1, or a non-curable Breach without the necessity of any notice and grace

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period. If Lessor elects to treat such unconsented to assignment or subletting as a non-curable Breach, Lessor shall have the right to either: (i) terminate this Lease or (ii) upon thirty (30) days’ written notice (“Lessor’s Notice”), increase the monthly Base Rent for the Premises to the greater of the then fair market rental value of the Premises, as reasonably determined by Lessor, or one hundred ten percent (110%) of the Base Rent then in effect. Pending determination of the new fair market rental value, if disputed by Lessee, Lessee shall pay the amount set forth in Lessor’s Notice, with any overpayment credited against the next installment(s) of Base Rent coming due, and any underpayment for the period retroactively to the effective date of the adjustment being due and payable immediately upon the determination thereof. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to the then fair market value as reasonably determined by Lessor (without the Lease being considered an encumbrance or any deduction for depreciation or obsolescence, and considering the Premises at its highest and best use and in good condition) or one hundred ten percent (110%) of the price previously in effect, (ii) any index oriented rental or price adjustment formulas contained in this Lease shall be adjusted to require that the base index be determined with reference to the index applicable to the time of such adjustment, and (iii) any fixed rental adjustments scheduled during the remainder of the Term shall be increased in the same ratio as the new rental bears to the Base Rent in effect immediately prior to the adjustment specified in Lessor’s Notice.

(e)           Lessee’s remedy for any breach of this Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.

(f)           Notwithstanding any provision of this Lease to the contrary, Lessee shall have the right to assign or hypothecate this Lease, or sublet the Premises or any portion thereof, without the consent or approval of Lessor to any party to which all or substantially all of the shares of stock or assets of Lessee have been sold, transferred or otherwise acquired pursuant to any (i) merger, (ii) consolidation, (iii) public offering, (iv) reorganization, (iv) dissolution, (v) sale of stock, membership or partnership interests or (vi) sale of assets, provided that such assignee, transferee, surviving entity or successor-in-interest to Lessee shall have a net worth equal to or greater than that of Lessee.

12.2           Terms and Conditions Applicable to Assignment and Subletting.

(a)           Regardless of Lessor’s consent, any assignment or subletting for which Lessor’s approval or consent is required shall not (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, nor (iii) alter the primary liability of Lessee for the payment of Base Rent and other sums due Lessor hereunder or for the performance of any other obligations to be performed by Lessee under this Lease.

(b)           Lessor may accept any rent or performance of Lessee’s obligations from any person other than Lessee pending approval or disapproval of an assignment, if and to the extent Lessor’s approval or consent to such assignment is required hereunder. Neither a delay in the approval or disapproval of such assignment nor the acceptance of any rent for performance shall constitute a waiver or estoppel of Lessor’s right to exercise its remedies for the Breach by Lessee of any of the terms, covenants or conditions of this Lease.

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(c)           The consent of Lessor to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting by Lessee or to any subsequent or successive assignment or subletting by the assignee or sublessee. However, Lessor may consent to subsequent sublettings and assignments of the sublease or any amendments or modifications thereto without notifying Lessee or anyone else liable under this Lease or the sublease and without obtaining their consent, and such action shall not relieve such persons from liability under this Lease or the sublease.

(d)           In the event of any Breach of Lessee’s obligation under this Lease, Lessor may proceed directly against Lessee or anyone else responsible for the performance of the Lessee’s obligations under this Lease, including any sublessee, without first exhausting Lessor’s remedies against any other person or entity responsible therefor to Lessor, or any security held by Lessor.

(e)           Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor’s determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a non-refundable deposit of $1,000 or ten percent (10%) of the monthly Base Rent applicable to the portion of the Premises which is the subject of the proposed assignment or sublease, whichever is greater, as reasonable consideration for Lessor’s consuming and processing the request for consent. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested by Lessor.

(f)           Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment or entering into such sublease, be deemed, for the benefit of Lessor, to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented in writing.

(g)           [Intentionally Omitted]

(h)           [Intentionally Omitted]

12.3           Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:

(a)           Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all rentals and income arising from any sublease of all or a portion of the Premises heretofore or hereafter made by Lessee, and Lessor may collect such rent and income and apply same toward Lessee’s obligations under this Lease; provided, however, that until a Breach (as defined in Paragraph 13.1) shall occur in the performance of Lessee’s obligations under this Lease, Lessee may receive, collect and enjoy the rents accruing under such sublease. Lessor shall not, by reason of the foregoing provision or any other assignment of such sublease to Lessor, nor by reason of

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the collection of the rents from a sublessee, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such sublessee under such Sublease. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee’s obligations under this Lease to pay to Lessor the rents and other charges due and to become due under the sublease. Sublessee shall rely upon any such statement and request from Lessor and shall pay such rents and other charges to Lessor without any obligation or right to inquire as to whether such Breach exists and notwithstanding any notice from or claim from Lessee to the contrary. Lessee shall have no right or claim against such sublessee, or, until the Breach has been cured, against Lessor, for any such rents and other charges so paid by said sublessee to Lessor.

(b)           In the event of a Breach by Lessee in the performance of its obligations under this Lease, Lessor, at its option and without any obligation to do so, may require any sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any other prior defaults or breaches of such sublessor under such sublease.

(c)           Any matter or thing requiring the consent of the sublessor under a sublease shall also require the consent of Lessor herein.

(d)           No sublessee under a sublease approved by Lessor shall further assign or sublet all or any part of the Premises without Lessor’s prior written consent.

(e)           Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.

13.           Default; Breach; Remedies.

13.1           Default; Breach. Lessor and Lessee agree that if an attorney is consulted by Lessor in connection with a Default or Breach by Lessee (as hereinafter defined), $250.00 is a reasonable maximum sum per such occurrence for legal services and costs in the preparation and service of a notice of Default, and that Lessor may include the cost of such services and costs in said notice as rent due and payable to cure a Default. A “Default” by Lessee is defined as a failure by Lessee to observe, comply with or perform any of the terms, covenants, conditions or rules applicable to Lessee under this Lease. A “Breach” by Lessee is defined as the occurrence of any one or more of the following Defaults, and, where a grace period for cure after notice is specified herein, the failure by Lessee to cure such Default prior to the expiration of the applicable grace period, and shall entitle Lessor to pursue the remedies set forth in Paragraphs 13.2 and/or 13.3:

(a)           The vacating of the Premises without the intention to reoccupy same, or the abandonment of the Premises.

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(b)           Except as expressly otherwise provided in this Lease, the failure by Lessee to make any payment of Base Rent, Lessee’s Share of Common Area Operating Expenses, or any other monetary payment required to be made by Lessee hereunder as and when due, the failure by Lessee to provide Lessor with reasonable evidence of insurance or surety bond required under this Lease, or the failure of Lessee to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of three (3) business days following Lessee’s receipt of written notice thereof by or on behalf of Lessor to Lessee.

(c)           Except as expressly otherwise provided in this Lease, the failure by Lessee to provide Lessor with reasonable written evidence (in duly executed original form, if applicable) of (i) compliance with Applicable Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service contracts required under Paragraph 7.1(b), (iii) the rescission of an unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination of this Lease per Paragraph 30, (vi) [Intentionally Omitted], (vii) the execution of any document requested under Paragraph 42 (easements), or (viii) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of ten (10) business days following Lessee’s receipt of written notice by or on behalf of Lessor to Lessee.

(d)           A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the Rules and Regulations adopted under Paragraph 40 hereof that are to be observed, complied with or performed by Lessee, other than those described in Subparagraphs 13.1(a), (b) or (c), above, where such Default continues for a period of thirty (30) days after Lessee’s receipt of written notice thereof by or on behalf of Lessor to Lessee; provided, however, that if the nature of Lessee’s Default is such that more than thirty (30) days are reasonably required for its cure, then it shall not be deemed to be a Breach of this Lease by Lessee if Lessee commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion.

(e)           The occurrence of any of the following events: (i) the making by Lessee of any general arrangement or assignment for the benefit of creditors, (ii) Lessee’s becoming a “debtor” as defined in 11 U.S. Code Section 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee the same is dismissed within sixty (60) days), (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within thirty (30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within thirty (30) days; provided, however, in the event that any provision of this Subparagraph 13.1(e) is contrary to any applicable law, such provision shall be of no force or effect, and shall not affect the validity of the remaining provisions.

(f)           The discovery by Lessor that any financial statement of Lessee given to Lessor by Lessee was materially false.

(g)           [Intentionally Omitted]

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13.2           Remedies. If Lessee fails to perform any affirmative duty or obligation of Lessee under this Lease, within ten (10) days after written notice to Lessee (or in case of an emergency, without notice), Lessor may at its option (but without obligation to do so), perform such duty or obligation on Lessee’s behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at its own option, may require all future payments to be made under this Lease by Lessee to be made only by cashier’s check. In the event of a Breach of this Lease by Lessee (as defined in Paragraph 13.1), with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach, Lessor may:

(a)           Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease and the term hereof shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the worth at the time of the award of the unpaid rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided, (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired Term. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District in which the Premises are located at the time of award plus one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee’s Default or Breach of this Lease shall not waive Lessor’s right to recover damages under this Paragraph 13.2. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding the unpaid rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit for such rent and/or damages.  If a notice and grace period required under Subparagraph 13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit, or to perform or quit, as the case may be, given to Lessee under any statute authorizing the forfeiture of leases for unlawful detainer shall also constitute the applicable notice for grace period purposes required by Subparagraph 13.1(b), (c) or (d). In such case, the applicable grace period under the unlawful detainer statute shall run concurrently after the one such statutory notice, and the failure of Lessee to cure the Default within the greater of the two (2) such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute.

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(b)           Continue the Lease and Lessee’s right to possession in effect (in California under California Civil Code Section 1951.4) after Lessee’s Breach and recover the rent as it becomes due, provided Lessee has the right to sublet or assign, subject only to reasonable limitations. Lessor and Lessee agree that the limitations on assignment and subletting in this Lease are reasonable. Acts of maintenance or preservation, efforts to relet the Premises, or the appointment of a receiver to protect the Lessor’s interest under this Lease, shall not constitute a termination of the Lessee’s right to possession.

(c)           Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the state wherein the Premises are located.

(d)           The expiration or termination of this Lease and/or the termination of right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee’s occupancy of the Premises.

13.3           Inducement Recapture In Event of Breach. [Intentionally Omitted]

13.4           Late Charges. Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by the terms of any ground lease, mortgage or deed of trust covering the Premises. Accordingly, if any installment of rent or other sum due from Lessee shall not be received by Lessor or Lessor’s designee within ten (10) days after such amount shall be due which ten (10) days shall not be a grace period, it being understood that such sums are due as provided in Subparagraph 13.1(b), then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a late charge equal to six percent (6%) of such overdue amount. The Parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder.

13.5           Breach by Lessor. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable time shall in no event exceed a period of thirty (30) days after receipt by Lessor and by any Lender(s) whose name and address shall have been furnished to Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor’s obligation is such that more than thirty (30) days after such notice are reasonably required for its performance, then Lessor shall not be in breach of this Lease if performance is commenced within such thirty (30) day period and thereafter diligently pursued to completion.

14.           Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (all of which are herein called “condemnation”), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession whichever first occurs. If more than ten percent

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(10%) of the floor area of the Premises or more than twenty-five percent (25%) of the portion of the Common Areas designated for Lessee’s parking, is taken by condemnation, Lessee may, at Lessee’s option, to be exercised in writing within ten (10) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in the same proportion as the rentable floor area of the Premises taken bears to the total rentable floor area of the Premises. No reduction of Base Rent shall occur if the condemnation does not apply to any portion of the Premises. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Lessor, whether such award shall be made as compensation for diminution of value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any compensation, separately awarded to Lessee for Lessee’s relocation expenses and/or loss of Lessee’s Trade Fixtures. In the event that this Lease is not terminated by reason of such condemnation, Lessor shall to the extent of its net severance damages received, over and above Lessee’s Share of the legal and other expenses incurred by Lessor in the condemnation matter, repair any damage to the Premises caused by such condemnation authority. Lessee shall be responsible for the payment of any amount in excess of such net severance damages required to complete such repair.

15.           Brokers’ Fees.

15.1           Procuring Cause. The Broker(s) named in Paragraph 1.10 is/are the procuring cause of this Lease.

15.2           [Intentionally Omitted].

15.3           [Intentionally Omitted].

15.4           Representations and Warranties. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder other than as named in Paragraph 1.10(a) in connection with the negotiation of this Lease and/or the consummation of the transaction contemplated hereby, and that no broker or other person, firm or entity other than said named Broker(s) is entitled to any commission or finder’s fee in connection with said transaction. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, and/or attorneys’ fees reasonably incurred with respect thereto.

16.           Tenancy and Financial Statements.

16.1           Tenancy Statement. Each Party (as “Responding Party”) shall within ten (10) days after written notice from the other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a statement in writing in a form similar to the then most

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current “Tenancy Statement” form published by the American Industrial Real Estate Association, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party.

16.2           Financial Statement. If Lessor desires to finance, refinance, or sell the Premises or the Building, or any part thereof, Lessee shall deliver to any potential lender or purchaser designated by Lessor such financial statements of Lessee as may be reasonably required by such lender or purchaser, including but not limited to Lessee’s financial statements for the past year. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.

17.           Lessor’s Liability. The term “Lessor” as used herein shall mean the owner or owners at the time in question of the fee title to the Premises. In the event of a transfer of Lessor’s title or interest in the Premises or in this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor at the time of such transfer or assignment. Except as provided in Paragraph 15.3, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.

18.           Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

19.           Interest on Past-Due Obligations. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor within ten (10) days following the date on which it was due, shall bear interest from the date due at the prime rate charged by the largest state chartered bank in the state in which the Premises are located plus four percent (4%) per annum, but not exceeding the maximum rate allowed by law, in addition to the potential late charge provided for in Paragraph 13.4.

20.           Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease.

21.           Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease are deemed to be rent.

22.           No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party. Each Broker shall be an intended third party beneficiary of the provisions of this Paragraph 22.

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23.           Notices.

23.1           Notice Requirements. All notices required or permitted by this Lease shall be in writing and may be delivered in person (by hand or by messenger or courier service) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission during normal business hours, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be that Party’s address for delivery or mailing of notice purposes. Either Party may by written notice to the other specify a different address for notice purposes, except that upon Lessee’s taking possession of the Premises, the Premises shall constitute Lessee’s address for the purpose of mailing or delivering notices to Lessee. A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate by written notice to Lessee.

23.2           Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail, the notice shall be deemed given forty-eight (48) hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given twenty-four (24) hours after delivery of the same to the United States Postal Service or courier. If any notice is transmitted by facsimile transmission or similar means, the same shall be deemed served or delivered upon telephone or facsimile confirmation of receipt of the transmission there of, provided a copy is also delivered via delivery or mail. If notice is received on a Saturday or a Sunday or a legal holiday, it shall be deemed received on the next business day.

24.           Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or any other term, covenant or condition hereof. Lessor’s consent to or approval of, any such act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. Regardless of Lessor’s knowledge of a Default or Breach at the time of accepting rent, the acceptance of rent by Lessor shall not be a waiver of any Default or Breach by Lessee of any provision hereof. Notwithstanding the foregoing, Lessor’s acceptance of rent after the first and second occurrence of a Default for a failure to pay said rent during any twelve (12) month period during the Term shall be deemed a waiver of any Default or Breach by Lessee. Any payment given Lessor by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment. Lessor hereby waives any landlord’s lien, other lien or any other interest whatsoever arising under statute or common law in any item of Lessee’s “clean room,” or any portion thereof or interest therein, whether located in the Premises or elsewhere. Notwithstanding the foregoing, Lessor’s waiver of any statutory or common law Lessor’s lien that it may have on all remaining Lessee’s personal

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property shall be at Lessor’s sole discretion and shall not be subject to the provisions of Paragraph 36(a). Any such waiver consented to by Lessor shall be made on Lessor’s form of lien waiver.

25.           Recording. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a short form memorandum of this Lease for recording purposes. The Party requesting recordation shall be responsible for payment of any fees or taxes applicable thereto.

26.           No Right to Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or earlier termination of this Lease. In the event that Lessee holds over in violation of this Paragraph 26 then the Base Rent payable from and after the time of the expiration or earlier termination of this Lease shall be increased to one hundred fifty percent (150%) of the Base Rent applicable during the month immediately preceding such expiration or earlier termination. Nothing contained herein shall be construed as a consent by Lessor to any holding over by Lessee.

27.           Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies in law or in equity.

28.           Covenants and Conditions. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions.

29.           Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.

30.           Subordination; Attornment; Non-Disturbance.

30.1           Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, “Security Device”), now or hereafter placed by Lessor upon the real property of which the Premises are a part, to any and all advances made on the security thereof, and to all renewals, modifications, consolidations, replacements and extensions thereof. Lessee agrees that the Lenders holding any such Security Device shall have no duty, liability or obligation to perform any of the obligations of Lessor under this Lease, but that in the event of Lessor’s default with respect to any such obligation, Lessee will give any Lender whose name and address have been furnished Lessee in writing for such purpose notice of Lessor’s default pursuant to Paragraph 13.5. If any Lender shall elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device and shall give written notice thereof to Lessee, this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof.

30.2           Attornment. Subject to the non-disturbance provisions of Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who acquires ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclosure, such new owner shall not: (i) be liable for any act or omission of any prior lessor or with respect to events

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occurring prior to acquisition of ownership, (ii) be subject to any offsets or defenses which Lessee might have against any prior lessor, or (iii) be bound by prepayment of more than one month’s rent.

30.3           Non-Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving assurance (a “non-disturbance agreement”) from the Lender that Lessee’s possession and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises.

30.4           Self-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however that upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any such subordination or non-subordination, attornment and/or non-disturbance agreement as is provided for herein.

31.           Attorneys’ Fees. If any Party or Broker brings an action or proceeding to enforce the terms hereof or declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term “Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fee award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all reasonable attorneys’ fees reasonably incurred. Subject to the provisions of Paragraph 13.1, Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach. Broker(s) shall be intended third party beneficiaries of this Paragraph 31.

32.           Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times for the purpose of showing the same to prospective purchasers, lenders and making such alterations, repairs, improvements or additions to the Premises or to the Building, as Lessor may reasonably deem necessary. Lessor may at any time place on or about the Premises or Building any ordinary “For Sale” signs and Lessor may at any time during the last one hundred eighty (180) days of the term hereof place on or about the Premises any ordinary “For Lease” signs and enter the Premises to show the same to prospective lessees. All such activities of Lessor shall be without abatement of rent or liability to Lessee; provided, however, Lessor shall not unreasonably interfere with Lessee’s business operations in the Premises.

33.           Auctions. Lessee shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises without first having obtained Lessor’s prior written consent. Notwithstanding anything to the contrary in this Lease, Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent.

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34.           Signs. Lessee shall not place any sign upon the exterior of the Premises or the Building, except that Lessee may, with Lessor’s prior written consent, install (but not on the roof) such signs as are reasonably required to advertise Lessee’s own business so long as such signs are in a location designated by Lessor and comply with Applicable Requirements and the signage criteria established for the Industrial Center by Lessor. The installation of any sign on the Premises by or for Lessee shall be subject to the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations). Unless otherwise expressly agreed herein, Lessor reserves all rights to the use of the roof of the Building, and the right to install advertising signs on the Building, including the roof, which do not unreasonably interfere with the conduct of Lessee’s business; Lessor shall be entitled to all revenues from such advertising signs.

35.           Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, Lessor shall, in the event of any such surrender, termination or cancellation, have the option to continue any one or all of any existing subtenancies. Lessor’s failure within ten (10) days following any such event to make a written election to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s election to have such event constitute the termination of such interest.

36.           Consents.

(a)           Except for Paragraph 33 hereof (Auctions) or as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld, delayed or conditioned. Lessor’s actual reasonable costs and expenses (including but not limited to architects’, attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent pertaining to this Lease or the Premises, including but not limited to consents to an assignment, a subletting, or the presence or use of a Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act, assignment of this Lease or subletting of the Premises by Lessee shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent.

(b)           All conditions to Lessor’s consent specifically permitted by this Lease are acknowledged by Lessee as being reasonable. The failure to specify herein any particular condition to Lessor’s consent shall not preclude the impositions by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given.

37.           [Intentionally Omitted]

38.           Quiet Possession. Upon payment by Lessee of the rent for the Premises and the performance of all of the covenants, conditions and provisions on Lessee’s part to be observed and performed under this Lease, Lessee shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease.

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39.           Options.

39.1           Definition. As used in this Lease, the word “Option” means the right to extend the Original Term or to renew this Lease.

39.2           Grant of Options. Lessee shall have the right to extend the Original Term of this Lease for three (3) periods of two (2) years each (each an “Option Term”) on and subject to the terms and provisions of this Paragraph 39. Lessee may exercise such right to extend the Term for the applicable Option Term by delivering to Lessor notice of Lessee’s intention to exercise its right to so extend the Term no later than the date one hundred eighty (180) days prior to the expiration of the Original Term or the Option Term then in effect, as the case may be. Each such Option Term shall be on all of the terms and conditions contained in this Lease, except that Base Rent shall be as set forth in Paragraph 1.5.

39.3           Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later option cannot be exercised unless the prior Options to extend or renew this Lease have been validly exercised.

39.4           Effect of Default on Options.

(a)           Lessee shall have no right to exercise an Option, notwithstanding any provision in the grant of Option to the contrary: (i) during the period of time Base Rent due Lessor from Lessee is unpaid (without regard to whether notice thereof is given Lessee), or (ii) during the time Lessee is in Breach of this Lease.

(b)           The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of Paragraph 39.4(a)

(c)           All rights of Lessee under the provisions of an Option shall terminate and be of no further force or effect, notwithstanding Lessee’s due and timely exercise of the Option, if after such exercise and during the Term if a Breach by Lessee occurs.

40.           Rules and Regulations. Lessee agrees that it will abide by, and keep and observe all reasonable rules and regulations (“Rules and Regulations”) which Lessor may make from time to time for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or Lessees of the Building and the Industrial Center and their invitees. Notwithstanding any provision of this Lease to the contrary, in the event of a conflict between any rule or regulation promulgated by Lessor and a specific provision of this Lease, the specific provision of this Lease shall control.

41.           Security Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.

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42.           Reservations. Lessor reserves the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights of way, utility raceways, and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights of way, utility raceways, dedications, maps and restrictions do not unreasonably interfere with the use of or ingress to or egress from the Premises by Lessee and its employees, suppliers, shippers, contractors invitees or customers. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions.

43.           Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease.

44.           Authority. Lessee hereby represents and warrants to Lessor that (i) this Lease constitutes the legal, valid and binding obligation of Lessee and (ii) the execution, delivery and performance of this Lease have been duly authorized by all necessary action; are within the power and authority of Lessee; and do not and will not violate any of the organizational documents of Lessee or any agreement or instrument binding or affecting Lessee or any of its property. Lessor hereby represents and warrants to Lessee that (i) this Lease constitutes the legal, valid and binding obligation of Lessor and (ii) the execution, delivery and performance of this Lease have been duly authorized by all necessary action; are within the power and authority of Lessor ; and do not and will not violate any of the organizational documents of Lessor or any lease or other agreement or instrument binding on or affecting Lessor or any of its property, including, without limitation, the Industrial Center.

45.           Conflict. Any conflict between the printed provisions of this Lease and any typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

46.           Offer. Preparation of this Lease by either Lessor or Lessee or Lessor’s agent or Lessee’s agent and submission of same to Lessee or Lessor shall not be deemed an offer to lease. This Lease is not intended to be binding until executed and delivered by all Parties hereto.

47.           Amendments. This Lease may be modified only in writing, signed by the parties in interest at the time of the modification. The Parties shall amend this Lease from time to time to reflect any adjustments that are made to the Base Rent or other rent payable under this Lease.

48.           Multiple Parties. Except as otherwise expressly provided herein, if more than one person or entity is named herein as either Lessor or Lessee, the obligations of such multiple parties shall be the joint and several responsibility of all persons or entities named herein as such Lessor or Lessee.

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LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR ATTORNEY’S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS, UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

The Parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.

Executed on:   , 2008	Executed on:   , 2008
LESSOR: TITAN MAC FUND I, LP, a Texas limited partnership By:          McAllen Portfolio GP, LLC, Texas limited liability company,                 its sole general partner	LESSEE: CrossCart, Inc., a Delaware corporation By:          Daniel R. Lee, President and Chief Executive Officer

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By:    Ben F. Spencer, Manager   Address: 6300 Riverside Plaza Lane NW #200 Albuquerque, New Mexico  87120 Telephone:                      (505) 998-0163   Facsimile:                      (505) 837-1061   Address: 10101 Reunion , Suite 970 San Antonio, Texas 78216 Telephone:                      (210) 269-3935   Facsimile:                      (210) 495-7443    

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 Exhibit 6.5

EXHIBIT “A”

LEGAL DESCRIPTION

NCB 12063 BLK 1 LOT 7 (BLOSSOM INDUSTRIAL PARK UT-4), in the city of San Antonio, Bexar County, Texas, further described as approximately 4,000 square feet of office/lab/warehouse space located at 11969 Starcrest Drive in an approximately 68,929 square foot facility in Blossom Business Park II, said project consisting of two (2) buildings totaling 137,858 square feet.

 Exhibit 6.5

EXHIBIT “B”

 Exhibit 6.5

EXHIBIT “C”

CONSTRUCTION WORK

Lessor shall deliver Premises to Lessee in “shell” condition, which shall include all finished exterior walls.

Lessee shall be responsible for completing and doing all construction work upon the Premises (“Lessee’s Work”). All materials and equipment furnished in connection with Lessee’s Work shall be new, and all Lessee’s Work shall be done in a first class and workmanlike manner. Lessee’s Work shall also be performed in strict accordance with all applicable laws and ordinances, all applicable rules, regulations and standards of all governmental authorities having jurisdiction and all requirements of insurance companies which provide insurance with respect to the Premises and/or the Building.

A.           Plans and Specifications. The plans and specifications for Lessee’s Work attached hereto as Exhibit “C-1” (the “Approved Plans”) have been approved by Lessor and are hereby deemed to be incorporated into this Lease.

B.           Approval of Initial Plans and Specifications. [Intentionally Omitted]

C.           Contractors. Lessor hereby approves DenMar Construction, Inc. (the “General Contractor”) to act as general contractor with respect to the performance of Lessee’s Work.

D.           Insurance and Bonding. The General Contractor shall provide, in addition to insurance required to be maintained by Lessee pursuant to any other provisions of this Lease, the following types of insurance in the following minimum amounts naming Lessor and any designee of Lessor as additional insured, issued by companies reasonably approved by Lessor:

(i)           Workman’s Compensation coverage with limits of a least $500,000.00 for the employer’s liability coverage thereunder, or statutory limits if greater.

(ii)           Builder’s Risk-Completed Value fire and extended coverage, covering damage to the construction and improvements to be made by Lessee, in amounts at least equal to the estimated completed cost of such construction and improvements, with 100 percent co-insurance protection.

(iii)           Automobile Liability coverage with bodily injury limits of at least $500,000.00 per accident for property damage.

E.           Indemnification. Lessee hereby assumes any and all liability, including but not limited to any liability arising out of statutory or common law, for any and all injuries to or death of any and all persons and for any and all damaged property caused by, or resulting from, or arising out of, any act or omission on the part of Lessee, its contractors and its or their subcontractors or employees in the performance of Lessee’s Work on the Premises, and agrees to defend, indemnify and hold harmless Lessor from and against any and all damages, costs, liabilities, losses and/or expenses (including legal fees and court costs) which Lessor may incur, suffer or pay as a result of claims or lawsuits due to, because of or arising out of any and all such injuries,

death and/or damage arising out of the performance of Lessee’s Work on the Premises. All insurance policies to be obtained by Lessee under the terms of this Lease shall expressly include such contractual liability coverage. All costs of Lessee’s Work shall be paid promptly so as to prevent the assertion of any liens for labor or materials, and Lessee shall cause all contractors and subcontractors performing Lessee’s Work to furnish such lien waivers and release as Lessor may require in connection with Lessee’s Work.

Lessee agrees to indemnify Lessor and hold Lessor harmless from and against any loss, liability or damage resulting from or related to the assertion of any liens on account of labor or materials furnished as part of, or in connection with, Lessee’s Work. In the event any liens are asserted against the Premises or the Building on account of any labor or materials furnished as a part of, or in connection with, Lessee’s Work, and such liens are not removed from such Premises or the Building or otherwise satisfied within thirty (30) days of the date of such assertion, Lessor, at its election, in addition to any of its other rights and remedies under this Lease, may pay all such sums necessary to the obligee asserting such lien and may thereafter charge the Lessee all such sums paid out, together with interest at the highest lawful rate, as additional rent hereunder, to be paid together with the next monthly rent payment to be made under the terms of this Lease alter the date Lessor notifies Lessee of the obligation to repay such sums.

F.           Timing. Lessee shall commence Lessee’s Work after the Early Possession Date, and Lessee shall use commercially reasonable efforts to complete Lessee’s Work no later than ninety (90) days after the Early Possession Date.

G.           Permits. The obtaining of all governmental permits required in connection with Lessee’s Work shall be the obligation of Lessee and deemed part of Lessee’s Work, including but not limited to any required building permit, certificate of occupancy, and certificate of compliance.

H.           Additional Fees. All reasonable architectural, engineering, construction or other fees incurred by Lessor relating to Lessee’s Work or changes in the Building necessitated by Lessee’s Work and previously disclosed to Lessee in writing shall be paid by Lessee upon demand by Lessor upon receipt of evidence of such fees from Lessor.

I.           Warranties. Lessee shall cause the General Contractor to guarantee and warrant, in writing, that the work done by it shall be free from any defects in workmanship and materials for a period of not less than one year from the date of its completion and acceptance by Lessee thereof. All such warranties or guarantees with respect to Lessee’s Work shall be contained in the applicable construction contracts or subcontracts and shall provide that such guarantees or warranties shall inure to the benefit of both Lessor and Lessee, and may be enforced by either of them. Lessee shall provide Lessor with such contracts or other evidence of guarantees or warranties as Lessor may desire from time to time. Lessee covenants to give Lessor any assignment or other assurance necessary to effect such right of direct enforcement.

J.           Removal of Trash. Lessee shall use commercially reasonable efforts to cause the General Contractor to remove all trash, debris and rubbish from the Premises at least daily, and shall provide that no trash, debris or rubbish is visible to the patrons of the Building. If at any time any such trash, debris or rubbish is not removed as required hereby, Lessor may remove

same at Lessee’s expense, and Lessee shall reimburse Lessor for such expense upon demand by Lessor.

K.           Review of Lessee’s Work. Lessee shall immediately notify Lessor of the completion of Lessee’s Work, and Lessor shall inspect Lessee’s Work to determine if it materially conforms with the Approved Plans. If any part of Lessee’s Work fails in any material and adverse way to comply with the Approved Plans, Lessee shall promptly repair or replace same. If Lessee fails to do so, Lessor shall have the right to repair or replace same at Lessee’s expense, and Lessee shall reimburse Lessor for such expense upon demand by Lessor. Lessee’s Work shall not be deemed complete until Lessor has inspected it and approved its substantial conformity with the Approved Plans; and Lessor agrees to make such inspection promptly. Any approval or consent by Lessor shall in no way obligate Lessor in any manner whatsoever in respect to the finished product design and/or construction by Lessee. Any deficiency in design or construction, although same had prior approval by Lessor, shall be solely the responsibility of Lessee. Any deficiency or defect in the design or construction of the Lessee’s Work shall not be waived by Lessor’s inspection of Lessee’s Work whether or not such deficiency or defect in the design or construction is objected to by Lessor.

L.           Work Items. Lessee’s Work shall include all labor, materials and equipment required for the installation or construction of those items specified in the Approved Plans. Lessee shall pay all costs of Lessee’s Work. Lessee shall furnish at its sole cost all labor, materials and equipment for the installation and construction of all interior shelving and trade fixtures necessary for the conduct of Lessee’s business.

M.           Lessor’s Contribution. Lessor agrees to reimburse Lessee for the cost of construction of Lessee’s Work; provided, however, Lessor’s reimbursement obligation (the “Construction Allowance”) shall in no event exceed the sum of $8,000.00. Lessor’s payment of the Construction Allowance shall be due in its entirety within thirty (30) days following completion of Lessee’s Work provided that Lessee has provided Lessor (i) a copy of Lessee’s Certificate of Occupancy, (ii) a Release of Lien from the General Contractor, and (iii) a copy of the certificate(s) evidencing the existence and amounts of the insurance required under Paragraphs 8.2(a) and 8.4 of the Lease.

 Exhibit 6.5

Date: November 21, 2008

Client: Cross Cart

Richard S. Robinson

Project Address: 11969 Starcrest Dr.

San Antonio, TX

Phone Wk: (352) 372 6788

Project Description

This proposal is based on visual observations and inspections. No physical destruction or penetrations were made and therefore the remodeling process may expose problems not yet evidenced. If this occurs, the Client will be advised of the problem and cost. A signed agreement/ change order between XXXXXX and the Client or Client’s representative will be needed before the work will be done.

Scope of Work

Remodel lease space at 11969 per plans and specifications dated 11/11/2008 to include the following:

Remove walls, ceilings, plumbing, electrical, and gas heater per plan.

Saw cut and remove 73 linear feet x 12” wide concrete floor for new floor drains and waste lines.

Patch concrete back after plumbing work.

Frame new walls per plan and wall schedule.

Install 5/8” drywall per wall schedule.

Install R-11 insulation at wall type A..

Install new doors and frames #8, 9, 10, and 11 with corresponding hardware.

Install two new windows and frames item B.

Install plastic strip curtain #4.

Paint walls per room finish schedule.

Install new ceiling system per room finish schedule.

Splice new ceiling system with existing as needed.

Install new flooring per room finish schedule.

Seal concrete floor per room finish schedule.

Seal off exit doors as indicated on plan.

HVAC: Install new 5 ton Carrier gas heat roof top unit.

Install six supply grilles and one return grille with programmable thermostat in room 121.

Install ten new supply grilles and one new return air grille in remaining area.

Patch all roof penetrations with matching roof materials.

Plumbing: Relocate toilet and lavatory in room 117 and install new wall hung lavatory with handicap faucet and handicap toilet.

Replace lavatory and toilet in room 104 with wall hung lavatory and handicap toilet.

Install 2 grab bars at each toilet.

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Install new plastic laminate counter top with stainless steel bar sink and handicap faucet at room 103.

Install wall hung lavatory with handicap faucet at room 116.

Install waste and supply stub up at room 11.

Install two floor drains, two wall drains, and one supply line at room 121.

Cap off gas line at existing space heater.

Install gas line to new A/C unit.

Electrical: Demo existing electrical, lighting, and terminate all unused circuits.

Install (6) emergency lights, (3) exit signs, (43) 2x4 lay in lights, (2) 100 amp sub panels from existing service at new panel location, (20) new switches, (20) new

110 plug outlets, (5) 220 plug outlets, power for new A/C unit, (1) recessed light at vestibule, reuse strip light at loading dock.

Clean up and haul off all debris.

Includes all applicable permits.

Excludes asbestos survey.

Flooring Allowances:
Marmorette with NATURCote Linoleum Flooring (heat welded seams)	$ XX.XX per square yard
Commercial carpet, 26 oz glue down	XX.XX per square yard
Commercial vinyl tile (Azrock or equal)	X.XX per square foot
	Cost $ XXX,XXX.XX
	Tax           X,XXX.XX
	Project Total $ XXX,XXX.XX

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 Exhibit 6.5

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 Exhibit 6.5

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 Exhibit 6.5

Keyed Notes

1. Render existing entry door inoperable and remove exterior hardware. Install bronze tone rubber plugs to fill exterior holes where pull handle was attached/

2. Render rear personnel door inoperable and remove knobset. Install painted metal blank over hole in door panel where knob was removed. Weather strip interior door/frame joint prior to constructing drywall partition over doorway.

3. Demo existing utility sink and cap-off plumbing within drywall partition.

4. Demo wet bar and cap-off waste drain piping beneath concrete floor.

5. Demo both existing Rest Rooms. Saw-cut slab and rough in for a new accessible toilet and wall hung lavatory in this location. Provide and install a new accessible tank type toilet equipped with open front toilet seat and tank trip lever on approach side of tank. Install 1 1/2” dia. stainless steel grab-rails along and behind new toilet at 34” anchored within drywall with block able to support a minimum of 250 lbs. each. Install an accessible wall hung lavatory equipped with an accessible faucet and padding on p-trap & shut-off valves beneath basin. Hot & Cold water supplies required. Retain existing electric water heater to serve Rest Rooms, Hallway Hand Sink and Wet bar faucets.

6. Hallway Hand Sink - Rough in new plumbing for a wall hung lavatory in this location. Equip new sink with accessible faucet (with wrist blade controls) and padding on p-trap and shut-off valves beneath basin. Hot & cold water supplies required.

7. Existing rest room to be modified. Demo vanity and reposition water closet rough in to create an accessible rest room. Provide and install a new accessible tank type toilet equipped with open front toilet seat and tank trip lever on approach side of tank. Install 1 1/2” dia. stainless steel grab-rails along and behind new toilet at 34” anchored within drywall with block able to support a minimum of 250 lbs. each. Install an accessible wall hung lavatory equipped with an accessible faucet and padding on p-trap & shut-off valves beneath basin. Hot & Cold water supplies required.

8. Demo existing wet bar and install a new accessible counter top/sink/faucet on existing plumbing rough in. New counter top to be 34” a.f.f.

9. New Clean Rooms – Saw-cut slab from existing toilets (to be demo’d) to this area. Tenant requires the installation of two fully recessed floor drains, two wall drains and cold water supplies in several locations to serve equipment. See detail.

10. Demo existing divisive wall from floor to roof decking. Install new batt insulation attached to underside of roof decking in a roughly 800 sq.ft. area.

11. Remove two existing distribution panels and feeders. Provide and install a new feeder to a new distribution panel.

12. Provide and install a new circuit breaker panel sized to accommodate new and existing electrical loads. Contractor shall provide bid as a Design/Build and shall be responsible for provision of Panel Schedule, Riser Diagram, Load Calculations, Circuiting Diagram and I.E.C.C. Compliance report.

13. Bolt down sectional overhead door in existing lift track and weather strip perimeter of door/wall joint prior to the construction of a new insulated drywall partition. Remove upper section of lift track if track interferes with the construction of drywall and installation of new suspended ceiling grid at 12’-0” a.f.f.

14. Demo party wall up to 7’-10” a.f.f. Install new gypsum wall board over modified metal framing to create a drywall header to separate dissimilar ceiling grid heights (8’ & 12’)

15. Existing suspended ceiling grid (7’-10”)

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16. New continuous 2’x4’ suspended grid (8’-0” & 12’-0”

17. Demo existing Hallway grid and splice new grid onto existing remaining grid in Rest Room.

18. Spice new suspended grid onto existing remaining grid where closets are to be removed.

19. Demo hallway grid and splice new grid onto remaining grid of adjacent Office area.

20. Align new suspended grid in a continuous manner. Break grid at perimeter wall of clean room area.

21. No ceiling grid, open to newly insulated roof decking. Reinstall one salvaged 96” long twin lamp fluorescent light fixture to bottom cord of roof joists.

22. Construct new drywall “hard lid” atop this vestibule. Install a fully recessed incandescent light fixture with 75 watt lamp.

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 Exhibit 6.5

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 Exhibit 6.5

· Wall Type A – New 15’ high furred drywall, constructed using 2 ½” wide 20 gage metal studs at 16” o.c. with R-11 batt insulation within stud cavities from floor to roof decking. Apply one layer of 5/8” thick gypsum wall board over all framing, tape and bed all joints, prime (one coat) and apply two finish coats of epoxy base high gloss paint to seal surface.

· Wall Type B – New 12’ high drywall partition constructed using 3 5/8” wide 20 gage metal studs at 16’ o.c. with one layer of 5/8” thick gypsum wall board on each side. No insulation required. On Clean room side of wall; Tape and bed all joints, prime (one coat) and apply two finish coats of epoxy base high gloss paint to seal surface. Exterior side of the partition may be finish similarly to Wall Type D.

· Wall Type C – Infill wall constructed using metal studs and gypsum wall board to patch opening in existing drywall partition. Framing and Gypsum wall board to be sized t match existing materials. Tape/float/texture/paint.

· Wall Type D – New 8’ high drywall partition constructed beneath continuous ceiling grid. Constructed using 3 5/8” wide 25 gauge metal studs at 24” o.c. with one layer of 5/8” thick gypsum wall board on each side. No Insulation required. Tape/float/texture/paint all surfaces.

· Wall Type E – New 12’ high drywall partition constructed using 3 5/8” wide 20 gage metal studs at 16” o.c. with one layer of 5/8” thick gypsum wall board on each side. No insulation required. Tape and bed all joints, prime (one coat) and apply two finish coats of flat latex paint with a roll-on texture.

· Wall Type F (Rest Rooms) - New 10’ high drywall partition constructed using 3 5/8” wide 25 gauge metal studs at 24” o.c. with one layer of 5/8” thick gypsum wall board on each side. No Insulation required. Tape/float/texture/paint all surfaces.

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FIRST AMENDMENT TO

LEASE AGREEMENT

This FIRST AMENDMENT TO LEASE AGREEMENT (this “First Amendment”) is made this 21 day of June, 2012 by and between TITAN MAC FUND I, LP, a Texas limited partnership (“Lessor”) and APERION BIOLOGICS, INC., a Delaware corporation, formerly CROSSCART, INC. (“Lessee”).

WHEREAS, Lessor and Lessee entered into that certain Lease Agreement dated December 17, 2008 (the “Lease”):

WHEREAS, the parties wish to extend the Original Term as set forth in the Lease;

NOW THEREFORE, for consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1.           Original Term. The Original Term is hereby extended Thirty Nine (39) months commencing on July 1, 2012. The Expiration Date of the Lease is now September 30, 2015.

2.           Base Rent. Base Rent during the remainder of the Original Term shall be as follows:

07/01/12 − 09/30/12                                             $0.00/square foot                                $0.00 per month

10/01/12 − 09/30/14                                             $6.20/square foot                                $2,067.00 per month

10/01/14 − 09/30/15                                             $6.40/square foot                                $2,133.00 per month

3.           Capital Terms. Capitalized terms used and not otherwise defined in this Amendment shall have the meaning ascribed to them in the Lease.

4.           Improvements. Lessor shall provide the Premises on an “as-is” basis. The cost of improvements shall be the sole responsibility of Lessee. Lessor shall have the right of approval on all aspects of the improvement process.

5.           Option to Terminate. Lessee may terminate this Lease at any time on or after September 30, 2013 in accordance with this paragraph.

(1) Lessee will give Lessor at least ninety (90) days’ prior written notice of Lessee’s election to terminate this Lease.

(2) Lessee may terminate this Lease only as of the last day of a month (the “Cancellation Date”). The Cancellation Date will be stated in Lessee’s notice and will be no less than ninety (90) days after the date of Lessee’s notice. At least ten (10) days prior to the Cancellation Date, as a condition to Lessee’s election, Lessee will pay Lessor the sum equal to the applicable unamortized leasing costs as set forth in Exhibit A.

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(3) On or prior to the Cancellation Date, Lessee will surrender possession of the Premises to Lessor in accordance with the provisions of the Lease, as if the Cancellation Date was the Termination Date.

(4) From and after the Cancellation Date, neither Lessor nor Lessee will have any further rights or obligations under this Lease, except for those accruing prior to the Cancellation Date.

6.           Ratification. Except as expressly set forth herein, all other terms and conditions of the Lease are hereby confirmed and ratified by both parties.

IN WITNESS WHEREOF, the parties have executed this First Amendment as of the date first set forth above.

Lessor:

TITAN MAC FUND I, a Texas limited

partnership

By:     Titan Industrial Development

            Limited Partnership

a New Mexico limited partnership

By:     Titan Development of Texas, LLC

            a New Mexico limited liability company

            Its Managing Member

By:   

Name: Ben F. Spencer

Title:   Manager

Lessee:

APERION BIOLOGICS, INC., a

Delaware corporation

By: 

Name: Daniel R. Lee

Title: Chief Executive Officer

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Exhibit A

Cancellation Date		Unamortized Leasing Costs
September 30,    October 31,	2013 2013	$5,273.59                 $5,053.85
November 30,	2013	$4,834.12
December 31,    January 31,    February 28,	2013 2014 2014	$4,614.39                 $4,394.66                 $4,174.92
March 31,	2014	$3,955.19
April 30,	2014	$3,735.46
May 31,	2014	$3,515.73
June 30,   July 31,    August 31,	2014 2014 2014	$3,295.99                 $3,076.26                 $2,856.53
September 30,    October 31,	2014 2014	$2,636.79                 $2,417.06
November 30,	2014	$2,197.33
December 31,    January 31,    February 28,	2014 2015 2015	$1,977.60                 $1,757.86                 $1,538.13
March 31,	2015	$1,318.40
April 30,	2015	$1,098.66
May 31,	2015	$878.93
June 30,   July 31,    August 31,	2015 2015 2015	$659.20                 $439.47                 $219.73
September 30,	2015	$-0-

EX1A-6 MAT CTRCT

Exhibit 6.6

INDEPENDENT CONSULTANT AGREEMENT

This Independent Consultant Agreement (“Agreement”) is entered into by and between CrossCart Incorporated (“Client”), and David Cocke, an individual currently residing at 2027 Chittim Hollow, San Antonio, TX 78232 (“Consultant”), to be effective as of September 1, 2008, hereinafter referred to by the parties as the “Effective Date.”

WITNESSETH:

WHEREAS, Client is desirous of engaging Consultant pursuant to the terms and conditions and for the consideration set forth in this Agreement, and Consultant is desirous of providing professional services on behalf of Client pursuant to such terms and conditions and for such consideration.

NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and obligations contained herein, Client and Consultant agree as follows:

ARTICLE 1:           DEFINITION OF BUSINESS, ENGAGEMENT AND PROFESSIONAL SERVICES:

1.1           Client and Consultant understand and agree that Client is in the business of developing, manufacturing and marketing cartilage, soft tissue and bone replacement products based upon confidential, proprietary antigen stripping and sterilization techniques which safely allow the use of animal tissue in humans.  Client and Consultant further understand and agree that Client’s technology is applicable to a variety of medical devices in the orthopedics, general, cardiovascular, aesthetic and other surgical fields, including but not limited to ligaments, cartilage, bone, heart valves, soft tissue patches and injectable collagen for use in dermatologic (wrinkle removal) procedures.

1.2           Client agrees to engage Consultant, and Consultant agrees to provide professional services to Client, for not less than eight (8) hours per month.

1.3           As of the Effective Date, Consultant shall provide the services of Chief Financial Officer.  Consultant agrees to perform diligently and to the best of Consultant’s abilities the duties and services appertaining to such position as determined by Client, as well as such additional or different duties and services appropriate to such position which Consultant from time to time may be reasonably directed to perform by Client.  Consultant shall at all times comply with and be subject to such policies and procedures as Client may establish from time to time.

1.4           Consultant shall, during the period of Consultant’s engagement by Client, be entitled to provide professional services to other entities besides Client, subject to the limitations set forth in Article 4, below.  Regardless, it is understood that Consultant may not engage, directly or indirectly, in any other business, investment, or activity that interferes with Consultant’s performance of Consultant’s duties hereunder, or else is contrary to the interests of Client.  The foregoing notwithstanding, the parties recognize and agree that Consultant is independent and may engage in passive personal investments and other business activities which

do not conflict with the business and affairs of the Client or interfere with Consultant’s performance of his duties hereunder.

1.5           Consultant acknowledges and agrees to act at all times in the best interests of the Client and to do no act which would intentionally injure Client’s business, its interests, or its reputation.  It is agreed that any direct or indirect interest in, connection with, or benefit from any outside activities, particularly commercial activities, which interest might in any way adversely affect Client, or any of its affiliates, involves a possible conflict of interest.  In keeping with Consultant’s services on behalf of Client, Consultant agrees that Consultant shall not knowingly become involved in a conflict of interest with Client, or its affiliates, or upon discovery thereof, allow such a conflict to continue.  Moreover, Consultant agrees that Consultant shall disclose to Client any facts which might involve a possible conflict of interest.

ARTICLE 2:           CONSULTING SERVICES FEES:

2.1           As of the Effective Date, Consultant shall be paid One Hundred Dollars and No Cents ($100.00) per hour of services.  Cash fees will not exceed 40 hours per month or $4,000.00 per month.  It is understood and agreed by Client and Consultant that Consultant is not an employee of Client.  Consultant understands and agrees that he will be issued an annual 1099 form reflecting professional fees paid by Client.  Further, Consultant is not entitled to any benefits of Client provided to its employees, including but not limited to insurance programs, retirement plans, workers’ compensation insurance, sick leave, vacation and any other benefits provided by Client to its employees, except as otherwise set forth below.

2.2           Consultant understands and agrees that he is solely responsible for:

(a)           Absorbing his business expenses in connection with performance under this agreement;

(b)           Reporting of payments received under this agreement for the purposes of federal income tax, state tax and FICA, and Consultant is solely responsible for any payments required by the IRS or other federal or state agencies.

(c)           The payment of any self-employment taxes with respect to its payments from Client;

(d)           Furnishing equipment, supplies, tools, and materials if any to be utilized in connection with the performance of services under this agreement; and

(e)           Producing a profit or suffering a loss as a result of services performed under this agreement.

2.3           Client grants to Consultant 6,556 preferred Series B shares and 22,500 Common Warrants (30% of those assigned to Holcomb Team Consulting Agreement Term Sheet dated February 21, 2007) and listed in Section 2.2 of the Disclosure Schedule Series C Preferred Stock Purchase Agreement.

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2.4           As of the Effective Date, Client grants to Consultant the right to obtain equity options on 36,000 shares of common stock.  Such equity opportunities shall vest on a monthly basis over two years.  In the event of a change of control of Client, Consultant may, at Client’s sole discretion or as legally permitted and/or required, be entitled to accelerated vesting of any equity options, if applicable.

2.5           From and after the Effective Date, Client shall pay, or reimburse Consultant, for all travel, expenses, meals and other as requested business needs which Consultant incurs in performing his duties at the request of Client which require travel outside of one hundred (100) miles of residence listed above.

2.6           As of the Effective Date and in the event more than fifty (hours) of professional services are requested by Client, Client grants to Consultant the right to obtain additional equity options on shares of common stock for hours of service above fifty (50) hours per month.  Consultant shall receive equity options on 250 shares of common stock per hour of services in excess of fifty (50) hours per month.  These additional equity opportunities shall vest as earned on a monthly basis.  In the event of a change of control of Client, Consultant may, at Client’s sole discretion or as legally permitted and/or required, be entitled to accelerated vesting of any equity options, if applicable.

ARTICLE 3:           TERMINATION OF CONSULTING SERVICES:

3.1           As set forth in Article 1, Client and Consultant understand and agree that Consultant has been engaged to provide professional services.  Client and Consultant understand and agree that either party may terminate the consulting agreement at any time, and for any or no reason whatsoever.  Termination of the agreement shall not remove the obligation to pay any balances due as of the termination date.

3.2           Termination of the consulting relationship shall not terminate those obligations imposed by this Agreement which are continuing obligations, including, without limitation, Consultant’s obligations under Article 4 of this Agreement.

ARTICLE 4:           OWNERSHIP AND PROTECTION OF INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION:

4.1           All information, ideas, concepts, improvements, discoveries, and inventions, whether patentable or not, which are conceived, made, developed or acquired by Consultant, individually or in conjunction with others, during Consultant’s engagement by Client (whether during business hours or otherwise and whether on Client’s premises or otherwise) which relate to Client’s business, products or services (including, without limitation, all such information relating to corporate opportunities, research, financial and sales data, pricing and trading terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or their requirements, the identity of key contacts within the customer’s organizations or within the organization of acquisition prospects, or marketing and merchandising techniques, prospective names, and marks), and all writings or materials of any type embodying any of such items, shall be disclosed to Client and are and shall be the sole and exclusive property of Client.

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4.2           Consultant acknowledges that the businesses of Client and its affiliates are highly competitive and that their strategies, methods, books, records, and documents, their technical information concerning their products, equipment, services, and processes, procurement procedures and pricing techniques, the names of and other information (such as credit and financial data) concerning their customers and business affiliates, all comprise confidential business information and trade secrets which are valuable, special, and unique assets which Client, or its affiliates use in their business to obtain a competitive advantage over their competitors.  Consultant further acknowledges that protection of such confidential business information and trade secrets against unauthorized disclosure and use is of critical importance to Client, and its affiliates in maintaining their competitive position.  Consultant hereby agrees that Consultant will not, at any time during or for twenty four (24) months after his engagement by Client, make any unauthorized disclosure of any confidential business information or trade secrets of Client, or its affiliates, or make any use thereof, except in the carrying out of his engagement responsibilities hereunder.  The above notwithstanding, a disclosure shall not be unauthorized if (i) it is required by law or by a court of competent jurisdiction or (ii) it is in connection with any judicial or other legal proceeding in which Consultant’s legal rights and obligations as an Consultant or under this Agreement are at issue; provided, however, that Consultant shall, to the extent practicable and lawful in any such events, give prior notice to Client of his intent to disclose any such confidential business information in such context so as to allow Client an opportunity (which Consultant will not oppose) to obtain such protective orders or similar relief with respect thereto as it may deem appropriate.

4.3           All written materials, records, and other documents made by, or coming into the possession of, Consultant during the period of Consultant’s engagement by Client which contain or disclose confidential business information or trade secrets of Client, or its affiliates shall be and remain the property of Client, or its affiliates, as the case may be.  Upon termination of Consultant’s engagement by Client, for any reason, Consultant promptly shall deliver the same, and all copies thereof, to Client.

ARTICLE 5:           MISCELLANEOUS:

5.1           For purposes of this Agreement, (i) the terms “affiliates” or “affiliated” means an entity who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with Client.

5.2           For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when received by or tendered to Consultant or Client, as applicable, by pre-paid courier or by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:  (i) If to Client, to CrossCart, Incorporated at its corporate headquarters to the attention of Consultant’s immediate supervisor; (ii) If to Consultant, to his last known personal residence.

5.3           This Agreement shall be governed in all respects by the laws of the State of Texas, excluding any conflict-of-law rule or principle that might refer to the laws of another State or country.

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5.4           No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

5.5           It is a desire and intent of the parties that the terms, provisions, covenants, and remedies contained in this Agreement shall be enforceable to the fullest extent permitted by law. If any such term, provision, covenant, or remedy of this Agreement or the application thereof to any person, association, or entity or circumstances shall, to any extent, be construed to be invalid or unenforceable in whole or in part, then such term, provision, covenant, or remedy shall be construed in a manner so as to permit its enforceability under the applicable law to the fullest extent permitted by law.  In any case, the remaining provisions of this Agreement or the application thereof to any person, association, or entity or circumstances other than those to which they have been held invalid or unenforceable, shall remain in full force and effect.

5.6           This Agreement shall be binding upon and inure to the benefit of Client and any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of Client by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise.  Consultant’s rights and obligations under this Agreement are personal and such rights, benefits, and obligations of Consultant shall not be voluntarily or involuntarily assigned, alienated, or transferred, whether by operation of law or otherwise, without the prior written consent of Client, other than in the case of death or incompetence of Consultant.

5.7           Except as otherwise specified in Article 2.3, this Agreement replaces and merges any previous agreements and discussions pertaining to the subject matter covered herein, including but not limited to the Holcomb Team Consulting Agreement Term Sheet dated February 21, 2007, the Non-Disclosure Agreement between Consultant and Company dated March 1, 2007 and the Engagement Letter between Consultant and Lurie Investments dated January 25, 2008.  This Agreement constitutes the entire agreement of the parties with regard to such subject matter, and contains all of the covenants, promises, representations, warranties, and agreements between the parties with respect such subject matter.  Each party to this Agreement acknowledges that no representation, inducement, promise, or agreement, oral or written, has been made by either party with respect to such subject matter, which is not embodied herein, and that no agreement, statement, or promise relating to the engagement of Consultant by Client that is not contained in this Agreement shall be valid or binding.  Any modification of this Agreement will be effective only if it is in writing and signed by each party whose rights hereunder are affected thereby, provided that any such modification must be authorized or approved by Client.

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IN WITNESS WHEREOF, Client and Consultant have duly executed this Agreement at San Antonio, Texas in multiple originals to be effective on the date first stated above.

CrossCart, Incorporated

By:

/s/ Daniel R. Lee                                                                          

Daniel R. Lee

CONSULTANT

/s/ David Cocke                                                                           

Name:  David Cocke

Date:     11/3/08                    

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EX1A-6 MAT CTRCT

EXHIBIT 6.7

APERION BIOLOGICS, INC.

2008 STOCK OPTION/STOCK ISSUANCE PLAN

ARTICLE ONE

GENERAL PROVISIONS

I.             PURPOSE OF THE PLAN

This 2008 Stock Option/Stock Issuance Plan is intended to promote the interests of Aperion Biologics, Inc., a Delaware corporation, by providing eligible persons in the Corporation’s employ or service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to continue in such employ or service.

Capitalized terms herein shall have the meanings assigned to such terms in the attached Appendix.

II.            STRUCTURE OF THE PLAN

A.           The Plan shall be divided into two (2) separate equity programs:

(i)           the Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock, and

(ii)           the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered the Corporation (or any Parent or Subsidiary) or pursuant to restricted stock units or other share right awards which vest upon the completion of designated service periods or the attainment of pre-established performance milestones.

B.           The provisions of Articles One and Four shall apply to both equity programs under the Plan and shall accordingly govern the interests of all persons under the Plan.

III.           ADMINISTRATION OF THE PLAN

A.           The Plan shall be administered by the Board.  However, any or all administrative functions otherwise exercisable by the Board may be delegated to the Committee.  Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time.  The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.

B.           The Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding options or stock issuances thereunder as it may deem necessary or advisable.  Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any option grant or stock issuance thereunder.

IV.           ELIGIBILITY

A.           The persons eligible to participate in the Plan are as follows:

(i)            Employees,

(ii)           non-employee members of the Board or the non-employee members of the board of directors of any Parent or Subsidiary, and

(iii)          consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

B.           The Plan Administrator shall have full authority to determine, (i) with respect to the grants made under the Option Grant Program, which eligible persons are to receive such  grants, the time or times when those grants are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the time or times when each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding, and (ii) with respect to stock issuances or other stock-based awards under the Stock Issuance Program, which eligible persons are to receive such issuances or awards, the time or times when those issuances or awards are to be made, the number of shares subject to each such issuance or award, the applicable vesting schedule and the cash consideration (if any) to be paid by the Participant for such shares.

C.           The Plan Administrator shall have the absolute discretion either to grant options in accordance with the Option Grant Program or to effect stock issuances in accordance with the Stock Issuance Program.

V.           STOCK SUBJECT TO THE PLAN

A.           The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock.  The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 3,653,218 shares.

B.           Shares of Common Stock subject to outstanding options, restricted stock units or share right awards shall be available for subsequent issuance under the Plan to the extent (i) those options, units or awards expire, terminate or are cancelled for any reason prior to the issuance of the underlying shares of Common Stock or (ii) such options are cancelled in accordance with the cancellation-regrant provisions of Article Two.  Unvested shares issued

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under the Plan and subsequently repurchased by the Corporation, at a price per share not greater than the option exercise or direct issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants or direct stock issuances under the Plan.

C.           In the event of any of the following transactions affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration: any stock split, stock dividend, spin-off transaction, extraordinary distribution (whether in cash, securities or other property), recapitalization, combination of shares, exchange of shares or other similar transaction affecting the outstanding Common Stock without the Corporation’s receipt of consideration or in the event of a substantial reduction to the value of the outstanding shares of Common Stock by reason of a spin-off transaction or extraordinary distribution, then equitable adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the number and/or class of securities and the exercise price per share in effect under each outstanding option and (iii) the number and/or class of securities subject to each outstanding restricted stock unit or other share right award and the cash consideration (if any) payable per share.  The adjustments shall be made by the Plan Administrator in such manner as the Plan Administrator deems appropriate, and those adjustments shall be final, binding and conclusive.  In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation’s preferred stock into shares of Common Stock.

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ARTICLE TWO

OPTION GRANT PROGRAM

I.             OPTION TERMS

Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below.  Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.

A.           Exercise Price.

1.           The exercise price per share shall be fixed by the Plan Administrator but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

2.           The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section I of Article Four and the documents evidencing the option, be payable in cash or check made payable to the Corporation.  Should the Common Stock be registered under Section 12 of the 1934 Act at the time the option is exercised, then the exercise price may also be paid as follows:

(i)           in shares of Common Stock valued at Fair Market Value on the Exercise Date and held for the period (if any) necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes, or

(ii)           to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions (A) to a brokerage firm (reasonably satisfactory to the Corporation for purposes of administering such procedure in compliance with any applicable pre-clearance or pre-notification requirements) to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the  purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and (B) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm on the settlement date in order to complete the sale.

Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

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B.           Exercise and Term of Options.  Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant.  However, no option shall have a term in excess of ten (10) years measured from the option grant date.

C.           Effect of Termination of Service.

1.           The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:

(i)            Should the Optionee cease to remain in Service for any reason other than death, Disability or Misconduct, then the Optionee shall have a period of three (3) months from the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.

(ii)           Should Optionee’s Service terminate by reason of Disability, then the Optionee shall have a period of twelve (12) months from the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.

(iii)          If the Optionee dies while holding an outstanding option, then the personal representative of his or her estate or the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or the Optionee’s designated beneficiary or beneficiaries of that option shall have a twelve (12)-month period from the date of the Optionee’s death to exercise such option.

(iv)          Under no circumstances, however, shall any such option be exercisable after the specified expiration of the option term.

(v)           During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of Vested Shares for which the option is exercisable on the date of the Optionee’s cessation of Service.  No additional shares shall vest under the option following the Optionee’s cessation of Service, except to the extent (if any) specifically authorized by the Plan Administrator in its sole discretion pursuant to an express  written agreement with Optionee.  Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding.

(vi)          Should the Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in Misconduct while holding one or more outstanding options under the Plan, then all those options shall terminate immediately and cease to remain outstanding.

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2.           The Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:

(i)           extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service or death from the limited period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or

(ii)           permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested under the option had the Optionee continued in Service.

D.           Stockholder Rights.  The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become the recordholder of the purchased shares.

E.           Unvested Shares.  The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock.  Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase any or all of those unvested shares at a price per share equal to the lower of (i) the exercise price paid per share or (ii) the Fair Market Value per share of Common Stock at the time of the Optionee’s cessation of Service.  The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.

F.           First Refusal Rights.  Until such time as the Common Stock is first registered under Section 12 of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Optionee (or any successor in interest) of any shares of Common Stock issued under the Plan.  Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.

G.           Limited Transferability of Options.

1.           An Incentive Stock Option shall be exercisable only by the Optionee during his or her lifetime, and such Incentive Stock Option, together with the shares of Common Stock subject to that option during the period prior to exercise, shall not be assignable or transferable other than by will or by the laws of inheritance following the Optionee’s death.

2.           A Non-Statutory Option, together with the shares of Common Stock subject to that option during the period prior to exercise, shall be subject to the same

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transfer restrictions as set forth in subparagraph 1 above, except that a Non-Statutory Option, together with the underlying unexercised shares of Common Stock, may to the extent permitted by the Plan Administrator be assigned in whole or in part during the Optionee’s lifetime by gift or pursuant to a domestic relations order to one or more of the Optionee’s Family Members or to a trust established exclusively for the Optionee and/or one or more such Family Members. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the Non-Statutory Option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.

3.           Notwithstanding subparagraphs 1 and 2 above, the Optionee may also, to the extent permitted by the Plan Administrator, designate one or more Family Members as the beneficiary or beneficiaries of his or her outstanding options under the Plan, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those options.  Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee’s death.

4.           Prior to the date the Corporation first becomes subject to the reporting requirements of Section 13 or 15(d) of the 1934 Act, outstanding options under the Plan, together with the shares of Common Stock subject to those options during the period prior to exercise, shall not be the subject of any short position, put equivalent position (as such term is defined in Rule 16a-1(h) under the 1934 Act) or call equivalent position (as such term is defined  Rule 16a-1(b) of the 1934 Act).

5.           Except as otherwise provided in subparagraph 1, 2 or 3 above, until the date the Corporation first becomes subject to the reporting requirements of Section 13 or 15(d) of the 1934 Act, outstanding options under the Plan, together with the shares of Common Stock subject to those options during the period prior to exercise, shall not be the subject of any pledges, gifts, hypothecations or other transfers, other than pursuant to the Corporation’s repurchase rights or in connection with a Change in Control of the Corporation in which such options shall terminate and cease to be outstanding.

II.            INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive Options.  Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options.  Options which are specifically designated as Non-Statutory Options shall not be subject to the terms of this Section II.

A.           Eligibility.  Incentive Options may only be granted to Employees.

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B.           Dollar Limitation.  The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000).  To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted, except to the extent otherwise provided under applicable law or regulation.

C.           10% Stockholder.  If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the option term shall not exceed five (5) years measured from the option grant date, and the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date.

III.           CHANGE IN CONTROL

A.           The shares subject to each option outstanding under the Plan at the time of a Change in Control shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Change in Control, become exercisable for all of the shares of Common Stock at the time subject to that option and may be exercised for any or all of those shares as fully-vested shares of Common Stock.  However, the shares subject to an outstanding option shall not vest on such an accelerated basis if and to the extent:  (i) such option is assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction and any repurchase rights of the Corporation with respect to any unvested shares purchasable under the option are concurrently assigned to such successor corporation (or parent thereof) or otherwise continued in effect or (ii) such option is to be replaced with a cash retention program of the Corporation or any successor corporation which preserves the spread existing on the unvested option shares at the time of the Change in Control (the excess of the Fair Market Value of those shares over the aggregate exercise price payable for such shares) and provides for subsequent payout of that spread in accordance with the same vesting schedule applicable to those unvested option shares or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant.

B.           All outstanding repurchase rights shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

C.           Immediately following the consummation of the Change in Control, all outstanding options shall terminate and cease to be outstanding, except to the extent assumed by

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the successor corporation (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction.

D.           Each option which is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Change in Control, had the option been exercised immediately prior to such Change in Control.  Appropriate adjustments shall also be made to (i) the number and class of securities available for issuance under the Plan following the consummation of such Change in Control and (ii) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same.  To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption or continuation of the outstanding options under this Plan, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control.

E.           The Plan Administrator shall have the discretion, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure one or more options so that those options shall automatically accelerate and vest in full (and any repurchase rights of the Corporation with respect to the unvested shares subject to those options shall immediately terminate) upon the occurrence of a Change in Control, whether or not those options are to be assumed in the Change in Control or otherwise continued in effect.

F.           The Plan Administrator shall also have full power and authority, exercisable either at the time the option is granted or at any time while the option remains outstanding, to structure such option so that the shares subject to that option will automatically vest on an accelerated basis should the Optionee’s Service terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control in which the option is assumed or otherwise continued in effect and the repurchase rights applicable to those shares do not otherwise terminate.  Any option so accelerated shall remain exercisable for the fully-vested option shares until the expiration or sooner termination of the option term.  In addition, the Plan Administrator may provide that one or more of the Corporation’s outstanding repurchase rights with respect to shares held by the Optionee at the time of such Involuntary Termination shall immediately terminate on an accelerated basis, and the shares subject to those terminated rights shall accordingly vest at that time.

G.           The portion of any Incentive Option accelerated in connection with a Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded.  To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.

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H.           The grant of options under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

IV.           CANCELLATION AND REGRANT OF OPTIONS

The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Plan and to grant in substitution therefor new options covering the same or different number of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new option grant date.

V.            FINANCIAL STATEMENTS

In the event there are at any time five hundred (500) or more holders of  outstanding options under the Plan, the Corporation shall provide to each such option holder, at the time the outstanding options first become held by five hundred (500) holders and at successive six (6)-month intervals thereafter, financial statements that meet the requirements of Rule 701(e)(4) under the 1933 Act and that are at the time of distribution not more than one hundred and eighty (180) days old. Such obligation shall continue until such time as the Corporation becomes subject to the reporting requirements of Section 13 or 15(d) of the 1934 Act or (if earlier) no longer relies on the exemption from such reporting requirements provided by Rule 12h-1(g) under the 1934 Act.

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ARTICLE THREE

STOCK ISSUANCE PROGRAM

I.             STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants.  Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below.  Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards or restricted stock units.

A.           Issue Price.

1.           The issue price per share shall be fixed by the Plan Administrator but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the issue date.

2.           Subject to the provisions of Section I of Article Four, shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:

(i)            cash or check made payable to the Corporation,

(ii)           past services rendered to the Corporation (or any Parent or Subsidiary), or

(iii)          any other valid consideration under the Delaware General Corporation Law.

B.           Vesting Provisions.

1.           Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon attainment of specified performance objectives.  Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards or restricted stock units which entitle the recipients to receive the shares underlying those awards or units upon the attainment of designated performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those awards or units, including (without limitation) a deferred distribution date following the termination of the Participant’s Service.

2.           Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of

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any stock dividend, stock split, spin-off transaction, extraordinary distribution (whether in cash, securities or other property), recapitalization, combination of shares, exchange of shares or other similar change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

3.           The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested.  Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.  The Participant shall not have any stockholder rights with respect to the shares of Common Stock subject to a share right award or restricted stock unit until that award or unit vests and the shares of Common Stock are actually issued thereunder.  However, dividend-equivalent units may be paid or credited, either in cash or in actual or phantom shares of Common Stock, on outstanding share right awards or restricted stock units, subject to such terms and conditions as the Plan Administrator may deem appropriate.

4.           Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares.  To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant’s purchase-money indebtedness), the Corporation shall repay to the Participant the lower of (i) the cash consideration paid for the surrendered shares or (ii) the Fair Market Value of those shares at the time of Participant’s cessation of Service and shall cancel the unpaid principal balance of any outstanding purchase-money note of the Participant attributable to such surrendered shares by the applicable clause (i) or (ii) amount.

5.           The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the non-completion of the vesting schedule applicable to those shares.  Such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies.  Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives.

6.           Outstanding share right awards or restricted stock units shall automatically terminate, and no shares of Common Stock shall actually be issued in satisfaction of those awards or units, if the performance goals or Service requirements established for such awards or units are not attained or satisfied.  The Plan Administrator, however, shall have the discretionary authority to issue vested shares of Common Stock under one or more outstanding share right awards or restricted stock units as to which the designated performance goals or Service requirements have not been attained or satisfied.

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C.           First Refusal Rights.  Until such time as the Common Stock is first registered under Section 12 of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Participant (or any successor in interest) of any shares of Common Stock issued under the Stock Issuance Program.  Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.

II.            CHANGE IN CONTROL

A.           Upon the occurrence of a Change in Control, all outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, except to the  extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

B.           Each share right award or restricted stock unit outstanding at the time of a Change in Control shall be assumable by the successor corporation (or parent thereof) or may otherwise be continued in effect pursuant to the terms of such Change in Control Transaction.  Each share right award or restricted stock unit which is so assumed or otherwise continued in effect shall be adjusted immediately after the consummation of that Change in Control so as to apply to the number and class of securities into which the shares of Common Stock subject to the award immediately prior to the Change in Control would have been converted in consummation of such Change in Control had those shares actually been outstanding at that time.  Appropriate adjustments shall also be made to the cash consideration (if any) price payable per share under each outstanding share right award or restricted stock unit, provided the aggregate cash consideration payable for such securities shall remain the same.  To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption or continuation of the outstanding share right awards or restricted stock units, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction.  If any such share right award or restricted stock unit is not so assumed or otherwise continued in effect, or if such award or unit is not replaced with a cash retention award which preserves the Fair Market Value of the Common Stock underlying that award or unit at the time of the Change in Control and provides for subsequent payout of that dollar amount in accordance with the vesting schedule in effect for such award or unit at the time of the Change in Control, then such award or unit shall vest, and the shares of Common Stock subject to such award or unit shall become issuable, immediately prior to the consummation of the Change in Control.

C.           The Plan Administrator shall have the discretionary authority to structure one or more unvested stock issuances or one or more share right awards or restricted stock units under the Stock Issuance Program so that the shares of Common Stock subject to those issuances or awards or units shall automatically vest (or vest and become issuable) in whole or in part immediately upon the occurrence of a Change in Control or upon the subsequent termination of

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the Participant’s Service by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of that Change in Control transaction.

III.           SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

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ARTICLE FOUR

MISCELLANEOUS

I.             FINANCING

The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Option Grant Program or the purchase price for shares issued under the Stock Issuance Program by delivering a full-recourse promissory note payable in one or more installments which bears interest at a market rate and is secured by the purchased shares.  In no event, however, may the maximum credit available to the Optionee or Participant exceed the sum of (i) the aggregate option exercise price or purchase price payable for the purchased shares plus (ii) any applicable income and employment tax liability incurred by the Optionee or the Participant in connection with the option exercise or share purchase.

II.           EFFECTIVE DATE AND TERM OF PLAN

A.           The Plan shall become effective when adopted by the Board, but no option granted under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is approved by the Corporation’s stockholders.  If such stockholder approval is not obtained within twelve (12) months after the date of the Board’s adoption of the Plan, then all options previously granted under the Plan shall terminate and cease to be outstanding, and no further options shall be granted and no shares shall be issued under the Plan.  Subject to such limitation, the Plan Administrator may grant options and issue shares under the Plan at any time after the effective date of the Plan and before the date fixed herein for termination of the Plan.

B.           The Plan shall terminate upon the earliest of (i) the expiration of the ten (10)-year period measured from the date the Plan is adopted by the Board, (ii) the date on which all shares available for issuance under the Plan shall have been issued as vested shares or (iii) the termination of all outstanding awards under the Plan in connection with a Change in Control.  All awards and unvested stock issuances outstanding at the time of a clause (i) termination event shall continue to have full force and effect in accordance with the provisions of the documents evidencing those awards or issuances.

III.           AMENDMENT OF THE PLAN

A.           The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects.  However, no such amendment or modification shall adversely affect the rights and obligations with respect to awards or unvested stock issuances at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification.  In addition, certain amendments may require stockholder approval pursuant to applicable laws and regulations.

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B.           Options may be granted under the Option Grant Program and awards and shares may be issued under the Stock Issuance Program which are in each instance in excess of the number of shares of Common Stock then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan.  If such stockholder approval is not obtained within twelve (12) months after the date the first such excess grants or issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund to the Optionees and the Participants the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow, together with interest (at the applicable Short Term Federal Rate) for the period the shares were held in escrow, and such shares shall thereupon be automatically cancelled and cease to be outstanding.

IV.           USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.

V.           WITHHOLDING

The Corporation’s obligation to deliver shares of Common Stock upon the exercise of any options granted under the Plan or upon the issuance or vesting of any shares issued under the Plan shall be subject to the satisfaction of all applicable income and employment tax withholding requirements.

VI.           REGULATORY APPROVALS

The implementation of the Plan, the granting of any options under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any option or (ii) under the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it.

VII.         NO EMPLOYMENT OR SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.

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APPENDIX

The following definitions shall be in effect under the Plan:

A.           Board shall mean the Corporation’s Board of Directors.

B.           Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

(i)           a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction, or

(ii)          a stockholder-approved sale, transfer or other disposition of all or substantially all of the Corporation’s assets in liquidation or dissolution of the Corporation, or

(iii)         the acquisition, directly or indirectly by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities pursuant to a tender or exchange offer made directly to the Corporation’s stockholders.

In no event shall any public offering of the Corporation’s securities be deemed to constitute a Change in Control.

C.           Code shall mean the Internal Revenue Code of 1986, as amended.

D.           Committee shall mean a committee of one (1) or more Board members appointed by the Board to exercise one or more administrative functions under the Plan.

E.           Common Stock shall mean the Corporation’s common stock.

F.           Corporation shall mean Aperion Biologics, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Aperion Biologics, Inc. which shall by appropriate action adopt the Plan.

G.           Disability shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances.

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H.           Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

I.            Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise.

J.            Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

(i)           If the Common Stock is at the time traded on the Nasdaq Global or Global Select Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers for that particular Stock Exchange and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

(ii)           If the Common Stock is at the time listed on any other Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

(iii)           If the Common Stock is not at the time listed on any Stock Exchange, then the Fair Market Value shall be determined by the Plan Administrator through the reasonable application of a reasonable valuation method that takes into account the applicable valuation factors set forth in the Treasury Regulations issued under Section 409A of the Code; provided, however, that with respect to an Incentive Option, such Fair Market Value shall be determined in accordance with the standards of Section 422 of the Code and the applicable Treasury Regulations thereunder.

K.           Family Member means, with respect to a particular Optionee or Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law.

L.            Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

M.           Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of:

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(i)            such individual’s involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or

(ii)           such individual’s voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected without the individual’s consent.

N.           Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner.  The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, to constitute grounds for termination for Misconduct.

O.           1933 Act shall mean the Securities Exchange Act of 1933, as amended.

P.           Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

Q.           Option Grant Program shall mean the option grant program in effect under the Plan.

R.           Optionee shall mean any person to whom an option is granted under the Plan.

S.           Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

T.           Participant shall mean any person who is issued shares of Common Stock under the Stock Issuance Program or to whom restricted stock units or share rights are awarded under such program.

U.           Plan shall mean the Corporation’s 2008 Stock Option/Stock Issuance Plan, as set forth in this document.

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V.            Plan Administrator shall mean either the Board or the Committee acting in its capacity as administrator of the Plan.

W.          Service shall mean the performance of services for the Corporation (or any Parent or Subsidiary, whether now existing or subsequently established) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance.  For purposes of the Plan, an Optionee or Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) the Optionee or Participant no longer performs services in any of the foregoing capacities for the Corporation or any Parent or Subsidiary or (ii) the entity for which the Optionee or Participant is performing such services ceases to remain a Parent or Subsidiary of the Corporation, even though the Optionee or Participant may subsequently continue to perform services for that entity. Service shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that for a leave which exceeds three (3) months, Service shall be deemed, for purposes of determining the period within which any outstanding option held by the Optionee in question may be exercised as an Incentive Option, to cease on the first day immediately following the expiration of such three (3)-month period, unless that Optionee is provided with the right to return to Service following such leave either by statute or by written contract.  Except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period the Optionee or Participant is on a leave of absence.

X.           Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

Y.           Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.

Z.           Stock Issuance Program shall mean the stock issuance program in effect under the Plan.

AA.        Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

BB.         10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary).

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EX1A-11 CONSENT

Exhibit 11.1

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

We consent to the inclusion in this Offering Statement of Aperion Biologics, Inc. on Form 1-A of our report dated September 21, 2015, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audits of the financial statements of Aperion Biologics, Inc. as of September 30, 2014 and 2013 and for the years ended September 30, 2014 and 2013, which report appears in the Offering Circular, which is part of this Offering Statement.

/s/ Marcum llp

Marcum llp

New York, NY

September 21, 2015

EX1A-13 TST WTRS

Exhibit 13.1

 *  Corporate Presentation  Daniel LeeChief Executive OfficerDavid CockeChief Financial OfficerKevin Stone, M.D.Founder & ChairmanAugust 2015 

 *  DISCLAIMERTHE INFORMATION CONTAINED HEREIN IS PROVIDED SOLELY FOR THE PURPOSE OF ACQUAINTING THE READER WITH APERION BIOLOGICS, INC. (THE “COMPANY” OR “WE”) AND ITS EXECUTIVE PERSONNEL, AND TO SOLICIT ANY INDICATION OF INTEREST IN A POTENTIAL OFFERING OF SECURITIES BY THE COMPANY. IT IS NOT AN OFFER TO SELL NOR IS IT A SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES AND CONVEYS NO RIGHT, TITLE OR INTEREST IN THE COMPANY OR THE PRODUCTS OF ITS BUSINESS ACTIVITIES. NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED IN CONNECTION THIS MEETING AND PRESENTATION, AND IF SENT IN RESPONSE, WILL NOT BE ACCEPTED. NO OFFER TO BUY THE SECURITIES CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICE CAN BE RECEIVED UNTIL AN OFFERING STATEMENT ON FORM 1-A IS QUALIFIED PURSUANT TO REGULATION A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SUCH OFFER MAY BE WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR COMMITMENT OF ANY KIND, AT ANY TIME BEFORE NOTICE OF ITS ACCEPTANCE GIVEN AFTER THE QUALIFICATION DATE. ANY PERSON'S INDICATION OF INTEREST IN THE MEETING INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND. THE INFORMATION CONTAINED HEREIN IS CONFIDENTIAL AND STRICTLY PROPRIETARY. BY ACCEPTING THIS DOCUMENT, THE RECIPIENT AGREES NOT TO REPRODUCE ITS CONTENTS NOR DISCLOSE OR DISTRIBUTE SAME TO ANY PERSON OR ENTITY WITHOUT THE EXPRESSED PRIOR CONSENT OF THE COMPANY. THIS PRESENTATION DOES NOT PURPORT TO BE ALL-INCLUSIVE OR TO CONTAIN ALL OF THE INFORMATION YOU OR ANY PROSPECTIVE INVESTOR MAY DESIRE. YOU SHOULD MAKE YOUR OWN DECISION ON WHETHER THIS INVESTMENT OPPORTUNITY MEETS YOUR INVESTMENT OBJECTIVES AND RISK TOLERANCE LEVEL. ANY PERSON CONSIDERING ENTERING INTO A PROPOSED TRANSACTION SHOULD SEEK ITS OWN INDEPENDENT FINANCIAL AND LEGAL ADVICE.   FORWARD LOOKING STATEMENTSTHIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS THAT ARE BASED ON OUR MANAGEMENT’S BELIEF AND ASSUMPTIONS AND ON INFORMATION CURRENTLY AVAILABLE TO OUR MANAGEMENT. ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS REFLECTED IN THESE FORWARD-LOOKING STATEMENTS ARE REASONABLE, THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OR PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. ACCORDINGLY, YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE STATEMENTS. FORWARD-LOOKING STATEMENTS IN THIS PRESENTATION INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS RELATING TO THE PROJECTED GROWTH OF ACL MARKETS; THE ANTICIPATED COMMERCIALIZATION OF OUR Z-LIG PRODUCTS; THE POTENTIAL APPLICATIONS OF OUR Z-PROCESS AND TECHNOLOGY; OUR STRATEGIES TO REALIZE DEVELOPMENT OPPORTUNITIES; THE TIMING AND STATUS OF CLINICAL TRIALS FOR OUR PRODUCT CANDIDATES; AND OUR ABILITY TO SUCCESSFULLY LAUNCH AND MARKET OUR PRODUCTS. THESE FORWARD LOOKING STATEMENTS ARE SUBJECT TO VARIOUS RISK FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM OUR CURRENT EXPECTATIONS. WE HAVE NO CURRENT INTENTION OF UPDATING THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PRESENTATION EXCEPT TO THE EXTENT REQUIRED BY LAW. YOU SHOULD THEREFORE NOT RELY ON THESE FORWARD-LOOKING STATEMENTS AS REPRESENTING OUR VIEWS AS OF ANY DATE SUBSEQUENT TO THE DATE OF THIS PRESENTATION. 

 *  Z-Lig is the first non-human biologic device for ACL reconstructionReceived CE Mark approval for initial indication of revision and multiligament reconstruction proceduresProprietary Z-Process immunochemically modifies optimal animal tissue for compatibility with human immune system while retaining scaffold quality and strengthRequires no change in surgical techniqueStabilizes knee and functions as dynamic implant for gradual host cell repopulation and subsequent ligamentizationRe-establishment of original tissue morphology allows natural repair of cumulative wear that limits useful life of non-biologic grafts in mechanically intensive applications  Z-Lig®: Alternative Solution for ACL Replacement  Z-Lig – a novel ACL replacement which provides both structure and immunocompatibility  Patient #4  Patient currently 9 years post-surgery 

 *  Product Pipeline   Target all currently used options for ACL reconstructionAll designed and optimized to meet doctor and patient needsDesigned to work with current fixation devices and instrumentsReceived CE Mark (BT+ and BTB) to commercialize in EU and other countries  The Z-Lig® Family of devices  Z-Lig BTB  Z-Lig BT+  Z-Lig ST 

 *  Product Pipeline  Z-Patch  Z-Fix  Patch product for soft tissue repair/augmentation sourced from porcine dermisSurgical market opportunity includes orthopaedics, general and reconstructive, plastic and wound healingCritical role of α-Gal removal has been published extensively  Initial application as a biologic fixation device for ACL reconstructionAll biologic ACL reconstructionMarket opportunity includes conductive and inductive bone graft repair and spacer implants  Near-term product opportunities in large global markets with 510 (k) pathway  Product representation  Product representation 

       Current Development Status  Current Development Status  Current Development Status  Current Development Status  Current Development Status        ProductName  ProductCategory  InitialRegulatoryPathway  Research  Preclinical  Pilot  Pivotal  Marketed  Clinical Detail  EU Market  U.S. Market  Z-Lig®  ACL  CE Mark            6 & 12 months post implantation in 60 patient EUSA trial100% of remaining subjects met 36 month endpoint in 4/2015  1Q:15$0.7b    Z-Lig®  ACL  PMA            FDA has unconditionally approved U.S. pivotal trial protocol10-patient U.S. pilot safety trial completed    2018-9$0.8b  Z-Patch  ExtracellularMatrix  CE Mark            Completion of developmental testing and validation 1H:17CE Mark approval by 1H:18  2018$1.0b    Z-Patch  ExtracellularMatrix  510 (k)            510(k) approval by 1H:18U.S. post-market tevaluation to follow    2018$1.2b  Z-Fix  Bone  CE Mark            CE Mark approval by 2H:18  2018$4.0b    Z-Fix  Bone  510 (k)            Preclinical testing to be completed in 2H:16    2018$6.8b  Z-Meniscus  Meniscus  CE Mark            Preclinical testing to be conducted 2H:17  2019-20$1.0b    Z-Meniscus  Meniscus  PMA            Preclinical testing to be conducted 2H:17    2020$1.5b  *  Product Pipeline 

 *  In orthopaedics and other surgical categories, human & animal tissue is widely used but has limitationsWe have developed and patented a technique facilitating successful implantation of animal tissuesOur Z-Lig® Anterior Cruciate Ligament Replacement (ACLR) is the first “off-the-shelf” biological ACL replacement device Positioned to address the $2 billion ACL marketCompelling clinical data, with 96% success at 6 months and 92% at 12 months, better than the standard of careOur commercial introduction underway in Europe and other countries Q1 2015CE Mark granted for revision and multi-ligament indicationsUnconditional FDA approval received to commence US pivotal trialOur tissue processing methods represent a technology platform – several anatomies/applications await  Aperion is commercializing an off-the-shelf ACL replacement  Aperion Biologics 

 Knee Injuries/ACL Surgeries Growing Globally  ACL injuries are common: estimated 2.6M* ACL injuries annually globally. Not all are treated today.$2b in ACL surgeries: 800K targetable procedures annually@$2,500 per procedureGrowing at 6-10%*Concentrated in EU and US30% in European market (where we have approval to sell) 40% US30% ROW  One of the few remaining high growth markets in orthopedics  European ACL Graft Mark(265k procedures annually)  US ACL Graft Market(300k procedures annually)  Global ACL Graft Market – $2.1b*  *  *Third party research (iData Research) or company estimates 

 *  One of the few remaining high growth markets in orthopedics  Number of Procedures (mm)  Global ACL Reconstruction Market Projections (1)  ACL Reconstructions ’12:’21 CAGR: 7%   2012E – 2021E CAGRUS – 8%EU – 5%ROW – 6%  US  EU  ROW  US ACL Graft Market by Type (300k procedures)  European ACL Graft Market by Type (265k procedures)  Global ACL Graft Market – $2.1B (1)  (1) Figures are from third party research and are projected 2012 estimates. ROW includes markets that can be penetrated in the near term via CE Mark approval.Note: These figures include: (i) the sales of allografts and synthetic grafts and (ii) the direct surgical costs of the autograft harvesting and subsequent direct incremental rehabilitation and medication costs related to the second surgical site (assumed to be $2,500 per procedure in total).   Knee Injuries/ACL Surgeries Growing Globally 

 The Z-Process™: The Effective Way to Treat Xenografts for Use in SurgeryWhat Makes us Different  

 *  Current Treatment Options  Safety  ++  +++  ?  ++  ?  Consistent Quality  ++  +  ?  +++  ++  Ability to Regenerate / Remodel  ++  ++  ++  ?  ?  No Supply Limitation  +++  +  ?  +++  +++  Standard surgical technique        ?  ?  No 2nd Surgical Site Required/Reduces OR time    -        Commentary  Safe, strong, available  Current “gold standard”Disadvantaged by higher operative and rehab time  Variable tissue qualityGlobal availability constrained by legal, cultural and religious issuesPotential for disease transmission  Indicated for high performance athletes quick return to activityRegeneration lacking, high failure rate  Biological / tissue based but does not regeneratePorcine xenografts already well acceptedFixation methods (crosslinking) restrict ability to remodel  Traditional Xenograft  Z-Lig  Allograft  LARS Synthetic  Autograft 

 *  Immune Challenge: alpha-galactosidase (α-Gal)  Lower species express specific carbohydrate epitopes called α-GalHumans (and some primates) have evolved to produce antibodies that bind to the α-Gal antigen to initiate a rapid immune rejection process1% of circulating human antibodies are anti-Gal 

 *  Aperion is the only company with issued patents to use alpha galactosidase to cleave the gal-antigen from non-primate tissue so that it is compatible with the human immune systemAlpha galactosidase is the only known treatment for cleaving the gal-antigen while preserving the graft’s key biological components and functionalityThe enzyme and its mechanism of action is well characterized and understood  Traditional Xenograft Hyperacute Rejection  Z-Process Prevents Rejection  Gal Antigen  PorcineGraft  Human’s Anti-GalIdentifiers  Human’s Neutrophils & Macrophages  Z-Process’GalactosidaseRemoving Gal  Aperion’s Solution: The Z-Process 

 *  Tissue cleaning processα-Galactosidase enzyme treatmentSolves α-Gal rejection issue by cleaving the terminal galactose of the α-Gal antigenStabilizationWhile alpha-galactosidase enzyme treatment solves the gal rejection issue, it has no effect on the non-α-Gal immune responseCrosslinking provides additional ability to tailor implant with desired remodeling propertiesSterilization and packagingTerminally sterilized by irradiationPackaged in a ready-to-use graft configuration minimizing operating room time  Aperion’s Solution: The Z-Process  A patented, reproducible process that preserves the graft’s ability to remodel, providing long-term functionality  2  3  4  1  Biological and Mechanical Properties maintained 

 Z-Process Can Be Used in Numerous Market Opportunities  *  Proprietary product platform has broad applicability to many other tissue needs beyond ACL replacementExtracellular matrixWound healingBone replacementHeart valvesLonger term, Aperion’s technology could be instrumental in:Dynamic scaffold with architectural and mechanical advantagesStem cell deliveryGrowth factor deliveryDrug delivery  Shoulder Rotator cuff repair  Knee ACL/PCL ligament reconstructionsMeniscus  Spine Spacers/bone grafting  HeartHeart valvesVascular grafts  TendonAchilles tendon repair  SkinCosmetic soft tissue augmentation  General Surgery Hernia repair  Wound CareChronic wounds  Urogynecology  Exceptionally solid IP estate providing Aperion with a powerful position in removal of α-Gal in key tissues—broad applicability of Aperion’s technology creates numerous opportunities 

 Z-Lig Clinical Results: Demonstration of Significant Clinical Outcomes 

 *  Aperion conducted studies in 20 Rhesus monkeys; treated with Z-Lig, allograft and unprocessed porcine xenograftAll Z-Lig results were substantially similar to the allograft-implanted monkey controlSerological studies Support immunocompatibility; transient production of gal and non-gal antibodies substantially decreased at approximately 9 monthsBiomechanical testingDemonstrates graft functional efficacy comparable to the allograft and autograft reconstructionsHistopathologyAdvanced graft remodeling and maturationFunctional host integration of both tendon and boneNo adverse synovial response  Rhesus Allograft(+ control)  Untreated Porcine(- control)  Z-Lig  Preclinical Efficacy Studies  1  2  3 

 *  Z-Lig safety pilot was conducted in 10 humans under an IDE with the FDAAs assessed in five of six evaluable subjects:Presented with functional grafts at the 12- and 24-month post- operative time pointsSatisfied all study success criteria including effusion, KT-1000, Pivot Shift, Lachman and Anterior Drawer testsVia MRI, showed significant remodeling and maturation of the functioning graftsFDA subsequently granted unconditional approval of a pivotal non-inferiority trialWe plan to begin this trial in 2016 with funds from this offering  US Pilot Trial Overview  Continued safety and graft function in patients from pilot safety study 12 years post-op  Mean Age 41 Years (range 21-51)7 males / 3 females5 of 10 chronic ACL injury (>3 months post injury)Operative / injured knee previous surgeries:2 ACL revisions1 ACL repair3 Medial meniscal repairsContralateral surgeries:3 ACL reconstructionsExtremely athletic population – Pre-injury Tegner average = 8.0  Patient Demographics 

 Z-Lig European/South African Clinical Study for CE Mark approval  *  Study Design  Composite Endpoint  60+ ACL replacement subjects7 sites – Belgium, Denmark, Netherlands, Italy, South Africa, SpainLevel 1 prospective, randomized, controlled trialAllograft-controlledEvaluator- and subject-blinded  6-month performance (non-inferiority) and safetySuccess defined as 2 of 3: KT-1000, Lachman’s, Pivot ShiftUtilization of composite endpoint addresses inherent clinical variability in each of the three individual endpoints 

 *    Physician  Institution  Leading Opinion Leaders  René Verdonk, MD, PhDPeter Verdonk, MD, PhDFredrik Almqvist, MD, PhD  Gent University Hospital Dept. of Orthopaedic Surgery & TraumatologyGent, Belgium  One of the most highly respected orthopedic/sports medicine research centers in Europe Prof. René Verdonk was inducted into the Hall of Fame for the American Orthopaedic Society for Sports Medicine, one of the highest honors given to a member of this American society  Willem van der Merwe, MDCape Town, South Africa  Sport Science Institute of South AfricaCape Town, South Africa  The Sports Science Institute is a leading center in sports medicine for South AfricaDr. van der Merwe is a member of the ACL Study group, a peer-selected international group focused on advanced ACL treatments  Maurilio Marcacci, MDStefano Zaffagnini, MD  Instituti Ortopedici Rizzoli - Bologna University Sports Traumatology Dept. Bologna, Italy  One of the most highly respected orthopedic/sports medicine research centers in Europe Considered to be the top orthopedic center in Italy  Ramón Cugat, MD, PhDMontserrat García-Balletbó, MD, PhD  Hospital Quirón Artroscopia GCBarcelona, Spain  Dr. Cugat is orthopedic consultant for FC Barcelona and medical assessor for the Catalan Football Federation (130,000 players in the Catalan region)Considered one of the top ACL clinicians in Spain  Martin Lind, MD, PhDPeter Faunoe, MD  Aarhus University HospitalDept. of Orthopaedic Surgery & TraumatologyAarhus, Denmark  Dr. Lind is responsible for the Scandinavian ACL Registry in DenmarkScandinavian ACL Registry is recognized as one of the most comprehensive ACL registries  Kees van Egmond, MDRutger Zuurmond, MD  Isala KliniekenDepartment of Orthopaedic SurgeryZwolle, Netherlands  The Isala Klinieken is the leading training center in the Netherlands for orthopedic surgeons  Pedro Guillen, MD  Clínica CemtroOrthopaedic Surgery & TraumatologyMadrid, Spain  Clinica Cemtro is a private hospital founded by Prof. Guillen which performs over 1,000 ACL reconstructions annuallyConsidered one of the top ACL clinicians in Spain  CE Trial Investigators & Sites 

 Outcomes   Tegner  SF-36  Patients return to a high level of activityand demonstrate increased satisfaction with their outcomes over time  *  Percentage achieving > 90% functional performance of operated knee when compared to uninjured knee . . .Z-Lig enables return to normal functional performance 

 *  Outcomes - Composite Stability  6 Months  12 Months  85% Success: the “Standard of Care”  24 Months  Demonstrated success better than literature reports with allograft – a clinical “standard of care”  88%   12%   Success  Falure  92%   8%   Success  Falure 

 *  Serology Findings – Preclinical & Pilot Safety  Primate  Human  Low antibody titers demonstrate markedly reduced immune recognition  10  100  1,000  10,000  100,000  0  2  4  6  8  10  12  Months Post-Reconstruction  Reciprocal Antibody Titer  Z-Lig: Anti-GAL IgG  Z-Lig: Anti-non-GAL IgG  Untreated: Anti-GAL IgG  10  100  1,000  10,000  100,000  0  20  40  60  80  Months Post-Reconstruction  Anti-GAL IgG  Anti-non-GAL IgG  Reciprocal Antibody Titer  T = 0 represents pre-implant titer  Without Z-technology untreated xenograft is biologically incompatible and non-functional 

 *  Key Clinical Takeaways  Key endpoint met for non-inferiority evaluation by Notified BodyCompelling 6, 12 and 24 month safety and performance data versus “standard of care” – study control are performed well above historical resultsObjective measurements - stability, ROMFunctional - one legged hopSubjective - SF-36, TegnerAll of study subjects have met 24 month milestone, most are beyond 36 months  Clinical Analysis  Z-Lig performed extremely well and demonstrated success at 6, 12 and 24 months  Six subjects suffered SAEs deemed related to device—external experts confirm all device-related SAEs caused by infection from water system—remedied by review and improvement of manufacturing process 

 Z-Lig European Commercialization 

 *  CE Mark Market Launch  The right people, right place and right data to sell in Europe in 2015  Z-Lig will be immediately impactful in Europe  Limited local market allograft supply  +  Compelling Z-Lig European clinical data  +  Support of key clinical opinion leaders  +  Restrictions on allograft importation  Key Market Launch Plan Elements  Key Distributor Terms  Phased launch in select marketsInitial target: multi-ligament and revision ACL reconstruction surgeries- 15% of totalWork with key clinicians and “thought leader” clinical investigatorsRegistries in select markets to collect additional clinical experience  Seeding markets throughout EUWorking with 1 leading distributor in each country: Stocking inventory, invoicingProducts sold at transfer fee; billing managed by distributorReimbursed under DRG codes  Need for immediate alternative to autograft  + 

 Go to Market: Phased Seed Strategy at Regional Level  Develop One Key Distributor Relationship per Country - Often Legally Required (Invoicing, etc.)Rationalizing/optimizing based on new personnelChampions and Clinicians in each CountryClinical investigators will continue to use/advocate for Z-LigFor Phase 1, Additional 4 to 10 New Clinicians in Each Country to be identified in conjunction with new distributor  * 

 US Market Regulatory and Commercial 

 Current team optimizes manufacturing and sourcing operations for long-term commercial viabilityReceives unconditional approval to commence IDE pivotal trial  *  FDA Overview and timeline  2010 - 2013  FDA Communication Timeline  Optimize US pivotal trial protocolPreparation for U.S. pivotal trial     Planned Optimization    Benefit   Randomization   Change subject randomization from 1:1 to 2:1    Reduces N from 326 to 245  Clinical Sites  Increase number of clinical sites from 10 to 20    Reduces recruitment period from 30 months to 15 months  EUSA Trial Data  Consider EUSA trial data in US trial    Potentially reduces N or reduces focus on longer term data  Screw Selection  Company remains screw manufacturer agnostic    Allow multiple manufacturers’ screws to be used 

  Summary Remarks 

 *  Highlights  Z-Lig will be the first commercialized and clinically tested, “off-the-shelf” biological ACL replacement Addresses shortcomings of existing market alternatives – Z-Lig is Healthy and Strong, Every Time  First & Only Tissue-Based Graft Product  Entered into commercialization in select EU markets in Q12015FDA unconditional approval for US pivotal IDE clinical trial   Commercialization  Disruptive IP protected technology facilitating successful implantation of processed animal tissuesBroad range of additional biologic applications – ligament, matrix, bone, valves, etc.  Proprietary Product Platform  First biologic graft to address >$2 billion global ACL market – a high-growth market in orthopedicsEarly market opportunity in Europe  Large Global Market Opportunity  Strong Management Team  Career-long orthopedic biomaterials focus and extensive commercialization experience  96% success at 6 months and 92% at 12 months in ongoing Level 1 randomized, controlled OUS clinical trialPerformance better than the standard of careClinical results validate 10 year data from US human pilot safety study  Compelling Clinical Data 

 Proposed Financing  *   Launch core EU markets Regulatory submissions for non-EU markets   Initiate US IDE study Introduce soft tissue ACL product Introduce dermis product   Expansion EU and non-EU markets Full ACL indication   Expand all Z-Process products in all markets  1H 2016  2H 2015  2H 2016  1H 2017  2H 2017  FINANCING  EVENTS   Scale-up Staffing Expanded indication study Expansion into other OUS markets 

 *  Z-Lig’s Time Has Come  The Right Market  ACL reconstruction estimated to outpace hip, knee and spine growthACL market is highly underpenetratedCurrent treatment options for ACL have severe drawbacksAutografts require longer operative and rehab timeAllografts are in short supply and vary greatly in qualitySynthetic grafts lack the ability to regenerate resulting in high failure rateTraditional xenograft fixation methods restrict ability to remodel  The Right Technology  First revolutionary product innovation in over a decadeTechnology platform w/ multiple applications outside ACLExtracellular matrixBone replacementMeniscus replacementProduct that addresses shortcomings of other xenograft products – strength vs. remodeling  At The Right Time  Near-term commercialization in EU and other marketsMinimal allograft availability will drive Z-Lig uptake immediatelyImmediate need for a graft alternative for revision and multiligament proceduresClearly defined US regulatory pathwayStrong EU data supports efficacy and timelineStudy design to address reimbursement Leverage experience and infrastructure to best position Z-Lig for approval510(k) approval path for Z-Patch and Z-Fix minimizes risk  The product the Sports Medicine world has been waiting for… 

 *  85 

 Appendix  * 

 *  Management  Name  Background  Daniel LeeChief Executive Officer  Joined Aperion in 2008; 20+ years experience in medical device industryPrior Experience: Responsible for TruRepair business at Smith & Nephew Endoscopy, responsible for Global Marketing Activities at OsteoBiologics, Director of Marketing at Regeneration Technologies and Director of Sports Medicine R&D group at Surgical DynamicsHolds a Certified Tissue Bank Specialist certification and 13 patents on implants and instruments used in orthopaedic and general surgeryReceived Masters of Science in Biomedical Engineering from University of Alabama at Birmingham and Bachelor of Science degree in Materials Science and Engineering from Johns Hopkins University  David CockeChief Financial Officer  Joined Aperion in 2008Prior Experience: GM at NuPak Medical, CFO at NuTech, managed Corporate Development Department at KCI, employed at Corporate Finance group of GE Capital and Investment Banking group of Salomon BrothersReceived MBA degree from University of Virginia’s Darden Graduate School of Business Administration and BBA degree with High Honors from the University of Texas at Austin   Lance JohnsonVP, Quality Systems  Joined Aperion Biologics in November 2010; 20+ years of experience in FDA Requirements and Quality SystemsPrior Experience: Quality Manager at Zimmer Spine, Quality Engineering Manager at Abbott Spine and 16 years of experience as investigator with FDA; Received Level II Auditor certification in 2003 and Medical Device Level II certification in 1998 Received Bachelor of Science degree in Biotechnology from Oklahoma State University  

 *  Board of Directors  Name  Background  Daniel LeeChief Executive Officer  Joined Aperion in 2008; 20+ years experience in medical device industryPrior Experience: Responsible for TruRepair business at Smith & Nephew Endoscopy, responsible for Global Marketing Activities at OsteoBiologics, Director of Marketing at Regeneration Technologies and Director of Sports Medicine R&D group at Surgical DynamicsHolds a Certified Tissue Bank Specialist certification and 13 patents on implants and instruments used in orthopaedic and general surgeryReceived Masters of Science in Biomedical Engineering from University of Alabama at Birmingham and Bachelor of Science degree in Materials Science and Engineering from Johns Hopkins University  David CockeChief Financial Officer  Joined Aperion in 2008Prior Experience: GM at NuPak Medical, CFO at NuTech, managed Corporate Development Department at KCI, employed at Corporate Finance group of GE Capital and Investment Banking group of Salomon BrothersReceived MBA degree from University of Virginia’s Darden Graduate School of Business Administration and BBA degree with High Honors from the University of Texas at Austin   Lance JohnsonVP, Quality Systems  Joined Aperion Biologics in November 2010; 20+ years of experience in FDA Requirements and Quality SystemsPrior Experience: Quality Manager at Zimmer Spine, Quality Engineering Manager at Abbott Spine and 16 years of experience as investigator with FDA; Received Level II Auditor certification in 2003 and Medical Device Level II certification in 1998 Received Bachelor of Science degree in Biotechnology from Oklahoma State University  

 Aperion’s Manufacturing Facility  *  Unlike allografts, Aperion’s production process is highly scalableReadily available and consistent raw materialPorcine tissue sourced in accordance with ISO/TR 22442 and FDA regulationsSignificantly higher gross margins than currently commercialized allografts4,000-square foot facility in San Antonio, Texas1,000-square feet of Class 6 to Class 8 clean roomsReceived ISO 13485 certification of its quality systems in January 2010, recertified in June 2011, transferred to new notified body October 2013Supports commercial sales for next 2-4 years   Aperion’s headquarters in San Antonio, Texas has Class 6 to Class 8 manufacturing clean rooms 

 Intellectual Property  *  23 issued patents in the U.S. and internationally and 3 patent applications: exclusive rights to use alpha-galactosidase enzyme to remove gal antigens from non-primate animal tissues, including ligaments, cartilage, bone, heart valves, vascular tissue, collagen and many other tissuesMaterial Composition for Z-processed tissuesThe Process used to create the Z-productsAdditional extensive coverage of immunochemical modifications of dermal- and tendon-derived injectable collagen formulations  Exceptionally solid IP estate providing Aperion with a powerful position in removal of α-Gal in key tissues 

PART II AND III

Preliminary Offering Circular Dated September 21, 2015

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission, which we refer to as the Commission.  Information contained in this Preliminary Offering Circular is subject to completion or amendment.  These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.

APERION BIOLOGICS, INC.

Best Efforts Offering of            Shares of Common Stock

This Offering Circular relates to the offer and sale of up to        shares of common stock of Aperion Biologics, Inc., a Delaware corporation.  We anticipate that the offering price will be between $         and $        per share.

	Price to Public	Underwriting Discounts and Commissions	Proceeds to Issuer
Per share:	$	$	$
Total Minimum:	$	$	$
Total Maximum:	$	$	$

Acting as Underwriter

See “Risk Factors” on page [  ] to read about factors you should consider before buying shares of our common stock.

The underwriter has agreed to use its best efforts to procure potential purchasers for the shares of common stock offered pursuant to this Offering Circular.

The shares are being offered on an all or none basis. The offering will commence on the date of this Offering Circular. All investor funds received from the date of this Offering Circular to the closing date of this offering, which shall take place on         , 2015, will be deposited into an escrow account until closing. The closing date is also the termination date of this offering. If, on the closing date, investor funds are not received for the full amount of shares to be sold in this offering, the offering will terminate and any funds received will be returned promptly, without interest.

Following this offering, our common stock will be quoted on OTCQB under the symbol “     .”

The Company is following the “Offering Circular” format disclosure under Form 1-A.

GENERALLY NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING LITERATURE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR APPLICABLE STATE SECURITIES LAWS, AND THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION. HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.

THIS OFFERING CIRCULAR CONTAINS ALL OF THE REPRESENTATIONS BY THE COMPANY CONCERNING THIS OFFERING, AND NO PERSON SHALL MAKE DIFFERENT OR BROADER STATEMENTS THAN THOSE CONTAINED HEREIN. INVESTORS ARE CAUTIONED NOT TO RELY UPON ANY INFORMATION NOT EXPRESSLY SET FORTH IN THIS OFFERING CIRCULAR.

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TABLE OF CONTENTS

Page

Offering Circular Summary	4
Risk Factors	9
Dilution	21
Underwriting	24
Use of Proceeds	26
Description of Business	28
Management’s Discussion and Analysis of Financial Condition and Results of Operations	51
Directors, Executive Officers and Significant Employees	54
Compensation of Directors and Executive Officers	57
Security Ownership of Management and Certain Securityholders	58
Interest of Management and Others in Certain Transactions	59
Securities Being Offered	63
Financial Statements	69
PART III—EXHIBITS	70
SIGNATURES	72

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OFFERING CIRCULAR SUMMARY

This summary highlights information contained elsewhere in this Offering Circular and does not contain all of the information that you should consider in making your investment decision.  Before investing in our common stock, you should carefully read this entire Offering Circular, including our consolidated financial statements and the related notes and the information set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case included elsewhere in this Offering Circular.  Unless otherwise stated, all references to “us,” “our,” “we,” the “Company” and similar designations refer to Aperion Biologics, Inc.

Overview

We are a commercial-stage medical device company addressing the significant need for an alternative to human-based sources of tissues to be used in surgical procedures. Our lead product, the Z-Lig^®, is produced by a patent-protected process for porcine tendons and its safety and performance was demonstrated in multicenter, prospective randomized trials in Europe and South Africa.  In 2014, we received the CE Mark (the regulatory permission to market the product in Europe) for use initially as a knee joint anterior cruciate ligament (“ACL”) replacement in revision and multiligament procedures, which allows us to distribute the Z-Lig in any market which recognizes this approval.  We have been building the appropriate distribution channels, primarily focusing on establishing a network of distributors that have strong relationships with sports medicine doctors.

Z-Lig is the only known biological alternative to human tissue for ACL replacement.  Since Z-Lig is a biological implant that maintains a scaffold, it can become populated and remodeled with the patient’s own cells (similar to human-sourced tissue), referred to in the industry as “ligamentization”.  This ligamentization is one of the keys to Z-Lig’s proven ability to be highly functional in patients many years post-implantation. Our propriety process is protected by an extensive portfolio of patents and patent applications, including 23 issued patents in the U.S. and internationally.

Our Solution

To solve for xenotransplant rejection problems, we developed the Z-Process, which is a proprietary process that immunochemically modifies animal tissue so that it is compatible with the human immune system.  The Z-Process addresses both α-gal and non-gal antigens on the xenograft to create porcine tendons that can be safely used in humans while still maintaining their biological scaffold activity. Using the Z-Process, we developed the Z-Lig^® device as an immunocompatible, porcine-derived ACL reconstruction alternative that provides a readily available, off-the-shelf solution and is strong, sterile, cost-effective and consistent.

Our Product Candidate Pipeline

In addition to the ACL, our processing technology represents a platform which can also potentially be applied to opportunities involving cartilage, soft tissue patches (extracellular matrices), bone, heart valves, vascular grafts, collagen and other tissues throughout the body.

The Company has several product families in clinical and preclinical development and research stages that fall into four general groupings:

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• Z-Lig – family of devices designed for use in a range of ligament reconstruction procedures, in addition to the initial application for the ACL.

• Z-Patch – an extracellular matrix product used in soft tissue repair and augmentation procedures.

• Z-Fix – a bone-based product for biologic fixation in ACL reconstruction procedures which would be complementary to the Z-Lig device permitting an all-biologic ACL reconstruction.

• Z-Meniscus – a meniscus device which can be use in the repair or reconstruction of meniscal injuries and defects.

Our Strategies

Our contact with clinicians confirmed that the initial market need for the Z-Lig is comprised of those revision and multiligament knee joint cases where a graft option is required to achieve the desired clinical result. The first phase of our European roll-out calls for the targeting of a select number of markets where human or synthetic graft options are accepted; in particular those markets whose sites participated in our European and South African (EUSA) clinical trials.  Thus, the initial target markets for Z-Lig distribution include Italy, South Africa, Poland, Spain, UK, and the Benelux countries (Netherlands, Belgium, Luxembourg).  We have identified and signed with a select group of distributors that have met our selection criteria, which include existing complementary product lines, market share, financial stability, and willingness to invest in the product line.  In these markets, we are introducing the product through a targeted approach by focusing on clinicians chosen by our investigative surgeons and our distribution partners.

Supporting our indirect distribution efforts will be Aperion direct personnel specifically tasked with sales management and also clinical marketing specialists for training and technical/scientific field education.

The next distribution phase is expected to expand our application of use to include all ACL indications and furthermore to add European and Asian markets that accept the CE Mark, with a specific focus on high-volume clinical centers or those specializing in knee injuries.  The third and final phase would include pan-European expansion into markets in the EU and continued introduction in markets outside the United States that accept the CE Mark and potential distribution into non-European nations whose regulatory bodies require additional regulatory approval.

We intend to build a sizable revenue base with the Z-Lig in overseas (outside U.S.) markets over the next several years.  Our marketing efforts in the U.S. are contingent on obtaining FDA approval for the Z-Lig and other devices.   The FDA has granted us an unconditional approval for a clinical trial of the Z-Lig in the United States.  We plan to market our products in the U.S. after the trial is completed and FDA approval is obtained.

Our Risks

An investment in our common stock involves a high degree of risk. You should carefully consider the risks summarized below. These risks are discussed more fully in the “Risk Factors”

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section immediately following this prospectus summary. These risks include, but are not limited to, the following:

· We have incurred significant operating losses since inception and may continue to incur losses for the foreseeable future;

· We only recently received approval in Europe to commercialize our Z-Lig products, and we have no significant experience or capability to sell our products on a commercial scale;

· Our Z-Lig products may not gain market acceptance among surgeons, physicians, patients, healthcare payors and the medical community;

· We may not be able to generate long-term or additional positive clinical data to support or expand our commercialization efforts;

· We may not be able to protect our intellectual property; and,

· CrossCart LLC, our controlling stockholder, controls all aspects of our business.

Company and Other Information

We were initially incorporated under the laws of the State of California as CrossCart, Inc., in 1996.  In June 2008, CrossCart, Inc. was reincorporated under the laws of the State of Delaware, and in May 2009, CrossCart, Inc. changed its name to “Aperion Biologics, Inc.” Our principal executive office is located at 11969 Starcrest Dr. San Antonio, TX 78247, and our telephone number is (210) 858-7056. Our website address is www.aperionbiologics.com. We do not incorporate the information on or accessible through our website into this Offering Circular, and you should not consider any information on, or that can be accessed through, our website a part of this Offering Circular.

We own various U.S. federal trademark registrations and applications, and unregistered trademarks, including the following marks referred to in this Offering Circular: “Z-Lig” and “Aperion Biologics”. All other trademarks or trade names referred to in this Offering Circular are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Offering Circular are referred to without the symbols ^® and ^™, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

This Offering Circular summary highlights information contained elsewhere and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire Offering Circular, including our financial statements and the related notes included elsewhere in this Offering Circular. You should also consider, among other things, the matters described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in each case appearing elsewhere in this Offering Circular.

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The Offering

Common stock offered by us	Shares
Common stock to be outstanding immediately after this offering	Shares
Use of proceeds	We intend to use approximately $700,000 of net proceeds from this offering to pay certain accounts payable.  We also intend to use a portion of the net proceeds to repay outstanding principal amounts and interest on certain demand notes and line of credit notes issued to CrossCart LLC in the amount of approximately $186,720, including accrued interest.  We also intend to use approximately $300,000 of net proceeds to pay certain compensation owed to our employees as a result of the reduction of their salaries and fees.  We intend to use the remaining net proceeds to launch our commercialization plan for Z-Lig products in Europe, South Africa and other countries that accept our approved CE Mark; fund post-market registry studies of Z-Lig; conduct pre-clinical and R&D activities for additional product candidates; and initiate clinical trials for Z-Lig products in the U.S.  See “Use of Proceeds” on page [        ].
Risk factors	You should carefully read “Risk Factors” on page [     ] in this Offering Circular for a discussion of factors that you should consider before deciding to invest in our common stock.

The number of shares of our common stock to be outstanding after this offering is based on 72,963,279 shares of our common stock outstanding as of June 30, 2015 and excludes:

· 6,447,747 shares of common stock issuable upon the exercise of stock options outstanding as of June 30, 2015 at a weighted average exercise price of $0.08 per share;

· 12,142,842 shares of common stock issuable upon the exercise of warrants outstanding as of June 30, 2015 at a weighted average exercise price of $0.08 per share, which warrants prior to the completion of this offering are exercisable to purchase common stock or convertible preferred stock, assuming such warrants will not be exercised prior to the completion of this offering;

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· 1,888,775 shares of common stock reserved for future issuance under our 2008 Stock Option/Stock Issuance Plan;

Unless otherwise indicated, all information in this Offering Circular reflects or assumes the following:

· the filing of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws, which will occur immediately prior to the completion of this offering;

· the conversion of all of our outstanding shares of convertible preferred stock into an aggregate of 37,504,969 shares of common stock upon the completion of this offering, including shares of common stock to be issued as cumulative dividends accrued under such preferred stock;

· the issuance of 31,366,725 shares of common stock upon the conversion of approximately an aggregate of $9,838,058 in outstanding principal and accrued interest on our convertible promissory notes (which is currently convertible into shares of our preferred stock but will be amended to be convertible into shares of our common stock in connection with the offering), upon the completion of this offering, at an average conversion price of $0.31 per share, assuming that the offering is completed on            ;

· the issuance of additional shares of common stock as a result of anti-dilution adjustments provided in our certificate of incorporation; and

· a one-for-        reverse split of our common stock, which became effective on           .

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Risk Factors

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below along with all of the other information contained in this Offering Circular, including our financial statements and the related notes, before deciding whether to purchase our common stock. If any of the adverse events described in the following risk factors, as well as other factors which are beyond our control, actually occurs, our business, results of operations and financial condition may suffer significantly. As a result, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock.

Risks Related to Our Business and Finance

We have incurred significant operating losses since inception, anticipate that we will continue to incur losses for the foreseeable future and will need to raise additional capital.

We have generated operating losses since we began operations in 2008, and our net losses attributable to common stockholders for the fiscal year ended September 30, 2014 and 2013 were $3.29 million and $5.45 million respectively. We expect to continue to incur additional operating losses for the foreseeable future as we plan the commercialization of Z-Lig products and continue our clinical and pre-clinical studies.  Our recurring operating losses and our need for additional sources of capital to fund our ongoing operations raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended September 30, 2014 with respect to this uncertainty. If the time required to generate material revenues and achieve profitability is longer than we currently anticipate, or if we are unable to raise new capital through equity or obtain debt financing or other sources of funding, we may be forced to curtail or suspend our operations, which would have a material adverse effect on the value of your investment.

We expect capital outlays and operating expenditures to increase over the next several years as we establish and expand our marketing infrastructure to commercialize our Z-Lig products. Following the completion of this offering, we believe our financial resources will be adequate to sustain our current operations at least through           .  However, we will need to raise additional capital. We cannot be certain that we will be able to obtain financing on terms acceptable to us, or at all. Our failure to obtain adequate and timely funding will materially adversely affect our business and our ability to develop our products and would have a material adverse effect on the value of your investment.

We only recently received approval in Europe to commercialize our Z-Lig products, and we have no significant experience or capability to sell our products on a commercial scale.

Our future is significantly dependent on the commercial success of our Z-Lig family of products.  We have only recently received a CE Mark in April 2014 that allowed us to conduct limited sales in select European markets beginning in February 2015.  As a result, we have no significant history or experience in selling Z-Lig or any other products in Europe or in any other markets, and we have limited relationships with surgeons, physicians, clinicians and hospitals that may purchase or use our products.  In order for us to commercialize our products successfully, we will need to develop, or obtain through outsourcing arrangements, the capability to market and

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sell our products on a commercial scale.  We may not have the ability and sufficient resources to establish the infrastructure and organizations needed to execute these functions, which can be complex and costly.  Our effort to commercialize Z-Lig products is also subject to a number of additional risks, which could have a material adverse effect on the value of your investment, including:

· competitors’ established relationships with our potential customers;

· limitations in our ability to demonstrate the advantages of our products compared to competing products and the relative safety, efficacy and ease of use of our products;

· our inability to convince doctors and hospitals to use our products; and

· the introduction and market acceptance of competing products and technologies.

Our Z-Lig products may not gain market acceptance among surgeons, physicians, patients, healthcare payors and the medical community.

A critical element in our commercialization strategy is to persuade and educate the medical community on the safe and effective use of our products and how Z-Lig products differentiate from the existing supplies of surgical issues.  Surgeons, physicians and hospitals may not perceive the benefits of our products and may be unwilling to change from the devices they are currently using. A number of factors may limit the market acceptance of our Z-Lig products,including the following:

· rate of adoption by healthcare practitioners;

· rate of a product’s acceptance by the target population;

· timing of market entry relative to competitive products;

· availability of third-party reimbursement;

· government review and approval requirements;

· extent of marketing efforts by us and third-party distributors or agents retained by us; and

· side effects or unfavorable publicity concerning our products or similar products.

Therefore, even after we have demonstrated the effectiveness of the Z-Lig products, we may not be able to commercialize these products successfully if we cannot achieve an adequate level of market acceptance. Our inability to successfully commercialize our products will have a material adverse effect on the value of your investment.

We may experience defects and manufacturing issues in our supplies of animal issues or raw materials.

As we continue to expand our clinical development and commercialization activities, we expect to scale up the manufacturing and supplies of animal tissues that are the main component of our Z-Lig products.  We may not be able to control or maintain a consistent and high quality of

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raw materials, such as porcine tissues, or uncover defects prior to implantation in humans. In the past, we observed and experienced contamination in porcine tissues resulting from the processing and handling of these materials during clinical trials, which led to bacterial infections associated with the grafts in patients implanted with Z-Lig in the trial.  While we have implemented stringent validation, safety and corrective procedures and intend to conduct additional post-market studies to confirm the effectiveness of such preventive measures, there is no guarantee that we can eliminate this risk in the future.  In addition, external factors outside of our control may affect the quality of our supplies of animal or porcine issues.  For example, swine diseases or pandemics may severely reduce the supply of porcine tissues required to manufacture our Z-Lig products.  Mishandling or lack of quality control at our third-party suppliers may also negatively impact our ability to obtain a sufficient and acceptable level of porcine tissues to meet our needs.  Our failure to eliminate contamination and deficiency in the animal and porcine issues used in our products may require us to incur additional costs to implement preventive measures, or cause significant delays and disruptions in the development and commercialization of our products, which would have an adverse effect on our business operations and financial condition.

The safety and efficacy of our products is supported by limited clinical data, and we may not be able to generate long-term or additional positive clinical data to support or expand our commercialization efforts.

We have obtained a CE Mark to market and sell our Z-Lig products in Europe based on the 6- and 12-month data collected from our clinical studies in 2013 and the longer term (12 years) safety data from the U.S. pilot safety trial.  We have committed to continue these clinical studies to support post-market commercial activities in Europe and to meet certain post-market approval requirements by European regulatory agencies.  In addition, we intend to conduct additional clinical studies to support further commercialization efforts and expand the markets for our Z-Lig products.  For example, the CE Mark we received in April 2014 is limited to revision and multiligament ACL surgeries and does not cover primary ACL surgeries.  We have established post-market clinical plans to generate additional data required to expand the indication of  Z-Lig products to cover primary ACL surgeries, which would allow us to reach a broader ACL reconstruction market.  There is no guarantee that we can duplicate the positive results from our earlier trials for future studies or generate the required data to support the expansion of Z-Lig indication.  Our failure to do so may result in the loss of CE Mark approval or other regulatory approvals, delays, failures in the adoption of our products by surgeons and physicians, damage to our reputation and legal claims against us.

In addition, any negative data from our post-market clinical studies may adversely impact our ability to conduct clinical trials and seek regulatory approval of our products from the FDA to market our products in the United States.  Furthermore, we are developing several products based on our Z-process that would allow a commercialization path based on FDA’s Section 510(K) pre-market clearance procedures.  This procedure is shorter and typically requires the submission of less supporting documentation than other FDA approval processes and does not require long-term clinical studies.  As result, we may encounter difficulties and delays in marketing these products which otherwise may not be the case if the products have been proven safe and effective in more extensive and long-term clinical trials.

Our clinical studies of our current or future products may not produce results necessary to support regulatory clearance or approval in the United States or elsewhere.

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We plan to seek FDA approval of Z-Lig by conducting pivotal clinical trials in the United States.  While we have conducted a limited safety pilot study in the United States showing that Z-Lig was safe, and we have received a CE Mark based on the clinical studies in Europe and South Africa, there is no guarantee that the same results will be duplicated in a clinical trial with a larger patient population in the United States.  Our inability to achieve acceptable results in future clinical studies would have a material adverse effect on our business operations and financial condition and the value of your investment.

If third-party payors fail to provide appropriate levels of reimbursement for the use of our products, our revenues could be adversely affected.

Sales of our products depend on the availability of adequate reimbursement from third-party payors. In each market in which we do business, our inability to obtain reimbursement approval or the failure of third-party payors to reimburse health care providers at a level which justifies the use of our products instead of cheaper alternatives will hurt our business.

Moreover, we are unable to predict what changes will be made to the reimbursement methodologies used by third-party payors in the future. We cannot be certain that under current and future payment systems, in which healthcare providers may be reimbursed a set amount based on the type of procedure performed, such as those utilized by Medicare and in many privately managed care systems, the cost of our products will be justified and incorporated into the overall cost of the procedure. A failure by third-party payors to provide appropriate levels of reimbursement for the use of our products will have a material adverse effect on our business operations and financial condition and the value of your investment.

As we expand into multiple international markets, we will face similar risks relating to adverse changes in coverage and reimbursement procedures and policies in those markets.  Reimbursement and healthcare payment systems vary significantly among markets in different jurisdictions. Our inability to obtain international coverage and reimbursement approval, or any adverse changes in coverage and the reimbursement policies of foreign third-party payors, could negatively affect our ability to sell our products.

We rely on third party suppliers for our raw materials, including porcine tissues, and their inability to supply us with an adequate supply of materials could harm our business.

We rely on third-party suppliers to supply and manufacture the raw materials, including porcine tissues, for the development of our products.  To be successful, our suppliers must be able to provide us with products and components in substantial quantities, in compliance with regulatory requirements (including ISO 22442), in accordance with agreed upon specifications, at acceptable cost and on a timely basis. Among other factors, our anticipated growth could strain the ability of suppliers to deliver an increasingly large supply of products, materials and components. If we are unable to obtain sufficient quantities of high quality components to meet customer demand on a timely basis, we could lose customers, our reputation may be harmed and our business could suffer.

In addition, we currently use one supplier for the supply of porcine tissues required to manufacture our Z-Lig products, biologics, and components. Our dependence on one supplier involves several risks, including limited control over pricing, availability, quality and delivery schedules. If any one or more of our suppliers cease to provide us with sufficient quantities of our components in a timely manner or on terms acceptable to us, we would have to seek alternative sources of supplies. We could incur significant delays while we locate and engage

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alternative qualified suppliers, including delays associated with qualifying the new supplier to meet all applicable regulatory requirements in the United States, Europe and other markets in which we develop and sell our products.  Even if we are able to identify an alternative supplier, we might not be able to negotiate or receive the same or more favorable terms as those provided by our existing suppliers. Any such disruption or increased expenses could harm our commercialization efforts and adversely affect our ability to generate revenue. Any inability to meet our customers’ demands for these products could lead to decreased sales and harm our reputation and result in the loss of customers, which would have a material adverse effect on our business operations and financial condition and the value of your investment.

Failure to attract, retain, and motivate skilled personnel may delay our commercialization plans and research and development efforts.

Our commercial success depends on our continued ability to attract, retain, and motivate highly qualified management and scientific personnel. Competition for skilled and qualified personnel in the medical device industry is intense. If we lose the services of personnel with the necessary skills, including the members of our senior management team, it could significantly impede our commercialization and research and development objectives. Replacing key personnel and consultants may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop, gain regulatory approval of and commercialize products successfully.

Our international operations subject us to certain risks.

We intend to market our Z-Lig products initially in select European countries and in South Africa, including Denmark, United Kingdom, Netherlands, Belgium, Spain, Italy and Poland.  We also have plans to expand our commercialization activities to other non-European countries that accept the CE Mark, such as Canada, Turkey, Saudi Arabia, Australia and Korea.  We will also pursue various clinical and pre-clinical activities in the United States and Europe. Our international operations will subject us to rules, regulations and customs of multiple jurisdictions, and compliance with these rules and regulations is costly and exposes us to penalties for non-compliance. Other laws and regulations that can significantly impact us include various anti-bribery laws, including the U.S. Foreign Corrupt Practices Act and anti-boycott laws, as well as export controls laws. Any failure to comply with applicable legal and regulatory obligations could impact us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties, denial of export privileges, seizure of shipments and restrictions on certain business activities. Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our sales activities.

Our international operations expose us to additional risks, including:

· difficulties in enforcing or defending intellectual property rights;

· pricing pressure that we may experience internationally;

· third-party reimbursement policies that may require some of the patients who receive our products to directly absorb medical costs or that may necessitate the reduction of the selling prices of our products;

· competitive disadvantage to competition with established business and customer relationships;

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· the imposition of additional U.S. and foreign governmental controls or regulations; changes in duties and tariffs, license obligations and other non-tariff barriers to trade;

· foreign currency exchange rate fluctuations;

· difficulties in communicating with our employees, partners and collaborators, and maintaining consistency with our internal guidelines;

· difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; and

· difficulties in establishing and maintaining an effective internal control system to ensure timely and accurate financial reporting.

If we experience any of these risks, our sales in international countries may be harmed and our results of operations would suffer.

We may face product liability claims that could result in costly litigation and significant liabilities.

Manufacturing and marketing of our products, and clinical testing of our products under development, may expose us to product liability and other tort claims. Although we have, and intend to maintain, liability insurance, the coverage limits of our insurance policies may not be adequate and one or more successful claims brought against us may have a material adverse effect on our business and results of operations. Additionally, product liability claims could negatively affect our reputation, product sales, and our ability to obtain and maintain regulatory approval for our products.

Risks Relating to Our Intellectual Property

If we are unable to protect our intellectual property, our business will be negatively affected.

The market for medical devices is subject to frequent litigation regarding patent and other intellectual property rights. It is possible that our patents or licenses may not withstand challenges made by others or protect our rights adequately.

Our success depends in large part on our ability to secure effective patent protection for our products and processes in Europe and the United States. We have filed and intend to continue to file patent applications to protect our proprietary technology. However, we face the risks that:

· we may fail to secure necessary patents prior to or after obtaining regulatory clearances, thereby permitting competitors to market competing products; and

· our already-granted patents may be re-examined, invalidated or not extended.

We also own trade secrets and confidential information that we try to protect by entering into confidentiality agreements with our employees and other parties. However, the confidentiality agreements may not be honored or, if breached, we may not have sufficient remedies to protect our confidential information. Further, our competitors may independently learn our trade secrets or develop similar or superior technologies. To the extent that our consultants, key employees

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or others apply technological information to our projects that they develop independently or others develop, disputes may arise regarding the ownership of proprietary rights to such information, and such disputes may not be resolved in our favor. If we are unable to protect our intellectual property adequately, our business and commercial prospects will suffer.

Because it is difficult and costly to protect our proprietary rights, and third parties have filed patent applications that are similar to ours, we cannot ensure the proprietary protection of our technologies and products.

Our commercial success will depend in part on obtaining patent protection of our technology and successfully defending any of our patents that may be challenged. The patent positions of medical device companies can be highly uncertain and can involve complex legal and factual questions, and we cannot predict the breadth of claims allowed in patents we own or license.

We are a party to certain license agreements that give us rights under specified patents and patent applications, including a license agreement with the University of Missouri. Our current licenses, and our future licenses frequently will, contain performance obligations. If we fail to meet those obligations, the licenses could be terminated. If we are unable to continue to license these technologies on commercially reasonable terms, or at all, we may be forced to delay or terminate our product development and research activities.

We are unable to exercise the same degree of control over intellectual property that we license from third parties as we exercise over our internally developed intellectual property. We do not control the prosecution of certain of the patent applications that we license from third parties; therefore, the patent applications may not be prosecuted as we desire or in a timely manner.

The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:

· we or our licensors will be the first to file patent applications for these inventions;

· the patents of others will not have an adverse effect on our ability to do business;

· others will not independently develop similar or alternative technologies or reverse engineer any of our products, processes or technologies;

· any of our pending patent applications will result in issued patents;

· any patents issued or licensed to us or our collaborators or strategic partners will provide a basis for commercially viable products or will provide us with any competitive advantages;

· any patents issued or licensed to us will not be challenged and invalidated by third parties; or

· we will develop additional products, processes or technologies that are patentable.

Others have filed and in the future are likely to file patent applications that are similar to ours. The costs of litigating any infringement claim could be substantial. Moreover, we cannot predict whether we, our collaborators, or strategic partners would prevail in any actions. In addition, if the relevant patent claims were upheld as valid and enforceable and our products or processes

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were found to infringe the patent or patents, we could be prevented from making, using, or selling the relevant product or process unless we could obtain a license or were able to design around the patent claims. We can give no assurance that such a license would be available on commercially reasonable terms, or at all, or that we would be able to successfully design around the relevant patent claims. There may be significant litigation in our industry regarding patent and other intellectual property rights, which could subject us to litigation. If we become involved in litigation, it could consume a substantial portion of our managerial and financial resources.

We rely on trade secrets to protect technology where we believe patent protection is not appropriate or obtainable. Trade secrets, however, are difficult to protect. While we require employees, and consultants to enter into confidentiality agreements, we may not be able to adequately protect our trade secrets or other proprietary information or enforce these confidentiality agreements.

We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts.

Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. We cannot guarantee that our products, or manufacture or use of our product candidates, will not infringe third-party patents. Furthermore, a third party may claim that we are using inventions covered by the third party’s patent rights and may go to court to stop us from engaging in our normal operations and activities, including making or selling our product candidates. These lawsuits are costly and could affect our results of operations and divert the attention of managerial and scientific personnel. Some of these third parties may be better capitalized and have more resources than us. There is a risk that a court would decide that we are infringing the third party’s patents and would order us to stop the activities covered by the patents. In that event, we may not have a viable way around the patent and may need to halt commercialization of the relevant product candidate. In addition, there is a risk that a court will order us to pay the other party damages for having violated the other party’s patents. In addition, we may be obligated to indemnify our licensors and collaborators against certain intellectual property infringement claims brought by third parties, which could require us to expend additional resources. The pharmaceutical and biotechnology industries have produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.

Patent litigation is costly and time consuming, even in cases where the claims against us are without merit. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully or have infringed patents declared invalid, we may incur substantial monetary damages, encounter significant delays in bringing our product candidates to market and be precluded from manufacturing or selling our product candidates.

International patent protection is particularly uncertain, and if we are involved in opposition proceedings in foreign countries, we may have to expend substantial sums and management resources.

The laws of some foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. For example, certain countries do not grant patent claims that are directed to the treatment of humans. We may participate in opposition

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proceedings to determine the validity of our foreign patents or our competitors’ foreign patents, which could result in substantial costs and diversion of our efforts.

The medical device industry is characterized by extensive patent litigation, and we could become subject to litigation that could be costly, result in the diversion of management’s attention, and harm our business and financial condition.

Our success depends in part on not infringing the patents or violating the other proprietary rights of others. Significant litigation regarding patent rights occurs in the medical industry, including among companies focused on regenerative medicine. It is possible that U.S. and foreign patents and pending patent applications controlled by third parties may be alleged to cover our Z-Process. Our competitors in Europe, the United States and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and sell our products. At any given time, we may be involved as either a plaintiff or a defendant in a number of patent infringement actions, the outcomes of which may not be known for prolonged periods of time.

The large number of patents, the rapid rate of new patent applications and issuances, the complexities of the technologies involved and the uncertainty of litigation significantly increase the risks related to any patent litigation. Any potential intellectual property litigation also could force us to do one or more of the following:

· stop selling, making, or using products that use the disputed intellectual property;

· obtain a license from the intellectual property owner to continue selling, making, licensing, or using products, which license may require substantial royalty payments and may not be available on reasonable terms, or at all;

· incur significant legal expenses;

· pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing;

· pay the attorney fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; or

· redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and/or infeasible.

If any of the foregoing occurs, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products, all of which could have a material adverse effect on our business, results of operations and financial condition. Any litigation or claim against us, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation. Further, as the number of participants in the regenerative tissue industry grows, the possibility of intellectual property infringement claims against us increases.

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Risks Related to Our Industry

We are in a highly competitive market segment, and if our competitors are better able to develop and market products that are safer, more effective, less costly, easier to use or otherwise superior than any products that we may develop, our business will be adversely impacted.

The medical device industry is highly competitive and subject to technological change. Our success depends, in part, upon our ability to maintain a competitive position in the development of technologies and products for use in the ACL knee reconstruction graft and other orthopaedic markets. Any product we develop that achieves regulatory clearance or approval will have to compete for market acceptance and market share. We believe that the primary competitive factors in ACL replacement graft markets are clinical effectiveness, product safety, reliability and durability, and eligible patient populations, physician experience and comfort with use of a particular device, ease of use, product support and service, sales force experience and relationships and price. We face significant competition in the United States and internationally, and we expect the intensity of competition will increase over time.  We compete with companies that provide allograft and traditional xenograft solutions for orthopaedic surgical procedures.  Many of the companies developing or marketing competing products enjoy several advantages to us, including:

· greater financial and human resources for product development, sales and marketing;

· greater name recognition;

· long established relationships with physicians and hospitals;

· longer-term clinical trial data due to earlier regulatory approval;

· the ability to offer rebates or bundle multiple product offerings to offer greater discounts or incentives; and

· more established sales and marketing programs and distribution networks; and

Our competitors may develop and patent processes or products competitive with us, obtain regulatory clearance or approvals for competing products more rapidly than us or develop more effective or less expensive products or technologies that render our technology or products obsolete or less competitive. We also face fierce competition in recruiting and retaining qualified sales, scientific, and management personnel, establishing clinical trial sites and enrolling patients in clinical studies. Our inability to successfully compete with existing and future market competitors will have a material adverse effect on our business operations and financial condition and the value of your investment.

Our business is subject to extensive governmental regulation that could make it more expensive and time consuming for us to introduce new or improved products.

Our products must comply with regulatory requirements imposed by various regulatory agencies. These requirements involve lengthy and detailed laboratory and clinical testing procedures, sampling activities, an extensive agency review process, and other costly and time-consuming procedures. It often takes several years to satisfy these requirements, depending on the complexity and novelty of the product. We also are subject to numerous additional licensing

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and regulatory requirements relating to safe working conditions, manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances. Some of the most important requirements we face include:

· European Union CE mark requirements;

· FDA Regulations;

· Medical Device Quality Management System Requirements (ISO 13485:2003); and

· Occupational Safety and Health Administration requirements.

Government regulation may impede our ability to conduct clinical studies and to manufacture our existing and future products. Government regulation also could delay our marketing of new products for a considerable period of time and impose costly procedures on our activities. The regulatory agencies may not approve any of our future products on a timely basis, if at all. Any delay in obtaining, or failure to obtain, such approvals could negatively impact our marketing of any future products and reduce our product revenues.

Our products remain subject to strict regulatory controls on manufacturing, marketing and use. We may be forced to modify or recall a product after release in response to regulatory action or unanticipated difficulties encountered in general use. Any such action could have a material effect on the reputation of our products and on our business and financial position.

Further, regulations may change, and any additional regulation could limit or restrict our ability to use any of our technologies, which could harm our business. We could also be subject to new international, federal, state or local regulations that could affect our research and development programs and harm our business in unforeseen ways. If this happens, we may have to incur significant costs to comply with such laws and regulations, which will harm our results of operations.

Risks Related to Our Common Stock and Corporate Structure

CrossCart LLC controls all aspects of our business.

CrossCart LLC (“CrossCart”) is our largest and controlling stockholder and currently beneficially owns approximately 78.5% of our outstanding shares of common stock on a fully-diluted basis assuming the conversion of all of our outstanding preferred stock and convertible notes.  Following the completion of this offering, CrossCart will beneficially own approximately      % of our outstanding shares of common stock.  In addition, Dr. Kevin R. Stone, Chairman of our Board of Directors, is the controlling member and manager of CrossCart.  In addition, CrossCart is our most significant creditor and historically we have depended on the funding of CrossCart and Dr. Stone to maintain our operations.  As a result, CrossCart and Dr. Stone are and will be able to exercise significant control over our business operations and on all matters requiring stockholders’ approval, including the election of directors and approval of significant corporate transactions.  Due to CrossCart’s and Dr. Stone’s controlling position, we may take actions with respect to our business that may conflict with the desire of other stockholders.

An active trading market for our common stock may not develop and you may not be able to resell your shares at or above the initial offering price.

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Prior to this offering, there has been no public market for shares of our common stock.  In the absence of an active trading market for our common stock, investors may not be able to sell their common stock at or above the initial public offering price or at the time that they would like to sell.   In addition, we intend to submit a listing application for our common stock to be listed on a national securities exchange, including the NASDAQ Capital Market (“NASDAQ”), and there is no guarantee that we can meet the listing standards or that such listing application will be accepted.  Even if such application is accepted and our common stock is listed on NASDAQ or other exchanges, an active trading market for our common stock may never develop, which will adversely impact your ability to sell our shares. If shares of common stock are not listed on NASDAQ or another national securities exchange, we anticipate that our common stock will be quoted at over-the-counter, or OTC markets, following the completion of this offering.  There is no assurance that an active trading market for our common stock will develop on the OTC market.

Our stock price may be influenced by public perception of alternative tissue replacement and government regulation of such technology.

External events in the field of ligament reconstruction or the use of animal-derived tissue in human transplantation may have a significant negative impact on the public perception and stock price of certain companies involved in this kind of work. Potential adverse events in this field may occur in the future that could result in increased governmental regulation of our Z-Lig device. These external events may have a negative impact on public perceptions of our business, which could cause our stock price to decline.

We do not intend to pay dividends on our common stock.

We have never paid dividends on our common stock and we currently intend to retain any future earnings and do not expect to pay any cash dividends on our common stock in the foreseeable future. The declaration and payment of all future dividends, if any, will be at the sole discretion of our board of directors, which retains the right to change our dividend policy at any time, and may be limited by our debt arrangements in place from time to time. Consequently, stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

Anti-takeover provisions in our certificate of incorporation and Delaware law could make an acquisition of the Company more difficult and could prevent attempts by our stockholders to remove or replace current management.

Provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws, which will be effective upon the completion of this offering, may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions may also prevent or delay attempts by stockholders to replace or remove our current management or members of our board of directors. These provisions include:  

· advance notice requirements for stockholder proposals and nominations;

· the inability of stockholders to act by written consent or to call special meetings;

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· the ability of our board of directors to make, alter or repeal our amended and restated bylaws: and

· the authority of our board of directors to issue preferred stock with such terms as our board of directors may determine.

The affirmative vote of the holders of at least 75% of our shares of capital stock entitled to vote, and not less than 75% of the outstanding shares of each class entitled to vote thereon as a class, is generally necessary to amend or repeal the above provisions that are contained in our amended and restated certificate of incorporation. In addition, absent approval of our board of directors, our amended and restated bylaws may only be amended or repealed by the affirmative vote of the holders of at least 75% of our shares of capital stock entitled to vote.

In addition, upon the completion of this offering, we will be subject to the provisions of Section 203 of the Delaware General Corporation Law, which limits business combination transactions with stockholders of 15% or more of our outstanding voting stock that our board of directors has not approved. These provisions and other similar provisions make it more difficult for stockholders or potential acquirers to acquire us without negotiation. These provisions may apply even if some stockholders may consider the transaction beneficial to them.

As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our common stock. These provisions might also discourage a potential acquisition proposal or tender offer, even if the acquisition proposal or tender offer is at a premium over the then-current market price for our common stock.

Dilution

If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering.

Our historical net tangible book value as of June 30, 2015 was ($28,398,078), or $($6.94) per share of our common stock.  Historical net tangible book value per share represents our total tangible assets less total liabilities divided by the number of shares of our common stock outstanding. Our pro forma net tangible book value (deficit) as of June 30, 2015 was approximately ($28,398,078), or ($0.39) per share of common stock.  Pro forma tangible book value per share represents our total tangible assets less total liabilities divided by the number of shares of common stock outstanding as of June 30, 2015 after giving effect to (i) the automatic conversion of all of the outstanding shares of our convertible preferred stock into an aggregate of 37,504,969 shares of our common stock upon the completion of this offering, including shares of common stock to be issued as cumulative dividends accrued under such preferred stock and (ii) approximately an aggregate of $9,838,058 in outstanding principal and accrued interest on our convertible promissory notes (which is currently convertible into shares of our preferred stock but will be amended to be convertible into shares of our common stock in connection with the offering), upon the completion of this offering, at an average conversion price of $0.31, assuming that the offering is completed on       2015.  Pro forma as adjusted net tangible book value per share gives further effect to the issuance of          shares of our common stock at an assumed initial public offering price of $         per share, the midpoint of the price range set forth on the cover page of this Offering Circular, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.  Our pro forma, as

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adjusted net tangible book value as of June 30, 2015 would have been $         million, or $         per share of common stock.  This represents an immediate increase in pro forma net tangible book value of $         per share to existing stockholders and an immediate dilution in pro forma net tangible book value of $         per share to investors purchasing common stock in this offering.

The following table illustrates this per share dilution:

Assumed initial public offering price per share		$
Historical net tangible book value per share as of June 30, 2015	$____
Decrease attributable to the conversion of outstanding convertible preferred stock and convertible promissory notes	$____
Pro forma net tangible book value per share as of June 30, 2015
Increase per share attributable to new investors	$____
Pro forma, as adjusted net tangible book value per share after this offering
Dilution per share to investors in this offering

The following table summarizes on an as adjusted basis as of June 30, 2015, the difference between the number of shares of common stock purchased from us, the total consideration paid and the average price per share paid by existing stockholders and by new investors, assuming an initial public offering price of $         per share, the midpoint of the price range set forth on the cover page of this Offering Circular, and before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

	Shares Purchased				Total Consideration(1)				AveragePrice per Share
	Number	Percent			Amount	Percent
Existing stockholders				%	$			%	$
New investors									$
Total			100	%	$		100	%

(1) A $1.00 increase (decrease) in the assumed initial public offering price of $         per share, the midpoint of the price range set forth on the cover of this Offering Circular, would increase (decrease) the total consideration paid to us by new investors and total consideration paid to us by all stockholders by $         million, assuming that the number of shares offered by us, as set forth on the cover page of this Offering Circular, remains the same and after deducting estimated placement agent fees and estimated offering expenses payable by us.  An increase (decrease) of 1.0 million shares in the number of shares offered by us would increase (decrease) the total consideration paid

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to us by new investors and total consideration paid to us by all stockholders by $         million, assuming the assumed initial public offering price of $         per share remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

As of June 30, 2015, options to purchase 6,447,747 shares of common stock were outstanding at a weighted average exercise price of $0.08 per share and warrants to purchase 12,142,842 shares of common stock and preferred stock were outstanding at a weighted average exercise price of $0.08 per share.  Assuming all of our outstanding options and warrants are exercised, new investors will own approximately     % of our outstanding shares while contributing approximately     % of the total amount paid to fund our company.

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Underwriting

We and WR Hambrecht + Co, LLC (the underwriter) have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, the underwriter has agreed to use its best efforts to procure potential purchasers for the shares of our common stock offered hereby. This offering is being undertaken on a best efforts only basis. The underwriter is not required to take or pay for any specific number or dollar amount of our common stock.

The shares are being offered on an all or none basis.  Investor funds will be deposited into an escrow account for the benefit of investors set up by          at           . The offering will not be completed unless we sell the number of shares specified on the cover page of this Offering Circular. All investor funds received prior to the closing will be deposited into the escrow account until closing. The escrow account will be opened on the date of this Offering Circular and will remain open until the closing date. All funds received into the escrow account after the pricing of the offering will be held in a non-interest bearing account in accordance with Rule 15c2-4 under the Exchange Act. The escrow account will not be opened until the date of this Offering Circular. All funds must be transmitted directly by wire to the specified bank account at            per the instructions disseminated at pricing by the underwriter.           will not accept or handle any funds. On the closing date, the escrow agent will notify the underwriter whether the full amount necessary to purchase the shares to be sold in this offering has been received. If, on the closing date, investor funds are not received in respect of the full amount of shares to be sold in this offering, then all investor funds that were deposited into the escrow account will be returned promptly to investors, and the offering will terminate. The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriter.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions payable by us	$	$
Proceeds, before expenses, to us	$	$

Certain expenses of the underwriter (excluding discounts and commissions) of up to $          are payable by us. Shares sold to the public will initially be offered at the initial public offering price set forth on the cover of this Offering Circular. Any shares sold to securities dealers may be sold at a discount of up to $           per share from the initial public offering price. After the initial offering of the shares, the offering price and the other selling terms may be subject to change. The offering of the shares is subject to receipt and acceptance and subject to the right to reject any order in whole or in part.

We and our officers, directors, and holders of five percent or more of our common stock have agreed, or will agree, with the underwriter, subject to certain exceptions, that, without the prior written consent of the underwriter, we and they will not, directly or indirectly, during the period ending 90 days after the date of the Offering Circular:

· offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any shares of the our common stock or any securities convertible into or exchangeable or exercisable for our common stock, whether now owned or

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hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition; or

· enter into any swap or any other agreement or any transaction that transfers, in whole or in part, the economic consequence of ownership of our common stock, whether any such swap or transaction is to be settled by delivery of our common stock or other securities, in cash or otherwise

This agreement does not apply, in our case, to securities issued pursuant to existing employee benefit plans or securities issued upon exercise of options and other exceptions, and in the case of our officers, directors and other holders of our securities, exercise of stock options issued pursuant to a stock option or similar plans, and other exceptions.

Prior to the offering, there has been no public market for the shares. The initial public offering price will be determined by negotiation between us and the underwriter. The principal factors to be considered in determining the initial public offering price will include:

· the information set forth in this Offering Circular and otherwise available to the underwriter;

· our history and prospects and the history of and prospects for the industry in which we compete;

· our past and present financial performance;

· our prospects for future earnings and the present state of our development;

· the general condition of the securities markets at the time of this offering;

· the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

· other factors deemed relevant by the underwriter and us.

We intend to submit an application with The NASDAQ Stock Market LLC (“NASDAQ”) to list shares of our common under the symbol “ZLIG.” In order to meet one of the requirements for listing our common stock on NASDAQ, the underwriter intends to sell lots of 100 or more shares to a minimum of 300 beneficial holders.  If our common stock is not listed on NASDAQ, we expect that our common stock will be quoted on OTCQB immediately following this offering under the symbol “      “.

Any underwriter who is a qualified market maker on NASDAQ may engage in passive market making transactions on NASDAQ in accordance with Rule 103 of Regulation M of the Exchange Act, during the business day prior to the pricing of the offering, before the commencement of offers or sales. Passive market makers must comply with applicable volume and price limitations and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent bids are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded.

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We have agreed to indemnify the underwriter against certain liabilities, including liabilities under the Securities Act. The underwriter and its affiliates are engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriter and its affiliates may in the future perform various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer. The underwriter and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Selling Restrictions

Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (SIX) or on any other stock exchange or regulated trading facility in Switzerland. This Offering Circular has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, the Company, the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (CISA). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

Use of Proceeds

We estimate that the net proceeds to us from the sale of               shares of common stock in this offering will be approximately $        based upon an assumed initial offering price of $          per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We anticipate that we will use approximately $700,000 of net proceeds from the offering to repay certain outstanding accounts payable, including trade payables, consulting and professional fees.  We also intend to repay outstanding principal amounts and accrued interest owed under our demand notes (the “Demand Notes”) and a line of credit note (the “LOC Note”) issued to CrossCart LLC.   The outstanding principal of each Demand Note carries an interest rate of 8% per annum, which may be increased to 10% if an event of default occurs.  As of June 30, 2015, the total amount outstanding under the Demand Notes was $125,093,

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including accrued interest.  The LOC Note bears interest at a rate of 10% per annum, and all principal and accrued interest will be due and payable on May 1, 2016.  The LOC Note contains customary events of default. If the Company fails to pay all amounts due by May 1, 2016, the interest on the remaining outstanding balance will accrue at a rate of 12% per annum.  As of June 30, 2015, the total amount outstanding under the LOC Note was $61,627, including accrued interest.

We also intend to use approximately $300,000 of the net proceeds to pay certain compensation owed to our employees as a result of the reduction of their salaries, including approximately $210,000 of reduced compensation owed to our Chief Executive Officer and Chief Financial Officer.  For a description of the salary reduction, see Compensation of Directors and Executive Officers on page [         ].

We anticipate that we will use the remaining net proceeds, approximately $       , from this offering to:

· launch our commercialization plan for Z-Lig products in Europe, South Africa and other countries that accept our approved CE Mark, including the establishment of sales, marketing and distribution infrastructure, expansion of our processing and manufacturing capacity to a commercial scale and hiring of additional personnel;

· fund post-market registry studies of Z-Lig in Europe, South Africa and other select markets;

· conduct pre-clinical and R&D activities for product candidates; and

· initiate clinical trials for Z-Lig products in the U.S.

We anticipate using the remaining amounts, if any, for general corporate purposes.

The expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our commercialization effort, the results from clinical trials and preclinical studies, the amount of cash available from other sources and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.

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Description of Business

Overview

Aperion Biologics, Inc. (“ABI”), headquartered in San Antonio, Texas, is a commercial-stage medical device company addressing the significant need for an alternative to human-based sources of tissues to be used in surgical procedures.  Our lead product, the Z-Lig, is a patent-protected porcine tendon currently in limited commercial release for use initially as an anterior cruciate ligament (ACL) replacement in revision and multiligament knee joint procedures (see Figure 1).  Z-Lig is the only known biological alternative to human tissue for ACL replacement.  Since the Z-Lig is a biological implant that maintains a scaffold, it can become populated and remodeled with the patient’s own cells (similar to human-sourced tissue), referred to in the industry as “ligamentization”.  This ligamentization is one of the keys to Z-Lig’s proven ability to be highly functional in patients for many years after implantation.  Our propriety process is protected by an extensive portfolio of patents and patent applications, including 23 issued patents in the U.S. and internationally.

 

Figure 1:  ABI’s Z-Lig^® (in product packaging on right) for use in ACL replacement surgery.

With the exception of synthetic ACL replacements, which are deemed inadequate by most orthopaedic surgeons , the only current ACL replacement choices include using tendon harvested from another part of the patient’s own body or tendon from a human cadaver (autograft and allograft, respectively).  These existing choices have a number of shortcomings.  As for autografts, the main clinical issue is the need for a second surgical site for harvesting.  This results in longer operation times, increased patient pain and morbidity, longer rehabilitation time and reduction of function at the harvest site.  Many clinicians believe autograft harvesting actually causes “harm” to patients by sacrificing one part of the human body to fix another.

As for allografts, the main clinical issue is the lack of supply of tissue of adequate quality.  Allografts are harvested from cadaveric donors.  The quality of allografts can be quite variable due to the age, sex, size, genetics, and medical condition of the donors and how the allograft tissue is processed.  Because tissue donation is not commonplace, the supply of allograft tissue can be quite variable.  Even in the U.S. with over an estimated 300,000 ACL replacements performed annually, less than 25% of these procedures were performed using allograft.  The remaining patients must have the graft harvested from their own bodies.

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Figure 2:  Torn ACLs can be replaced with human-based or synthetic grafts.

The need for an alternative to human-sourced grafts has been recognized in the medical community.  The only non-human commercialized grafts are synthetics which tend to quickly wear, degenerate and fail.  Synthetic grafts are not approved for use in the U.S. and we are not aware of any in clinical development in the U.S.  In Europe, synthetic grafts have extremely limited commercial acceptance and are primarily used for patients who wish to return to sport in the shortest time period possible.  We believe that the lack of durability of a synthetic graft can mainly be attributed to its inability to regenerate (as tissue-based implants do) after wear from use.  The only synthetic graft in development in Europe is a resorbable polymer based scaffold graft currently in clinical safety trials and will require an additional clinical study prior to commercial availability.

Given the issues with synthetic grafts, we believe that animal tissue is the only viable alternative to human-sourced ACL grafts.  No other company sells or has in human clinical development an animal-based (xenograft) ACL product.

The xenograft market is a well-accepted segment of the medical device industry.  Xenografts from porcine, bovine and equine sources have been used as heart valves, extracellular matrices (patches), injectable collagen and other replacement/augmentation tissues for many years.  Our products are different from currently commercialized xenografts in that they (i) act as biological scaffolds (unlike, for example, heart valves) and (ii) do not illicit an immunological reaction (unlike, for example, extracellular matrices and injectable collagen).

We were originally incorporated in the State of Delaware under the name “CrossCart, Inc.” CrossCart Inc. was established in 1996 to develop xenograft replacement tissues including cartilage, meniscus cartilage, soft tissue devices, and ligaments.  Its efforts to do so were then focused on ligaments due to the ability to  measure objectively the outcomes, the presence of an FDA ligament guidance document, and the large unmet needs.  The Company developed the Z-Lig process to be flexibly applied to each of these tissue devices.  Due to the limitations of the CrossCart name, the Company was renamed Aperion Biologics Inc. in 2008 and established a manufacturing facility in San Antonio.

CrossCart, Inc. is a separate and distinct entity from CrossCart LLC, which was formed in 2013 as an investment vehicle to purchase outstanding securities the Company held by a previous controlling stockholder.  In addition, Dr. Kevin R. Stone, a member of our Board of Directors, is the controlling member and manager of CrossCart LLC.

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Industry and Market Opportunities

ABI believes that regenerative medicine is one of the markets with the highest growth potential within the medical device industry.  The potential size of the tissue engineering market totals $74 billion according to industry research.  We estimate that the market expenditures for ACL autografts and allografts total over $2 billion worldwide, including $750 million in the U.S., $625 million in Europe and $750 million in the rest of the world.  These figures include both the cost of allografts (approximately $2,500 per procedure based on our calculation) and the direct surgical costs of the autograft harvesting and subsequent direct incremental rehabilitation and medication costs related to the second surgical site (approximately $2,500 per procedure in total based on our calculation).

We believe that the global supply of quality allografts does not sufficiently meet the demand for knee ligament procedures.  Furthermore, the demand is expected to be driven higher by the expanding aging and active population suffering from degenerative ailments.  Over 250,000 ACL reconstruction surgeries are performed in Europe annually.  The vast majority of such surgeries were performed using autografts.  Throughout most of Europe, allografts are available on a very limited basis and the need for an alternative option is more acute.

We have also conducted a study to estimate of the size of the potential markets applicable to our earlier stage pipeline, including Z-Patch, Z-Fix, and Z-Meniscus.  Based on this study, we believe the total addressable U.S. and European markets for extracellular matrices, wound healing, bone replacement and meniscus replacement are $3.6 billion, $5.0 billion, $2.1 billion,  and $300.0 million, respectively.

Current Treatment and Limitations

The major problems with the existing ACL replacement graft market are (i) autografts require a second surgical site which causes significant additional cost and morbidity; (ii) allografts are in short supply, are highly inconsistent in quality and can transmit human disease; (iii) synthetic grafts are unable to regenerate and therefore fail due to the continuous abrasion from regular use; and (iv) traditional xenografts have been plagued with rejection or lose their ability to be populated with the host’s cells.

Below are the specific issues within each category of graft:

Problems with Human-Sourced Grafts (Autografts and Allografts)

Autografts

As shown in Figure [ ] below, during an autograft procedure, a second surgical site is chosen on the patient’s body and tendon (patellar tendon or hamstring) is harvested.  Consequently, the patient suffers from additional pain, morbidity and scarring at the harvest site.  The requirement for a second surgical site prolongs operating time and causes a more complex and extended recovery period.  Most patients have impaired function, including muscle weakness and many even develop arthritis at the autograft harvest site.  The direct surgical costs of the autograft harvesting and the subsequent direct incremental rehabilitation and medication costs are high and it is approximately $3,500 per procedure.  In addition, patients’ own tendons available for harvesting are of limited supply and do not grow back.  Given that many active patients reinjure their repaired ACL or injure their other ACL, autografts may not be a viable follow-on procedure.

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Figure 3

Allografts

Supply of cadaver tissue remains extremely constrained and demand for high quality tissue significantly outstrips the supply.  One allograft tendon is needed for each ACL replacement.  Only half of the 25,000 cadavers available in the U.S. annually provide tissue meeting the specific requirements of orthopaedic tissue donation and, of those that meet the requirements, the yield is only about six harvested grafts suitable for ACL replacement per cadaver.  Therefore, of the over 300,000 ACL replacements performed annually in the U.S., approximately 20-25% of these procedures were performed using allograft.  Outside the U.S., the availability of allografts is even more limited on a country by country basis.  Of these procedures performed with an allograft, we believe a significant portion were performed with a graft that would generally be considered by most surgeons to be less than ideal, typically because the graft was not: (i) the preferred type (bone-tendon-bone, bone-tendon or soft tissue); (ii) the preferred length; or (iii) from a young enough donor.

Allografts have been shown to have inconsistent characteristics due to the broad range of ages of the tissue donors.  Published studies document the biomechanical properties of human allografts based on age.  Tensile testing has been performed on allografts from different aged donors.  Tensile testing to failure from different allograft donors, as shown in the chart below,  demonstrate that the effect of donor age on the strength of allografts can be significant.  For example, an allograft from a 66-75 year old donor can only withstand (i) approximately 60% of the stress load that an 18-35 year old allograft can withstand or (ii) approximately 40% of the stress load that a Z-Lig can withstand.  Surgeons and certain patients are aware of the importance of the age of the cadaver from which the allograft is derived and given the preference for young donors, the supply shortage of quality allografts is more pronounced.

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Allografts are produced in tissue banks which are regulated differently than medical devices by the FDA.  Product from tissue banks is not subject to the FDA approval process and is therefore not subject to the same controls and regulations as is a medical device.  Despite a range of improvements in industry monitoring and oversight made beginning predominantly in 2005, soft tissue allograft infections in patients continue to be reported and have resulted in recalls of allografts from several tissue banks.  While allografts are generally safe, the risk of human disease transmission continues to exist.

In addition to the disadvantage discussed above, the availability of allograft is even more restricted in Europe and other international markets.  These patients are often left with little to no choice but to use autografts because the allograft market in these markets is severely underdeveloped due to legal, cultural and religious issues.  Allografts in some international markets are only available from hospital-based or regional tissue banks.  The quality, processing and consistency of these grafts have even greater variability and thus limits allograft acceptance.

Problems with Non-Human Grafts (Synthetic Grafts and Traditional Xenografts)

Synthetic Grafts

Numerous attempts have been made to develop artificial ligament devices.  Ligaments made from Dacron, carbon fiber, Gore-Tex and other chemicals/fibers have been tested by competitors.  However, we believe that no synthetic device to date has possessed the necessary biological and biomechanical properties to achieve long-term success because they not have supported meaningful cellular remodeling by the human’s own cells.  The only graft that has survived the test of time in the ACL indication are biologic grafts. Regardless of these limitations, a limited number of synthetic devices are available outside the U.S. but the acceptance of such devices by surgeons has been very low.  Combination devices, which include a synthetic device augmented with a human allograft, have seen only limited technical success and they  do not address most of the issues discussed above regarding human allograft sourcing and use.

Xenografts

Specific types of antibodies in humans,known as anti-gal antibodies, bind to the α-gal antigen

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on animal-based grafts and initiate a rapid immune rejection process.  The α-gal-mediated rejection may be prevented by: (i) removing or deactivating the antigens found on the xenograft or (ii) sourcing the xenograft from an animal that has been genetically modified to remove or eliminate α-gal antigens. 

Deactivation of antigens involves crosslinking -- a chemical manipulation of the xenograft to make it acceptable to the human body.  However, too much crosslinking results in a xenograft that is incapable of acting as a biological scaffold and thereby incapable of becoming populated with the patient’s own cells (no ligamentization occurs).  The ability of a xenograft to become remodeled and incorporated into the host has been shown to be vital to the long-term performance of the implant.  Too little crosslinking results in the patient’s immune system attacking the xenograft and rejecting it either acutely or over the longer-term (see Figure 4 below).  Historical attempts by competitors to use xenografts have ended mostly with failure.  Companies have attempted to develop animal-based products for the ACL market using high concentrations of glutaraldehyde to attenuate recognition of antigens on the graft, previously successfully used to “fix” porcine heart valves, but were abandoned due to the frequent failure of subsequent implants. 

Figure 4

We believe that previous failure of knee-related xenograft was mainly due to local toxicity and synovitis caused by residuals of the chemical crosslinking agent leaching into the surrounding joint areas and not rapidly dissipating.  Knee capsules, unlike heart valves and rotator cuffs, generally have very little turnover of surrounding fluid, and, as a result, residual crosslinking agent does not have the opportunity to meaningfully dissipate or be removed.

An alternative method to prevent α-gal-mediated rejection is by using genetically altered animals.  Genetic alteration has been shown to be technically feasible in pigs. However, scaled-up production of such pigs has not occurred because genetically modified pigs have not been found to be completely void of the α-gal antigen nor reliably reproduce offspring free of the α-gal antigen.  We  believe the resultant production cost and regulatory hurdles will be very significant, are we are not aware of any company that is attempting to scale-up production of genetically modified pigs for commercial tissue use.

Our proprietary approach has been shown to solve both the rejection as well as the compatibility issues.  Currently, we believe we are the only company that is pursuing an animal-derived ACL implant.  See “Our Solutions and Advantages” section for additional details.

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Our Solutions and Advantages

To solve the xenotransplant rejection problems mentioned above, we developed the Z-Process^®.  The Z-Process is a proprietary process that immunochemically modifies animal tissue so that it is compatible with the human immune system (see Figure [ ] below).  The Z-Process addresses both α-gal and non-gal antigens on the xenograft.  Our Z-Process also creates porcine tendons for safe use in humans while still maintaining biological scaffold activity of the implant.  Using our Z-Process, we developed the Z-Lig device as an immunocompatible, porcine-derived ACL reconstruction alternative which provides a readily available, off-the-shelf solution that is strong, sterile, and reproducible.  The process and resultant product is protected by our extensive portfolio of patents and patent applications.  See “—Intellectual Property”

Figure 5

We uses α (alpha) -galactosidase enzyme to cleave the terminal galactose of the gal antigen so that the carbohydrate chain remaining on the animal tissue is the same in its structure as the carbohydrate chains present in humans.  Importantly, our technology uses α-galactosidase enzyme to remove α-gal antigens from non-primate animal tissues, including ligaments, cartilage, bone, heart valves, vascular tissue, injectable collagen and other tissues.  We are not aware of any competing technology that acts as a replacement for α-galactosidase for cleaving the gal antigen while still maintaining the tissue’s biological scaffold.  Therefore, we believe that

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competitors are prevented from deactivating the α-gal antigen from specific animal tissues without either (i) infringing ABI’s patents or (ii) making the xenograft non-functional or inert and incapable of incorporating the host’s own cells.

While the α-galactosidase enzyme treatment solves the α-gal rejection issue, it has no known effect on the non-gal immune response.  To address the non-gal response, low level chemical crosslinking is utilized to control the response due to the non-gal antigens.  This multi-step process was developed by our team and refined over many years to the final, highly specific and reproducible process used in the clinical trials.  Our process patents cover the crosslinking treatment of tissues for non-gal antigens and subsequent sterilization using forms of e-beam irradiation.

Outside of autografts and allografts, Z-Lig represents a new and unique method in the industry in that it incorporates the host’s cells.  When first implanted, Z-Lig contains no live cells.  Z-Lig is gradually populated and remodeled by the patient’s own cells, eventually yielding a mature human ligament through the process of ligamentization.  We believe that Z-Lig remodels at a similar rate as human allografts, with substantial ligamentization occurring within 6 to 12 months and complete remodeling within two to three years.  This remodeling is key to Z-Lig’s long-term functionality.

In regenerative medicine much of the work with stem cells, growth factors and bioactive agents is also focused on the development of an ideal scaffold.  Many different techniques have been employed to replicate the architecture and organization of normal tissue and organs, i.e. non-woven and woven materials, development of porous materials, 3-D printing, etc.  All of these efforts may have shortcomings in terms of the architecture, mechanical properties and biological-materials interactions, among others.  We believe scaffolds produced using the Z-Process may offer optimal properties in terms of the natural architecture, target mechanical properties, and inherent material properties of a biological substrate.   The use of scaffolds produced using the Z-Process could represent a sizeable advance in the development of regenerative therapies.

Product Candidates and Pipeline

The Company’s product pipeline is summarized in Figure 6 below:

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Figure 6

The Company currently has four product candidates in clinical and preclinical development and research stages.  Below is the current status, clinical results and regulatory strategy for the product candidates in the portfolio:

Z-Lig^® Family - The Z-Lig family of devices are designed for use in a range of ligament reconstruction procedures, especially the initial application for the anterior cruciate ligament (ACL).  The device is sourced from animal tissue but is sized and has the requisite biological and mechanical properties for use in these type procedures.  A key advantage of this device is that little training is required for its use.  The use of the device does not require the surgeon to change his surgical technique, his preferred fixation system, nor his rehabilitation protocols.

We received the CE Mark for the BT+ (bone-tendon) and BTB (bone-tendon-bone) versions of the Z-Lig Device Family for revision and multiligament ACL reconstruction (ACLR) procedures.  We have developed a portfolio of data supportive of clinical safety and performance to enable the opportunity to market the device in the EU.  We also have plans to provide additional clinical data required to expand our approved indication to the full ACL indication to cover all ACL procedures, including primary ACL surgeries.  The Z-Lig has thus been evaluated to demonstrate its suitability as a biocompatible graft alternative to allograft and/or autograft through bench testing and extensive in vivo testing.  We plan to expand indications as well as introduce a ST (soft tissue) version to complete the spectrum of ligament reconstruction devices for the Z-Lig Device Family.

Z-Patch – an extracellular matrix product used in soft tissue repair and augmentation procedures, such as hernia and Achilles tendon repair.  Sourced from porcine dermis, this product has potential applications in orthopaedics, general, reconstructive, plastic and wound care indications.  In the U.S., this product may be developed and approved through the 510(k) clearance route under the FDA process.

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Z-Fix – a xenograft bone based product which is a biologic fixation device for ACL reconstruction and would be complementary to the Z-Lig device (all biologic ACL reconstruction).  In the U.S., this product may be developed and approved through the 510(k) clearance route.  Designs using bone could be expanded to include indications such as bone graft repair and spacer implants used in spine surgery.

Z-Meniscus – a xenograft meniscus device which can be use in the repair or reconstruction of meniscal injuries and defects.  In the U.S. and markets outside the U.S., this device would require additional clinical data prior to regulatory approval and commercialization.

Our Current Status – Clinical Results with the Z-Lig

After extensive review of our regulatory dossier, we were granted the CE Mark for the Z-Lig device for multiligament and revision ACL procedures in April 2014.  The dossier was an extensive summary of the science, preclinical, validation data and included the data collected from the European and South African multicenter study. We are also committed to plans for continued clinical and medical evaluation of this device family to insure the processing related issues have been addressed (post-market controls, reporting / vigilance, and long-term safety and performance).  The additional data on 20 to 30 subjects at one year period will be submitted to support the indication expansion to the full ACL indication.  In addition, we have committed to post-market safety evaluations and plans to continue Z-Lig Subject follow-up for an extended period of time (up to 60 month follow-up) for post-market surveillance purposes, which will generate the additional clinical data for market expansion opportunities both in the existing markets covered by the CE Mark and in the U.S.

In 2012, we initiated our multicenter, prospective, controlled (allograft), randomized and blinded clinical study in Europe and South Africa and subjects enrolled in the trial have surpassed the 36 month long-term follow-up period.  This study enrolled sixty-six subjects (n=66).  All time points to complete the endpoint analysis for Primary Performance and Efficacy have been achieved, therefore the study continues  for the purpose of collecting additional post-market safety data.  Generally, the failure of ACL grafts occurs within the early post-implantation window (3 months after the operation), when the ligamentization process has initiated and graft strength is most vulnerable.  Our assessment with the Primary Performance measure (primary endpoint for CE Marking) supported the conclusion of non-inferiority of Z-Lig versus allograft, with 100% success in all subjects at 6 months follow-up in the PP population.  Assessment of clinically relevant success outcomes such as patient activity, patient satisfaction, stability, functional and effusion resulted in compelling data showing comparable performance to the allograft control.

Surgeons using the device (our study Principal Investigators) have reported consistent, comparable or superior quality of the Z-Lig graft materials in comparison to allograft controls.  Surgeons have reported that the Z-Lig graft has a superior bone plug material, is easily used and managed during surgery, and requires no change to their standard surgical procedure.

Within the initial 12 months, bacterial infections associated with the graft were reported in 6 subjects implanted with Z-Lig in this study.  We conducted a proactive and extensive safety investigation which concluded that the infections were caused by contamination of incoming tissue and processing deficiencies.  Excepting these cases of bacterial infection, it was concluded that the reported complications are consistent with those found in the medical and scientific literature and were unrelated to the graft.  We have implemented a robust corrective action plan to address the sources of bacterial contamination, and these validation activities

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have been completed to verify that the corrective actions were sufficient and effective and that sterility can be assured.  Our corrective action plan and validation data were reviewed by the Notified Body for CE Marking and they required no additional action by us.  We plan to execute additional post-market study to confirm the effectiveness of the corrective actions.

U.S. Human Clinical Results

Z-Lig is currently under development in the U.S. under an Investigational Device Exemption (IDE) with the FDA.  Z-Lig’s development trials follow the FDA guidance document on Intra-Articular Knee Ligament Reconstruction Devices.  The safety testing modules conducted for CE Mark approval can also support FDA approval of Z-Lig as well as 510(k) approvals of follow-on products.

The results of the U.S. safety pilot study demonstrated that the Z-Lig was safe (see Figure 7 below).  Data from the human clinical study demonstrated the long-term safety and feasibility of the Z-Lig device.  The study included 10 subjects followed for 2 years under the protocol.  This group represented a highly active subject population, including subjects with high pre-injury Tegner activity levels (competitive athletes with Tegner ratings 8-10), subjects with clinically significant comorbidities, and subjects undergoing revision ACL surgeries.  These are all known risk factors to outcomes following ACL surgery.  The device performed as intended during the surgical procedure and post-surgically through progressive weight bearing and return to normal activities.  The grafts were well-tolerated without observation of a deleterious immunogenic response.  In 4 of the 10 subjects, non-device related adverse events were experienced either due to vigorous sports activities (e.g., sports injury, rupture) or events related to the initial procedure (e.g., fixation, procedure error).  No systemic diseases or secondary infections resulted from the implantation of the device and there was no acute immune response or long-term rejection response exhibited by any of the subjects.  The 12-month results of the pilot study described below were submitted to the FDA, leading to unconditional acceptance by the FDA of a pivotal clinical trial protocol.  As assessed by the operating surgeon and two non-affiliated orthopaedic knee specialists, five of six evaluable subjects presented with functional grafts at the 24-month post-operative time point and satisfied all success criteria, including effusion, knee laxity (KT 1000), pivot shift, Lachmans and Anterior Drawer tests.  Assessment by MRI also showed significant remodeling and maturation of the functioning grafts.  One of six evaluable patients that presented without a functional graft had a tibial bone fixation that loosened.

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Figure 7

The above figure describes the outcomes of subjects five years postsurgery.  Recently, we completed 12-year follow-up on the five evaluable patients with functional grafts.  Safety of the devices continued to be exhibited throughout the 12-year interval, and all evaluable patients continued to demonstrate graft function with knee stability.  The nature and rate of complications and adverse events seen during this feasibility study were similar to those cited in the literature.  In April 2014, we received unconditional approval from FDA to move forward with its pivotal efficacy trial.

The pivotal efficacy trial will involve 326 patients at up to 10 clinical sites.  The study will be controlled, randomized and evaluator-blinded.  Half of the patients will receive Z-Lig while the other half will receive an allograft control.  The study’s primary endpoint is non-inferiority of function of Z-Lig (relative to allograft) at 12 months and 24 months post-implant.  We plan to continue discussions with the FDA regarding ways to optimize the study through randomization schemes, the number of clinical sites and discussions surrounding the data gathered during the European trial.

The body of data in support of the safety and performance of the Z-Lig Device Family is thus consistent and extensive, with multiple studies concluding that the Z-Lig Device Family performs in accordance with design criteria and has demonstrated adequate safety and performance in support of its intended use.  Studies for long-term efficacy analysis have been completed (reported herein) and post-market surveillance studies are in effect for ongoing assessment.

Preclinical Studies

Prior to the clinical experience, we conducted controlled studies in 20 Rhesus monkeys to evaluate Z-Lig’s safety and performance prior to use in humans.  Our studies showed that knee joints of monkeys implanted with a Z-Lig displayed normal motion and laxity within a few weeks post implantation.  This normal motion and laxity was maintained for the entire one-year period of the study.  Serological studies of these monkeys showed a transient production of non-gal

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antibodies that was deemed to have substantially decreased at approximately nine months post-implantation due to the gradual replacement of the pig tissue and matrix by the recipient’s own cells and tissue.  Biomechanical analysis of the implants after one year in monkeys demonstrated characteristics similar to those of the control (monkey allograft) and a significant return to normal leg function (as also seen in the allograft-implanted monkey).  Histological studies of the implants one year post-implantation revealed effective replacement of the porcine tissue components with those of the recipient, demonstrating that the device served as a scaffold that supported gradual remodeling with the monkey’s own cells.  In addition to these animal studies, we also successfully completed initial safety and performance studies, including cytotoxicity, acute systemic toxicity, pyrogenicity, residual risk assessment, viral safety, viral inactivation, tensile strength and dynamic abrasion.

Our Marketing & Distribution Strategy

Markets and Methods of Distribution

The orthopaedic surgery marketplace is fragmented with many clinicians focused on certain types of surgical procedures, such as trauma, total joints, spine, sports medicine. Our marketing efforts will be focused on developing awareness of the Z-Lig to stakeholders treating sports or activity related injuries.  The scope of our marketing and distribution efforts  includes the patients who desire their specific expertise  and suppliers who service their needs.  The identification of this market segment and the key opinion leaders enable a more efficient, focused sales and marketing effort.   Additionally since the Z-Lig device does not require changes to surgical technique and thus avoids additional costs for training, marketing activities are focused on educating on the science, technology and the previous clinical experiences.

The following describes our plans to initiate marketing and distribution activities as an independent organization through a distribution model.  With the CE Mark approval, we intend to introduce the Z-Lig ACLR device through a focused, phased market introduction.  We believe the initial market need for the Z-Lig are revision and multiligament cases where a graft option is typically required to achieve the desired clinical result. Initially we intend to target a select number of markets where human or synthetic graft options are accepted, in particular those nations whose sites participated in our European and South African (EUSA) clinical trials, which includes Italy, South Africa, Poland, Spain, UK, and the Benelux countries (Netherlands, Belgium, Luxemburg).  We will utilize indirect distribution channels who have met our selection criteria (i.e. existing/complementary product lines, market share, financial, willing to invest in the product line, among others).  In these select markets, we will introduce the product through a targeted approach, clinicians chosen by our investigative surgeons and/or our distribution partners.  Supporting the efforts of our indirect distribution channel will be direct personnel specifically tasked with sales management and clinical marketing specialists for training and technical/scientific field education.  The next distribution phase will expand our distribution reach to additional European and Asian markets that accept the CE Mark, with a specific focus on high-volume clinical centers or those specializing in knee injuries.  The third and final phase would include pan-European expansion into markets in the EU and continued global introduction in markets outside the United States who accept the CE Mark and potential distribution into non-European nations whose regulatory bodies require additional regulatory approval.

The following describes the main elements our proposed structured rollout in each region:

• Identify Targets in Each Country

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o Clinicians

o Distributors

• Adapt Brand Messaging and Marketing Communication

o Define messaging

o Marketing Materials adapted for local markets

o Product Training material: develop Sales and Surgeon training (product and technology) presentations.

o Sales Operations:  Ordering and shipping processes

• Seed and Expansion stage

§ Sales training meetings in each market with distributors

§ Distributors identify 4-10 “launch” clinicians

§ Clinician Referrals

§ Surgeon-based symposia

• Tradeshows – national/in-country – European Society of Sports Traumatology, Knee Surgery, & Arthroscopy (ESSKA), International Society of Arthroscopy, Knee Surgery and Orthopaedic Sports Medicine (ISAKOS), European Federation of National Associations of Orthopaedics and Traumatology (EFFORT), and others.

• “Surgeons selling surgeons” - Company sponsored symposia

• Post Sale Monitoring and Partnering

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Phase 1 (launch to 12-18 months)

Distribution efforts will be in 6 to 10 markets which have accepted options for ACL reconstruction (allograft and synthetic), have reimbursement pathways for graft alternatives, and/or are countries where we have conducted our clinical evaluations. Some of these initial markets may be characterized as:

· Major markets which utilize graft options such as allograft, xenograft or synthetic; clinicians who are receptive to the use of alternatives.

· Markets with minimal coding restraints.

· Markets where we have conducted our clinical evaluations to take advantage of our clinical successes and leverage our study clinicians and key opinion leaders (KOLs) to introduce and penetrate the local markets.

· Collaboration with our distributors or clinical investigators; initial distribution in each market will focus on a select number of thought leader clinicians to effect an orderly  launch of our product and gain clinical experience and feedback, verify current sizing and surgical techniques, and help insure success and traction in the marketplace.

· This limited release will enable us to gather first hand data, establish successes and help fine tune training and marketing activities.

· In some markets release will take the form of a registry to establish a clinical database for the local market and obtain product performance feedback.  The data will also be used for broader marketing and reimbursement activities in the future.

· Presence at key international medical events with exhibit supplemented with symposia or presentations.

Phase 2 (12-18 months to 24-36 months)

Efforts will focus on expanding our customer base in existing countries and extend our distribution to additional European markets with a specific focus on high-volume clinical centers or those specializing in knee injuries.  This phase will also involve markets outside of Europe that accept the CE Mark (i.e. Canada, Turkey, Saudi Arabia, Australia and Korea).  Working with these centers may require implementation of additional “mini-studies” for clinical acceptance and reimbursement.  Continue our presence at international meetings and assist our distributors at national events.  Continue to add and train distributors is expansion markets.

Phase 3 (24 months and beyond)

Efforts will continue in the expansion of customer base in markets with established distribution. In addition to pan-European expansion in the EU markets, continued introduction in markets outside the United States who accept the CE Mark.  These non-European markets would include those whose regulatory bodies require additional regulatory submissions and approvals.  Developing access, advocacy and adoption in the non–European markets.

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Our Distributors

We require that each indirect distributor purchase stock of our products and store grafts and provide local distribution, billing, and collection for its designated markets.  Initially distributors will be directed to identify a select group of qualified clinicians to become users and potential key opinion leaders of the Z-Lig within their territory.

Choosing the right distribution partners as we move into the various international markets is key.  Some of the issues that have to be explored and expectations established with any potential business partner before distribution can begin are:

· A current presence in the geographic region in the orthopedic, sports medicine or sports traumatology market with existing products

· The experience, ability, or the desire to handle a regenerative medicine/tissue-based product (store, monitor, distribute, invoice, collect, etc)

· Presence in the target market including accounts and relationships with clinicians

· Presence at local, regional, and national logical meetings

· A willingness to invest in training their sales force and customers, and a willingness to invest in marketing, training and promotional activities that will drive distribution and acceptance of their products

· A willingness to invest in activities needed to establish products in their markets, including those related to establishing reimbursement.  Local knowledge of regulatory barriers and time to market conditions are valuable.

· Distributors with adequate financial resources

Quality of the product, safety, efficacy, and price are important, but the value of surgeon relationships and customer service are equally important factors for success.

Our Management, Direct Sales and Marketing Team

As we continue to advance our commercialization efforts and expand our operations, we expect to hire additional management members to execute our strategies.  These additional hires may include senior management positions overseeing our business development and regulatory affairs.  We also intend to hire additional personnel to enhance our financial reporting, accounting and auditing capabilities, which will ensure that we comply with any ongoing reporting requirements under the rules and regulations of the SEC.

We will initially use an indirect distribution model.  We intend to increase our headcounts by hiring additional sales and marketing employees, including a Vice President of European, Middle East and Africa Distribution Management responsible for establishing our distribution network, initiating and coordinating our distribution activities within the distribution network, and driving distribution objectives; and  Clinical Marketing Specialist(s) who will be focused on both surgeon and sales representative education on the science and technology surrounding the Z-Process, Z-Lig product, and our company.

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Marketing Approach

The introduction of an innovative technology, especially one for ligament reconstruction, will meet an unmet market need but will also encounter the challenges of clinical acceptance.  Our efforts to execute a Level I clinical trial with KOLs in Europe represent a significant step towards gaining scientific and clinical credibility.  The study design includes post-marketing surveillance out to 5 years as a means of providing continual product performance feedback.   We will focus on peer-to-peer marketing activities as a rapid and effective means of establishing credibility and market acceptance of our new technology.

Direct marketing efforts at logical meetings, symposiums and others are highly effective, especially those with clinician-to-clinician interactions.  For example, we have  conducted lunchtime symposiums or have had invited lectures at the ISAKOS (International Society of Arthroscopy, Knee Surgery and Orthopaedic Sports Medicine) and ESSKA (European Society for Sports Traumatology, Knee Surgery and Arthroscopy) meetings to introduce surgeons to the Z-Lig in a peer-to-peer environment.  We plan to repeat this successful format at additional international meetings.  Independent surgeon training symposia with KOLs will be encouraged/supported.  Exhibiting at major international meetings is planned and supporting local distributors to exhibit at in-country meetings will be encouraged.  Marketing efforts will also be expected by the local distribution channels to augment company efforts.

Use of Initial Market Feedback

In some markets, post launch market feedback will be collected from clinicians who have had the opportunity to use the product.  Data will be used to confirm safety and performance expectations as well as provide information for product enhancements, market reception and education or training opportunities.  We anticipate surveys to be sent to approximately 20-24 clinicians who have used the product in a minimum of 6 cases and can provide follow up assessments 6 and 12 months post-operative.  These surveys will be conducted with surgeons who have been targeted in our launch activities.

The Advantage of Clinical Registries

In addition to the ongoing multicenter trial (post-market surveillance), performance of smaller, local market studies as registries will be encouraged.  These additional studies have been proposed to supplement our CE Mark approval and may be needed to encourage clinical Z-Lig use in new markets (those outside of trial countries).  These studies can explore issues such as cost (reimbursement), performance versus autograft, overall operative time savings, and other advantages.

Competition

As has been mentioned elsewhere in the business section, the principal competition for our  Z-Lig device arises from other types of ACL graft materials: allograft (from cadaveric tissue) and synthetic (polymers that are designed to replicate the physical, strength characteristics of native human ligaments.  We do not believe that there are other xenograft (from other species) or biologic ligaments either in the market or under development by the established orthopaedic companies.  In some global markets, synthetic devices such as those produced by LARS, Xiros (Neoligaments) and Telos have limited clinical use due to their less than satisfactory clinical history.  Currently, the only synthetic device under clinical testing that we are aware of is a resorbable polymer-based scaffold that is being developed by Soft Tissue Regeneration.

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Intellectual Property

Our product candidates and Z-Process technology are protected by an extensive intellectual property portfolio.  As of June 30, 2015, we held 23 issued patents in the U.S. and internationally, consisted of 17 issued patents in the U.S. and 6 issued patents in Europe and Japan.  In addition, we currently hold 3 patent applications pending in the U.S. and Europe. These issued patents will expire between 2015 and 2024. ABI’s patent portfolio includes claims relating to treatment and application of specific tissues for a variety of medical and surgical uses.  The intellectual property portfolio includes combined patents of process and material composition that support deantigenation, sterilization and viral inactivation of a wide range of biological tissues.  ABI has exclusive rights to the only known method for humanizing non-primate animal grafts for replacement of ligaments, bone, etc. in humans without making the graft inert.

Patents regarding Z-Process include coverage of key immunochemical modification and sterilization techniques as applied to a variety of animal-derived tissues, including connective tissue grafts (tendon, ligament, articular cartilage and fibrocartilage); cardiovascular tissues (heart valve and pericardium); and calcified and de-calcified bone (granular bone matrix, cortical and cancellous structural bone for struts, cages and machined implants).  The patent portfolio also includes immunochemical modifications of solubilized and homogenized dermal- and tendon-derived injectable collagen formulations.

In January 2009, we entered into a licensing agreement with the Curators of University of Missouri pursuant to which we obtained an exclusive right and license to use five U.S. Patents covering an alpha-galactosidase.  The license was obtained to ensure a viable source of alpha-galactosidase to use the Z-Process.  Under this license agreement, we are required to pay royalty in an amount equal to a percentage in the low single digits of net sales of licensed products. In addition, we are required to pay an annual minimum royalty payment of $35,000.  All payments under this agreement will be terminated if the aggregate amount paid under the agreement (including both sale royalties and minimum royalty payments) equals to a specified amount.

Manufacturing

Z-Lig raw materials are sourced from suppliers that meet ABI’s strict quality and performance requirements and are compliant with ISO 22442 standards.  Through simple, predictable ramp-up of the breeding and processing of the pigs and supply chain redundancies, we believe we can readily meet all of the expected market demand.  Accordingly, we have not entered into any formal supply agreements with our suppliers to provide a guaranteed volume of raw materials.   In addition, by utilizing varying ages and strains of pig, we established a flexible manufacturing process that permits us to adjust the size of our Z-Lig products to accommodate the demand of customers.

Government Regulation

Our products are medical devices that are subject to extensive regulation by government authorities in the European Union (the “EU”), the United States and in other countries and jurisdictions, including South Africa, and non-EU European countries. These governmental authorities regulate the marketing and distribution of medical devices in their respective geographies. The regulations cover the entire life cycle of the product, including the research, development, testing, manufacture, quality control, packaging, storage, labeling, advertising and

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promotion of the devices. In addition, post-approval monitoring and reporting, as well as import and export of medical devices, are subject to regulatory requirements.

Review and approval of medical devices in the EU

The EU has a coordinated system for the authorization of medical devices. The EU Medical Devices Directive (Council Directive 93/42/EEC, as amended) sets out the basic regulatory framework for medical devices in the European Union. In the EU our medical devices must comply with the Essential Requirements in Annex I to the EU Medical Devices Directive, which we refer to as the Essential Requirements. Compliance with these requirements is a prerequisite to be able to affix the Certificate of Conformity mark, or CE Mark, to our medical devices, without which they cannot be marketed or sold in the European Economic Area, or EEA. To demonstrate compliance with the Essential Requirements we must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification. Except for low risk medical devices (Class I with no measuring function and which are not sterile), where the manufacturer can issue a CE Declaration of Conformity based on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure requires the intervention of a third-party organization designated by competent authorities of an EU country to conduct conformity assessments, which is referred to as a Notified Body. The Notified Body would typically audit and examine products' technical file and the quality system for the manufacture, design and final inspection of the devices before issuing a CE Certificate of Conformity demonstrating compliance with the relevant Essential Requirements.  To date, we have used the CE Marking process to satisfy the conformity standards required to market and sell our Z-Lig products in the EU.

With respect to implantable devices or devices classified as Class III in the EU, the manufacturer must conduct clinical studies to obtain the required clinical data, unless reliance on existing clinical data from similar devices can be justified. As part of the conformity assessment process, depending on the type of devices, the Notified Body will review the manufacturer's clinical evaluation process, assess the clinical evaluation data of a representative sample of the devices' subcategory or generic group, or assess all the clinical evaluation data, verify the manufacturer's assessment of that data and assess the validity of the clinical evaluation report and the conclusions drawn by the manufacturer.  To date, we have conducted clinical studies in Europe and South Africa to obtain clinical data as part of the clinical evaluation process.

Even after we receive a CE Certificate of Conformity enabling us to affix the CE Mark on a product and to sell our product in the EEA countries, a Notified Body or a competent authority may require post-marketing studies of our product. Failure to comply with such requirements in a timely manner could result in the withdrawal of our CE Certificate of Conformity and the recall or withdrawal of our product from the market in the EU, which would prevent us from generating revenue from sales of that product in the EEA. Moreover, each CE Certificate of Conformity is valid for a maximum of five years, but more commonly three years. Our current CE Certificates of Conformity are valid through 2019 for our Z-Lig products.   At the end of each period of validity we are required to apply to the Notified Body for a renewal of the CE Certificate of Conformity. There may be delays in the renewal of the CE Certificate of Conformity or the Notified Body may require modifications to our products or to the related Technical Files before it agrees to issue the new CE Certificate of Conformity.

In addition, we must inform the Notified Body that carried out the conformity assessment of the medical devices we market or sell in the EEA of any planned substantial changes to our devices

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that could affect compliance with the Essential Requirements or the devices' intended purpose. The Notified Body will then assess the changes and verify whether they affect the products' conformity with the Essential Requirements or the conditions for the use of the devices. If the assessment is favorable, the Notified Body will issue a new CE Certificate of Conformity or an addendum to the existing CE Certificate of Conformity attesting compliance with the Essential Requirements. If it is not, we may not be able to continue to market and sell the product in the EEA.

On September 26, 2012, the European Commission adopted a package of legislative proposals designed to replace the existing regulatory framework for medical devices in the EU. These proposals provide for a revision of the current regulatory framework for medical devices in the EU to strengthen patient safety, transparency and product traceability. The proposals, for instance, include reinforced rules governing clinical evaluation throughout the life of the device, improved traceability of devices in the supply chain, including a phased and risk-based introduction of unique device identification, or UDI, improved market surveillance and vigilance, as well as better co-ordination between national regulators, increased powers for Notified Bodies to undertake unannounced inspections and strengthened supervision of Notified Bodies by member states. The European Commission's proposals may undergo significant amendments as they are reviewed by the European Council and European Parliament as part of the EU legislative process. If and when adopted, the proposed new legislation may prevent or delay the EU approval or clearance of our products under development or may impact our ability to modify our currently EU approved or cleared products on a timely basis and impose additional costs relating to clinical evaluation, vigilance and product traceability.

Marketing and sales considerations in the EU

In the EU, medical devices may be promoted only for the intended purpose for which the devices have been CE Marked. Failure to comply with this requirement could lead to the imposition of penalties by the competent authorities of the EU Member States. The penalties could include warnings, orders to discontinue the promotion of the medical device, seizure of the promotional materials and fines. Promotional materials must also comply with various laws and codes of conduct developed by medical device industry bodies in the EU governing promotional claims, comparative advertising, advertising of medical devices reimbursed by the national health insurance systems and advertising to the general public.

Post-approval monitoring in the EU

Additionally, all manufacturers placing medical devices into the market in the EU are legally bound to report any serious or potentially serious incidents involving devices they produce or sell to the competent authority in whose jurisdiction the incident occurred. In the EU, manufacturers must comply with the EU Medical Device Vigilance System. Under this system, incidents must be reported to the relevant authorities of the EU countries, and manufacturers are required to take field safety corrective actions to reduce a risk of death or serious deterioration in the state of health associated with the use of a medical device that is already placed on the market.

Third-party reimbursement

In the United States and most other major joint implant markets, third-party payors, including government health programs, commercial health insurers and managed care organizations, reimburse hospitals and other medical facilities an aggregate amount for all elements of a joint

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replacement procedure, including operating room time, patient care and the joint replacement product. As a result, our products generally are not reimbursed separately, but instead are subject to the limits imposed by third-party payors on the coverage and reimbursement of procedures that utilize our products.

Sales of our products will depend, in part, on the extent to which the costs of such procedures involving the use of our products cleared by the EU and other jurisdictions will be covered by third-party payors, including government health programs in the United States, such as Medicare and Medicaid, commercial health insurers and managed care organizations. The process for determining whether a payor will provide coverage for a particular procedure may be separate from the process for setting the price or reimbursement rate that the payor will pay for the procedure once coverage is approved. Third party payors may limit coverage to particular procedures on an approved list, or formulary, which might not include all of the approved procedures involving the use of our products for a particular indication.

In the EU, pricing and reimbursement schemes vary widely from country to country. In many foreign markets, pricing of medical devices is subject to governmental control. In the United States, there have been, and we expect that there will continue to be, a number of federal and state proposals to limit payments by governmental payors for medical devices, and the procedures in which medical devices are used. While we cannot predict whether such legislative or regulatory proposals will be adopted, the adoption of such proposals could have a material adverse effect on our business, financial condition and profitability.

Review, approval and clearance of medical devices in the United States

Medical devices in the United States are strictly regulated by the FDA. Unless an exemption applies, a medical device may not be marketed in the United States unless it has been cleared through filing of a 510(k) premarket notification, or 510(k), or approved by the FDA pursuant to a premarket approval application, or PMA. The information that must be submitted to the FDA in order to obtain clearance or approval to market a new medical device varies depending on how the medical device is classified by the FDA. Medical devices are classified into one of three classes depending on the level of control necessary to assure the safety and effectiveness of the device. Class I devices have the lowest level or risk associated with them, and are subject to general controls, including labeling, premarket notification and adherence to the Quality System Regulations (“QSRs”). Class II devices are subject to general controls and special controls, including performance standards. Class III devices, which have the highest level of risk associated with them, are subject to most of the aforementioned requirements as well as to premarket approval. Most Class I devices and some Class II devices are exempt from the 510(k) requirement, although manufacturers of these devices are still subject to registration, listing, labeling and QSR requirements.

The PMA process is more complex, costly and time consuming than the 510(k) clearance procedure. A PMA must be supported by extensive data, including technical, preclinical, clinical, manufacturing, control and labeling information, that demonstrate the safety and effectiveness of the device for its intended use. After a PMA is submitted, the FDA has 45 days to determine whether it is sufficiently complete to permit a substantive review. If the PMA is complete, the FDA will file the PMA. The FDA is subject to performance goal review times for PMAs and may issue a decision letter as a first action on a PMA.

In evaluating a 510(k), the FDA will determine whether the device has the same intended use as the predicate device, and (a) has the same technological characteristics as the predicate

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device, or (b) has different technological characteristics, and (1) the data supporting substantial equivalence contains information, including appropriate clinical or scientific data, if deemed necessary by the FDA, that demonstrates that the device is as safe and as effective as a legally marketed device, and (2) does not raise different questions of safety and effectiveness than the predicate device. Most 510(k)s do not require clinical data for clearance, but the FDA may request such data. The FDA seeks to review and act on a 510(k) within 90 days of submission, but it may take longer if the agency finds that it requires more information to review the 510(k).

Our Z-Lig products are classified as Class III medical devices.  We intend to obtain regulatory approval of our Z-Lig products by filing a PMA with the FDA.   The PMA process for the Z-Lig may be subject to additional clinical evaluation under an Investigational Device Exemption (IDE) to collect more human clinical data prior to filing a PMA. We intend to rely on the 510(k) premarket notification process to obtain FDA clearance for our product candidates which may pursue this regulatory pathway.

Investigational device exemption

A clinical trial to support safety and effectiveness of the device is typically required for a PMA and, in a small percentage of cases, the FDA may require a clinical study in support of a 510(k) submission. A manufacturer that wishes to conduct a clinical study involving the device is subject to the FDA's Investigational Device Exemption, or IDE, regulation. The IDE regulation distinguishes between significant and nonsignificant risk device studies and the procedures for obtaining approval to begin the study differ accordingly. Also, some types of studies are exempt from the IDE regulations. A significant risk device presents a potential for serious risk to the health, safety, or welfare of a subject. Significant risk devices are devices that are substantially important in diagnosing, curing, mitigating or treating disease or in preventing impairment to human health. Studies of devices that pose a significant risk require both FDA approval and an approval of an independent institutional review board, or IRB, prior to initiation of a clinical study. Nonsignificant risk devices are devices that do not pose a significant risk to the human subjects. A nonsignificant risk device study requires only IRB approval prior to initiation of a clinical study.

An IDE application is considered approved 30 days after it has been received by the FDA, unless the FDA otherwise informs the sponsor prior to 30 calendar days from the date of receipt, that the IDE is granted (“approved”), granted  with conditions, or disapproved. The clinical trial must be conducted in accordance with applicable regulations, including but not limited to the FDA's IDE regulations and current good clinical practices. A clinical trial may be suspended by the FDA, the IRB or the sponsor at any time for various reasons, including a belief that the risks to the study participants outweigh the benefits of participation in the trial.

Post-marketing restrictions and enforcement

After a device is placed on the market, numerous regulatory requirements apply. These include: compliance with the QSR and other compliance requirements; labeling regulations, which prohibit the promotion of products for uncleared or unapproved or "off-label" uses and impose other restrictions on labeling; and medical device reporting obligations, which require that manufacturers investigate and report to the FDA adverse events, including deaths, or serious injuries that may have been or were caused by a medical device and malfunctions in the device that would likely cause or contribute to a death or serious injury if it were to recur.

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Facilities

We lease a 4,000 square foot facility in San Antonio, Texas, under a lease agreement that was recently renewed and will expire on December 31, 2018, at our option. The facility has a 1,000-square foot Class 8 clean room area which contains four 100-square foot modular clean rooms of Class 6 to Class 7 certification.  We believe that we have adequate capacity to support Z-Lig and other production requirements for clinical trials through commercial launch in Europe and the U.S.  The remainder of ABI’s facility is used for product development, distribution and general and administrative purposes

Legal Proceedings

We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to a medical device business. These matters may include product liability, intellectual property, employment, and other general claims. We accrue for contingent liabilities when it is probable that a liability has been incurred and the amount can be reasonably estimated. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

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Management’s Discussion and Analysis ofFinancial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and related notes appearing at the end of this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled "Risk Factors" and elsewhere in this Offering Circular.

Aperion Biologics, Inc. (“we” or the “Company”) is a commercial-stage medical device company addressing the significant unmet need for an alternative to human-based sources of tissues to be used in surgical procedures. Our core technology platform is an enzymatic stripping of the key carbohydrate antigens followed by a unique conversion process that both “humanizes” and sterilizes animal tissues without unduly affecting their biomechanical or biological properties.  The Company’s lead product, the Z-Lig, is a patent-protected porcine tendon currently in limited commercial release for use initially as an anterior cruciate ligament (ACL) replacement in revision and multiligament knee joint procedures.  Z-Lig is the only known biological alternative to human tissue for ACL replacement.  Since the Z-Lig is a biological implant that maintains a scaffold, it can become populated and remodeled with the patient’s own cells (similar to human-sourced tissue), referred to in the industry as “ligamentization.”  This ligamentization is one of the keys to Z-Lig’s proven ability to be highly functional in patients for many years after implantation.  Our propriety process is protected by an extensive portfolio of patents and patent applications, including 23 issued patents in the U.S. and internationally.

The Company’s primary activities since its inception have been the development and implementation of its business plans, performing research on its platform technology, conducting clinical trials on its products in both animals and humans, pursuing regulatory approvals to market its product in U.S. and international markets, and raising capital.  In April 2014 the Company received the CE Mark to allow commercial sales of the Z-Lig in foreign markets that accept the CE Mark (primarily Europe).  The first commercial sale took place in February 2015.

The Company was founded in October 1996 under the name CrossCart, Inc.  The Company changed its name to Aperion Biologics, Inc. (a Delaware corporation) in May 2009.  To date, the Company has funded its business primarily with the proceeds from private placements of equity and debt securities.

Results of Operations

The Nine Months ended June 30, 2015 as compared to June 30, 2014

As mentioned above, the Company commenced its first commercial sale of Z-Lig in February 2015 and recognized $27,000 of sales during the nine months ended June 30, 2015.  There were no sales during the nine months ended June 30, 2014.

Costs related to clinical studies decreased by $38,833 from $165,896 for the nine months ended June 30, 2014 to $127,063 for the nine months ended June 30, 2015.  The decrease was primarily driven by lower expenses associated with the Company’s clinical trials outside of the United States.

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Research and development expenses decreased by $16,429 from $56,345 for the nine months ended June 30, 2014 to $39,916 for the nine months ended June 30, 2015, primarily due to completion of an R&D consulting contract which reduced expenses $15,174 between the periods.

Sales, general and administrative expenses increased by $19,421 from $1,099,724 for the nine months ended June 30, 2014 to $1,119,146 for the nine months ended June 30, 2015.  Sales and marketing activities related to the launch of the Z-Lig product increased $103,451.  In addition, consulting activities related to fundraising resulted in an increase of $100,734 for the period.  Offsetting these increases were a decrease of $55,262 in salary and personnel costs in operations, a decrease of $48,567 in legal fees and a decrease of $84,469 and in regulatory expenses due to the completion of the CE Mark application process.

Other expenses increased for the period primarily as a result of higher interest expense related to the Company’s borrowings to support its activities, as interest expense increased $91,564 between the periods.  This increase was driven by the increase in the total amount of average interest bearing debt from $6,400,014 for the nine months ended June 30, 2014 to $7,956,327 for the nine months ended June 30, 2015.

Fiscal Year ended September 30, 2014 as compared to September 30, 2013 

Operating expenses decreased by $1,537,299 from $3,389,580 in fiscal year 2013 to $1,852,281 in fiscal year 2014.  The decrease was primarily due to the completion of the Company’s clinical trials outside of the U.S. and related follow-up examinations, data gathering and compilation activities and reduced salary and personnel expenses.

Research and development expenses decreased by $358,599 from $417,844 in fiscal year 2013 to $59,245 in fiscal year 2014, primarily due to a reduction of salary and personnel expenses and reduced use of consultants.

Sales, general and administrative expenses decreased by $604,906 from $2,101,434 in fiscal year 2013 to $1,496,528 in fiscal year 2014.  The decrease was primarily attributed to a $226,098 reduction in spending in our Quality Assurance department related to the completion of significant activities relating to our CE Mark application and the adverse event investigation in our clinical trials, a $133,404 decrease in salary and personnel expenses in the Sales department, and a $178,832 decrease in salary and personnel expenses in our Operations Department as a result of the completion of process validation production, which was offset by an increase of $57,411 in fees related to fundraising activities and an increase of $62,499 in fees to Board members due to increasing the size of the Board of Directors.

Other expenses increased for the period primarily as a result of higher interest expense related to the Company’s borrowings to support its activities, as interest expense increased $234,931 between the periods.  This increase was driven by the increase in the total amount of average interest bearing debt from $4,537,000 for fiscal year 2013 to $6,600,014 for fiscal year 2014.

Liquidity and Capital Resources

We had cash of $124,769 at September 30, 2014 and $258,564 at June 30, 2015, sourced primarily from the proceeds received in private placements of convertible promissory notes.

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As of September 30, 2014, the Company had working capital and a stockholders’ deficiency of $25,345,307 and $25,990,881,respectively. During the year ended September 30, 2014, the Company incurred a net loss attributable to common stockholders of $3,291,838. The Company has not generated any material revenues and has incurred net losses since inception. Our recurring operating losses and our need for additional sources of capital to fund our ongoing operations raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended September 30, 2014 with respect to this uncertainty.

Since August 2013, the Company has relied primarily on the issuance of convertible promissory notes to fund its continuing operations.  Most of this funding has been provided by CrossCart, LLC, which is the Company’s largest shareholder and controlled by Dr. Kevin R. Stone, who is the Chairman of the Board of Directors of the Company.  As of June 30, 2015 the Company had borrowed $6,825,615 from CrossCart, LLC and other related parties.   As of June 30, 2015, we had a total of $8,156,027 in outstanding principal amount of convertible promissory notes, the majority of which have matured and are due and payable, and we have not been able to make payments due to the lack of funding.  However, we expect to enter into an agreement with each noteholder, including CrossCart LLC, to (i) waive any default resulting from such non-payment of notes and (ii) provide that all outstanding amount due under the convertible promissory notes will be converted into shares of our common stock immediately following the completion of the offering at the initial conversion price.

We believe that the net proceeds from this offering of approximately $           will be sufficient to fund our current operations at least through the end of calendar year           , and thereafter we may need additional capital to continue our operations. We do not expect to be able to satisfy our cash requirements solely through sales of the Z-Lig in the near future, therefore we expect to rely on equity and debt financing to fund our operations.  The sale of additional equity securities could result in additional dilution to our stockholders and those securities may have rights senior to those of our common stock. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations.

We cannot assure that we will have sufficient capital to finance our growth and business operations or that such capital will be available on terms that are favorable to us or at all. We are currently incurring operating deficits that are expected to continue for the foreseeable future, and as we begin to prosecute our marketing plan, we expect our operating deficit will continue to grow initially until we begin to generate a sufficient level of revenue from our commercialization efforts.

Plan of Operations

Since the receipt of the CE Mark in April 2014, the Company has developed a detailed marketing plan that will initially focus on distribution efforts of its Z-Lig products in 6 to 10 markets which have accepted options for ACL reconstruction (allograft and synthetic), have reimbursement pathways for graft alternatives, and/or are countries where we have conducted our clinical trials.  We intend to use an indirect distribution model and focus on peer-to-peer marketing activities as a rapid and effective means of establishing credibility and market acceptance of our new technology.  We intend to increase our headcounts by hiring additional sales and marketing employees, including a Vice President of EMEA Distribution Management responsible for establishing our distribution network, initiating and coordinating our distribution

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activities within the distribution network, and driving distribution objectives.  We also intend to hire  Clinical Marketing Specialist(s) who will be focused on both surgeon and sales representative education on the science and technology surrounding the Z-Process, Z-Lig product, and our Company.  In later years the Company intend to expand into other countries to broaden the reach of Z-Lig.

The Company recognizes that following the completion of this offering, it will need to raise additional capital in order to meet its obligations and execute its business plan within the next two years. If the Company is unable to raise sufficient additional funds through this offering, it will be required to develop and implement an alternative plan to further extend payables, reduce overhead or scale back its business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

Directors, Executive Officers and Significant Employees

The following table sets forth information regarding our executive officers, directors and significant employees, including their ages as of June 30, 2015:

Name and Principal Position	Age	Term of Office	Approximate hours per week for part-time employees
Executive Officers
Daniel Lee, Chief Executive Officer and Director	54	Since August 2008	_
David Cocke, Chief Financial Officer	50	Since September 2008	_
Directors
David W. Anderson	62	Since February 2012	_
France Dixon Helfer	62	Since March 2014	_
Alfred G. Holcomb	63	Since 2008	_
Kevin R. Stone, M.D.	60	Since our inception	_
Mike Ward	44	Since March 2014	_
Significant Employee
Lance Johnson, Vice President Quality	49	Since November 2010	--

Executive Officers

Daniel R. LeeMr. Lee has been serving as our Chief Executive Officer since August 2008. Prior to joining us, from July 2006 to August 2008, Mr. Lee was Director of Marketing at Smith & Nephew Endoscopy, a sports medicine technology company, responsible for its TRUREPAIR business unit.  From November 2003 to July 2006, Mr. Lee was Director of Marketing at OsteoBiologics, Inc., a medical supply company providing off-the-shelf bio-absorbable implant for articular cartilage, which was acquired by Smith & Nephew Endoscopy in 2006.  Prior to joining OsteoBiologics, Inc., Mr. Lee was the Director of Marketing for Regeneration Technologies, Inc (“RTI”), a leading allograft tissue processor for orthopaedic surgical applications, from 1999 to 2003.  Prior to joining RTI, he was the Director of the Sports Medicine Research and Development group at Surgical Dynamics, a subsidiary of U.S. Surgical Corporation.  He is a member of the Society for Biomaterials and the American Association of

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Tissue Banks where he holds a Certified Tissue Bank Specialist certification.  He currently holds thirteen (13) patents on implants and instruments used in orthopaedic and general surgery.  Mr. Lee holds an M.S. in Biomedical Engineering from the University of Alabama at Birmingham and a B.A. in Materials Science and Engineering from the Johns Hopkins University.

David Cocke  Mr. Cocke has been serving as our Chief Financial Officer since September 2008.  Since 1997, Mr. Cocke has been serving as a General Manager of NuPak Medical, Ltd., an ISO 13485-certified contract manufacturing medical device company. He was responsible for all aspects of management, including sales, finance and operations. Prior to that, from November 1993 to May 1996, Mr. Cocke was Chief Financial Officer of NuTech, Inc., a technology incubator subsidiary for KCI, a leader in tissue-based products for surgical procedures and wound healing.  From 1991 to 1993, he was Director at the Corporate Development department at KCI. Prior to KCI, David was employed by GE Capital in its Corporate Finance Group and Salomon Brothers Inc in its Investment Banking Group. Mr. Cocke holds an MBA from the University of Virginia’s Darden Graduate School of Business Administration and a BBA with High Honors from the University of Texas at Austin.

Directors

David W. Anderson.  Mr. Anderson has been our director since February 2012.  Since September 2014, Mr. Anderson has been serving as the Chief Executive Officer of Orteq Ltd., an orthopedic medical device and regenerative medicine company focused on sports medicine.  He also serves as Chairman of the Board of Gentis, Inc. a clinical stage spinal implant company which he joined in 2004.  From 1999 to 2004, he was the founder and a director of Replication Medical, Inc., an orthopedic medical device company focused on spine surgeries.  From 1994 to 1999, he served as the Chief Executive Officer of Bionx Implants, Inc., a leading manufacturer and marketer of reinforced polymer implants.  From 1986 to 1989, he was the founder and Executive Vice President of Osteotech, Inc., a global leader in providing biologic solutions for regenerative medicine, which was acquired by Medtronic Inc. in 2010. Mr. Anderson also served as the Chief Executive Officer of Kensey Nash Corporation, a medical device company, from 1992 to 1994, and Sterilox Technologies, a manufacturer of non-toxic disinfectants, from 2000 to 2004. Mr. Anderson holds a B.S. in Chemical Engineering from Cornell University.  Mr. Anderson brings to the Board over 25 years of experiences in entrepreneurship, strategic transactions and financing in the medical device industry.

France Dixon Helfer.  Ms. Helfer has been our director since February 2014.  Ms. Helfer is currently the President and Chief Executive Officer of TinyKicks LLC, a University of California healthcare technology company based in Irvine, California, since January 2015.  From September 2011 to September 2014, Ms. Helfer was the President, Chief Executive Officer and Director of Halo Healthcare Inc., a medical device and diagnostics company focused on the detection and screening of breast cancer.  Prior to that, from August 2004 to January 2008, Ms. Helfer was the President and Founder of Pegasus Biologics, Inc., which was acquired by Baxter Healthcare Inc.  Prior to that, Ms. Helfer held a number of executive positions at various biotechnology companies,including Medtronic, Xenotech Labs, SORIN Bimedica, Eclipse Surgical and MMDDataDirect.  Ms. Helfer serves on the boards of various business organizations and academic institutions, including Chapman University’s Crean College of Health and Behavioral Sciences. Ms. Helfer holds a B.A. in Biologic Sciences from California State University, Fullerton.  Ms. Helfer brings to the Board over 20 years of experience as a senior level executive in the medical device industry.

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Alfred G. Holcomb.  Mr. Holcomb has been our director since 2008.  Since 2004, Mr. Holcomb has been serving as the Vice President of Acquisition and Divestutures at Lewis Energy Corp., an oil drilling company,where he led the completion of numerous strategic transactions.  From 1978 to 2004, Mr. Holcomb was a partner at the law firm of Schoenbum, Curphy & Scanlan.  Mr. Holcomb has been an active speaker on the Eagle Ford in conferences around the world.  Mr. Holcomb  holds his B.A. in Finance in from University of Texas, a J.D. from St. Mary's University School of Law and a LL.M. in Taxation from New York University.  Mr. Holcomb brings to the Board extensive experience and knowledge on strategic, legal and financial matters.

Kevin R. Stone, M.D.   Dr. Stone is the founding scientist of our company and served as our Chief Executive Officer from 1996 to 2008, as a director since our inception and as our Chairman of the Board since 2014.  Dr. Stone is a renowned orthopaedic surgeon and founded the Stone Clinic in 1988, an orthopedic clinic focused on biologic approaches to treating joint injuries.  He is also the Founder and Chairman of Stone Research Foundation, an independent research institution investigating new techniques for joint health, arthritis and human performance, since 1996.  Dr. Stone is the controlling member and manager of CrossCart LLC, our controlling stockholder.  Dr. Stone is also an attending staff at the California Pacific Medical Center and the San Francisco Surgery Center.  From 1999 to 2003, Dr. Stone served as the Chief Executive Officer and Chairman of the Board of Joint Juice, Inc. (now Post Holdings, Inc.). Dr. Stone is also the founder and Chief Executive Officer of Rescue Reel, LLC since 2006 and the founder of ProprioSense Holdings, LLC since 2012.   Dr. Stone holds an A.B. cum laude in biology from Harvard College and an M.D. from the University of North Carolina School of Medicine, residency training in general surgery at Stanford University and orthopaedics at Harvard and Fellowship trained in knee surgery and sports medicine.  Dr. Stone is recognized internationally as a leading expert and authority of advanced orthopedic surgical and rehabilitation techniques to repair damaged cartilage and ligaments. He brings to the Board extensive expertise, knowledge and experience in the field of orthobiologic medicine and provides us with significant management, operational and financial support.

Mike Ward.   Mr. Ward has been our director since March 2014.  Mr. Ward has been serving as the Vice President, Corporate Development at BioNano Genomics, Inc., a genomic mapping company, since March 2014.  Prior to joining BioNano Genomics, Inc., from 2009 to 2013, Mr. Ward was a Vice President at Lurie Investment Fund, LLC, the venture capital arm of Ann and Robert H. Lurie Foundation, where he was responsible for managing the life sciences venture capital and private equity investments of the foundation.  Prior to 2009, Mr. Ward worked for more than 15 years in the investment banking industry, holding various positions at Leerink Partners, Credit Suisse, Dresdner Kleinwort Wasserstein, BMO and Vector Securities.  Mr. Ward also serves on the boards of the following healthcare companies: Nanosphere, Inc., a publicly traded molecular diagnostics company and CytoPherx, Inc., an acute renal failure-focused therapeutic medical device company.  Mr. Ward holds a B.S. in finance from the University of Illinois. Mr. Ward brings to the Board over 20 years of life-sciences dedicated investment banking, venture capital and private equity experiences.

Significant Employee

Lance Johnson.  Mr. Johnson has been serving as our Vice President, Quality since November 2010.  Prior to joining us, he was the Quality Manager at Zimmer Spine, the orthopaedic spine division of Zimmer, Inc., from March 2009 to October 2010. From March 2005 to November 2009, Mr. Johnson was the Associate Quality Engineering Manager for Abbott Spine, an orthopaedic spine company, working specifically with new product development teams.  In addition, he served as an investigator with the FDA from 1989 to 2005.  From 1994 to 2005, he

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was the resident investigator in charge of the Austin field office and as contributor to the FDA international cadre. During his time at the FDA, he audited medical device firms in the US, Europe and Canada.  Mr. Johnson received his Medical Device Level II certification in 1998 and received his Level II Auditor certification in 2003. Lance trained and certified FDA, Texas, and BSI auditors during his career with the FDA. Mr. Johnson holds a B.S. in Biotechnology from Oklahoma State University.

Compensation of Directors and Executive Officers

The following table represents information regarding the total compensation earned by the three highest paid individuals who served as an executive officer or director of the Company as of June 30, 2015:

Name and Principal Position	Cash Compensation ($)	Other Compensation ($)(2)	Total Compensation ($)
Daniel R. Lee, Chief Executive Officer	$235,000	$23,349	$258,349
David Cocke, Chief Financial Officer(1)	$60,000	$4,239	$64,239
Kevin R. Stone, Chairman of the Board	$45,833	$0	$45,833

(1) Mr. Cocke is performing his services as Chief Financial Officer pursuant to the Independent Consulting Agreement, dated September 1, 2008.

(2) Represents stock-based compensation of stock options issued to the Chief Executive Officer and Chief Financial Officer.

The aggregate cash compensation of all of our directors for the fiscal year ended September 30, 2014 was $142,499. In addition, we have granted, in the aggregate, stock options to purchase to a total of 330,000 shares of our common stock to our directors (excluding Mr. Lee), during the fiscal year ended September 30, 2014.

As part of our effort to preserve cash, since July 2013, we have reduced, in full or partially, the salaries of our Chief Executive Officer, Chief Financial Officer and other full time employees until the Company has received financing of at least $2.0 million (beyond any funding received from CrossCart LLC) or the signing of a license or distribution agreement with at least $2.0 million of upfront payments or milestone fees achievable within 12 months of signing.  Following the completion of this offering, we expect to pay the amount of such salaries to our Chief Executive Officer, Chief Financial Officer and other employees (the “Reduced Salary”).   As of June 30, 2015, the total amount of the Reduced Salary for the Chief Executive Officer and Chief Financial Officer was $210,604.  Since July 2013, we have reduced a total of $289,999 in cash compensation to our Board members as of June 30, 2015.  We expect to enter an agreement with the directors pursuant to which we will agree to pay 70% of such compensation by issuing an aggregate of 751,849 shares of our common stock to these directors, and that the remaining 30% of cash compensation owed to such directors will be paid in cash.

On December 16, 2013, our Board approved the Management Retention Plan, pursuant to which our management members, including the Chief Executive Officer and Chief Financial Officer, will receive a retention bonus upon an external financing of at least $2.0 million (beyond any funding received from CrossCart LLC) or the signing of a license or distribution agreement with at least $2.0 million of upfront payments or milestone fees achievable within 12 months of signing. As of June 30, 2015, and assuming the completion of this offering, the total amount of the management retention bonus for all eligible management members will be approximately

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$85,000, and we intend to pay this amount by issuing shares of common stock having the same value based on the public offering price.

Security Ownership of Management and Certain Securityholders

The following table sets forth certain information known to us regarding beneficial ownership of our capital stock as of June 30, 2015 for (i) all executive officers and directors as a group and (ii) each person, or group of affiliated persons, known by us to be the beneficial owner of more than ten percent (10%) of our capital stock.  The percentage of beneficial ownership in the table below is based on 72,963,279 shares of common stock deemed to be outstanding as of June 30, 2015 and gives effect to the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 37,504,969 shares of our common stock following the completion of this offering, including shares of common stock to be issued as cumulative dividends accrued under such preferred stock and (ii) the issuance of 31,366,725 shares of common stock upon conversion of approximately an aggregate of $9,838,058 in outstanding principal and accrued interest on our convertible promissory notes (which is currently convertible into shares of our preferred stock but will be amended to be convertible into shares of our common stock in connection with the offering), upon the completion of this offering, assuming that the offering is completed on            .In addition, shares of common stock that may be acquired by the stockholder within 60 days of June 30, 2015, pursuant to the exercise of stock options are deemed to be outstanding for the purpose of computing the percentage ownership of such shareholder, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned	Number of Shares Acquirable	Percent of Class
CrossCart LLC (1)	57,304,590	0(3)	78.5%
Dr. Kevin R. Stone (1) (2)	60,777,692	100,000(4)	83.2%
All executive officers and directors as a group	61,532,732	3,602,833(5)	85.1%

____________________________________________________________________________

(1) Dr. Kevin R. Stone, a director of the Company, is the controlling member and manager of CrossCart LLC.  As such, Dr. Stone may be deemed to have voting and dispositive power of all securities beneficially owned by CrossCart LLC reported herein.  Dr.  Stone disclaims beneficial ownership of all shares held by CrossCart LLC.  The mailing address of CrossCart LLC and Dr. Stone is 3727 Buchanan Street, San Francisco, CA 94123.

(2) All shares of common stock, warrants and convertible notes reported herein are held directly by the Stone Family Revocable Trust dated 9/20/90 (the “Trust”) for which Dr. Stone and Susan Stone serve as co-trustees.    As the co-trustee of the Trust, Dr. Stone is deemed to have beneficial ownership of all securities held by the Trust.

(3) Excludes 5,327,224 shares of common stock issuable upon exercises of warrants to purchase shares of our common stock and convertible preferred stock and the subsequent conversion of such shares of convertible preferred stock to shares of common stock.

(4) Includes 100,000 shares issuable upon exercise of stock options within 60 days of June 30, 2015 and  excludes 2,388,238 shares of common stock issuable upon exercises of warrants to purchase shares

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of our common stock and convertible preferred stock and the subsequent conversion of such shares of convertible preferred stock into shares of common stock.

(5)  Includes an aggregate of 3,602,833 shares of common stock issuable upon exercise of stock options within 60 days of June 30, 2015.

Interest of Management and Others in Certain Transactions

Transactions with CrossCart and Dr. Kevin Stone

Convertible Note Financing

Dr. Kevin Stone, a director of the Company, is a controlling member and the manager of CrossCart LLC, a California limited liability company (“CrossCart”).  Between August 19, 2013 and May 23, 2014, CrossCart loaned an aggregate of $1,520,015 to the Company in exchange for the issuance of eight (8) separate and identical convertible promissory notes in the principal amount of $200,000, $200,000, $150,000, $250,000, $250,000, $150,000, $150,000,$150,000, and $20,015 respectively (the “CrossCart Series D Notes”).  Each CrossCart Series D Note bears an interest of 8% per annum, which rate increases to 10% per annum upon maturity or if an event of default occurs.  In general, all principal and interest accrued under each CrossCart Series D Note is due and payable, upon demand at the sole option of CrossCart, following each such note’s maturity dates, all of which have occurred with the exception of the CrossCart Series D Note with a principal amount of $20,015 which matures on May 23, 2016.  The CrossCart Series D Notes contain customary events of default.  The principal and any accrued interest under the CrossCart Series D Notes are convertible, at CrossCart’s discretion, into shares of Series D Preferred Stock of the Company at an initial conversion price of $0.25 per share.  Under the terms of the CrossCart Series D Notes, the Company is required to use reasonable efforts to cause a sufficient number of shares of Series D Preferred Stock to be authorized and reserved for the conversion of such notes.  As of June 30, 2015 the total outstanding amount due under the CrossCart Series D Notes was $3,260,851, including accrued interest.  CrossCart has informed us that it does not intend to demand repayment of the CrossCart Series D Notes prior to the completion of this offering. In addition, we expect to enter into an agreement with CrossCart to provide that upon completion of this offering, all outstanding amounts due under the 2013 CrossCart Series D Notes will be automatically converted into shares of our common stock at the initial conversion price of $0.25 per share.

Demand Notes

On December 18, 2014, the Company issued a demand note to CrossCart for an aggregate principal amount of $120,000 (the “Demand Note”).  The outstanding principal of each Demand Note carries an interest rate of 8% per annum, which may be increased to 10% if an event of default occurs.  All principal and accrued interest under the Demand Note is due and payable, upon demand, at the sole option and discretion of CrossCart.  The Demand Note includes customary events of default.  The outstanding balance on the Demand Note as of June 30, 2015 was $125,093, including accrued interest.

In addition, as inducement to enter into the Demand Note, the Company granted CrossCart certain royalty rights (the “Royalty Right”), pursuant to which the Company agrees to pay a royalty equal to 5% of any net sales from products manufactured using the Company’s Z-Process on the first $12,000,000 of net sales.  The Royalty Right will expire on December 31,

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2016 or when $12,000,000 in net sales has been achieved.  The Royalty Right was further amended in connection with the execution of the Line of Credit Note as described below.  Furthermore, as inducement to enter into the Demand Note, the Company agreed to pay CrossCart a transaction bonus equal to 3% of the gross proceeds received from any control change transaction of the Company (“Transaction Bonus”).  In September 2015, the Company and CrossCart entered into an agreement to provide that CrossCart’s right to receive the Transaction Bonus will terminate and expire upon completion of this offering. As of June 30, 2015, the total amount outstanding under the Demand Note was $125,093.

Line of Credit Note

On May 1, 2015, the Company entered into a Line of Credit Note with CrossCart that provides the Company with a credit line up to $100,000.  During the term of this note, the Company may request borrowings, with a minimum amount of $10,000 for each request, from CrossCart, and such request may be granted or denied at CrossCart’s sole discretion. The Company may repay the outstanding amount of this note at its discretion.  The note bears interest at rate of 10% per annum, and all principal amount and accrued interest will be due and payable on May 1, 2016.  The note contains customary events of default. If the Company fails to pay all amounts due by May 1, 2016, the interest on the remaining outstanding balance will accrue at a rate of 12% per annum.  As of June 30, 2015, the total amount outstanding under the Line of Credit Note was $61,627, including accrued interest.  In addition, as inducement to enter into the Line of Credit Note, the Company amended the Royalty Right such that CrossCart will be entitled to receive a 5% royalty on all net sales in excess of $12,000,000 without an expiration date (the “Additional Royalty Rights”). In September 2015, the Company and CrossCart entered into an agreement to provide that the Additional Royalty Rights will terminate and expire upon completion of this offering.

Extension of Warrants and Stock Options

On or about December 23, 2013, the Company entered into a letter agreement (the “Letter Agreement”) with CrossCart and Dr. Stone to extend the expiration dates of the following warrants held by CrossCart (the “Series C Warrants”):

· A warrant to purchase 10,625 shares of Series C Preferred Stock issued on July 25, 2007 having an exercise price of $0.48 per share and an expiration date of July 25, 2012.

· A warrant to purchase 6,250 shares of Series C Preferred Stock issued on August 14, 2007 having an exercise price of $0.48 per share and an expiration date of August 14, 2012.

The expiration dates of the two Series C Warrants were extended five (5) years from the initial expiration dates, such that the expiration dates are now July 25, 2017 and August 14, 2017, respectively.

In addition, the Letter Agreement extended the expiration date of stock options to purchase 100,000 shares of common stock of the Company, which was issued to Dr. Stone on February 11, 2003 with an exercise price of $0.45 per share.  The expiration date of such stock option was extended  to February 11, 2018.

Transaction between CrossCart and Lurie Investment

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On August 19, 2013, CrossCart, Dr. Stone, Lurie Investment Fund, L.L.C. (“Lurie”) and Alfa-Tech, L.L.C. (“Alfa-Tech” and, together with “Lurie”, the “Lurie Entities”) entered into a Stock and Note Purchase Agreement (the “Lurie Purchase Agreement”), pursuant to which CrossCart purchased from the Lurie Entities the following securities of the Company held by Lurie: (i) an aggregate of 937,602 shares of Series B Preferred Stock; (ii) an aggregate of 7,083,334 shares of Series C Preferred Stock; (iii) an aggregate of 12,952,917 shares of Series C-2 Preferred Stock; (iv) warrants to purchase an aggregate of 937,500 shares of Series C-1 Preferred Stock at an exercise price of $0.48 per share; (v) warrants to purchase an aggregate of 1,171,875 shares of Series C-2 Preferred Stock at an exercise price of $0.48 per share; (vi) warrants to purchase an aggregate of 3,217,849 shares of common stock at an exercise price of $0.01 per share; and (vi) convertible promissory notes in the aggregate principal amount of $5,000,000 (collectively, the “Lurie Securities”).  In exchange for the Lurie Securities, CrossCart agreed to pay the Lurie Entities cash consideration of $1.00 and certain contingent consideration upon the consummation of a sale of the Company, including the occurrence of a “deemed liquation event” as defined in the Company’s Certificate of Incorporation (the “Lurie Contingent Consideration”).  In general, the Lurie Contingent Consideration shall equal to 20% of the gross proceeds received by CrossCart from the Company in such sale to the extent the proceeds exceed CrossCart’s capital contribution made by the purchaser to the Company.

Change of Control Bonus

On March 3, 2012, the Company awarded Dr. Stone a bonus (the “Stone Bonus Agreement”) in the event of an acquisition of the Company.  An acquisition is defined as a sale, merger, consolidation, transfer or other disposition of all or substantially all (more than 80%) of the Company to another entity (the “Acquisition”).  An initial public offering of the Company’s Common Stock pursuant to an effective registration statement filed with the Securities and  Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), does not constitute an Acquisition.  Dr. Stone is entitled to receive a bonus award in an amount equal to 1% of the proceeds received in the Acquisition that occurred on or prior to December 16, 2013.  On December 16, 2013, the Board amended and extended the Stone Bonus Agreement to cover any Acquisition that occurs on or before the completion of an initial public offering of the Company’s stock pursuant to an effective registration statement filed with the Securities and Exchange Commission under the Securities Act.  In September 2015 the Company and Dr. Stone entered into an amendment to the Stone Bonus Agreement, pursuant to which the Stone Bonus Agreement will be terminated, and no bonus will be paid to Dr. Stone, upon the completion of this offering.

Transactions with Bruce Stone

Between May 22, 2014 and June 2, 2015, the Company issued three convertible promissory notes in the amount of $50,000, $35,000 and $40,000, respectively, to Mr. Bruce Stone, who is the brother of Dr. Kevin Stone, pursuant to Note Purchase Agreements dated April 17, 2014, November 12, 2014 and May 20, 2015, respectively (collectively, the “Bruce Stone Notes”).  Each note bears interest at a rate of 8% per annum, which may be increased to 10% per annum if an event of default occurs.  In general, all principal and interest accrued under each Bruce Stone Note are due and payable, upon demand at the sole option of Mr. Stone, on or after two years after the date of issuance.  The notes contain customary events of default.  The principal and any accrued interest under the Bruce Stone Notes are convertible, at Mr. Stone’s sole discretion, into shares of Series D Preferred Stock of the Company at an initial conversion price of $0.25 per share.  Under the terms of the Bruce Stone Notes, the Company is required to use reasonable efforts to cause a sufficient number of shares of Series D Preferred Stock

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authorized and reserved for issuance upon conversion of the notes.  As of June 30, 2015 the total amount outstanding under the Bruce Stone Notes was $131,407, including accrued interest.  In addition, we expect to enter into an agreement with Mr. Stone to provide that upon completion of this offering, all outstanding amount due under the Bruce Stone Notes will be automatically converted into shares of our common stock at the initial conversion price.

Management Retention Plan

On December 16, 2013, the Board approved the Management Retention Plan (the “Plan”), pursuant to which certain key employees, including Mr. Lee and Mr. Cocke, are entitled to receive a bonus upon the occurrence of specified events, provided that the participant must continue as an employee of the Company through the occurrence of the triggering event.  Under the Plan, upon an external financing (beyond any financing from CrossCart) of at least $2.0 million or a signing of a license or distribution agreement with at least $2.0 million of upfront payments or milestone payments achievable within 12 months of signing, Mr. Lee is entitled to receive a bonus equal to $35,000 plus a salary delta amount (the “Salary Delta Amount”), and Mr. Cocke is entitled to receive a bonus equal to $15,000 plus the Salary Delta Amount.  The Salary Delta Amount is calculated as the difference between the salary actually received after July 1, 2013 and the amount of salary such person would have received if the salary in effect during June 2013 had continued from July 2013 until the bonus is earned.  We expect to amend the Plan to provide that all bonuses under the Plan shall be paid in shares of common stock based on the public offering price in this offering.

In addition, the Plan also provides that upon closing of a deemed liquidation events specified in the Company’s certificate of incorporation or a sale of the Company’s securities representing 50% or more of total voting power of outstanding securities (the “Acquisition”), Mr. Lee and Mr. Cocke are entitled to receive certain bonus payments based, in part, on the amount of proceeds received by the Company in the Acquisition (the “Acquisition Bonus”).  We expect the Board to approve an amendment to the Plan to provide that the Acquisition Bonus will terminate and expire upon the completion of this offering.

Transactions with Directors

In December 2013, the  Company entered into a letter agreement with each of David W. Anderson and Alfred G. Holcomb, two of our directors, to provide certain acquisition bonus payments (the “Director Bonus Agreement”),  Under the Director Bonus Agreement, in the event of an acquisition of the Company or the occurrence of a “deemed liquidation” event under our certificate of incorporation (the “Acquisition”), each director will be eligible to receive the following cash bonus payments (the “Director Acquisition Bonuses”):

· if the proceeds of the Acquisition is at least $15 million and less than $25 million, a cash bonus of $100,000;

· if the proceeds of the Acquisition is at least $25 million and less than $100,000 million, a cash bonus of $250,000; and

· if the proceeds of the Acquisition is at least $100 million, a cash bonus equal to 10% of 4% of such proceeds.

We expect to enter into an agreement with each of Mr. Anderson and Mr. Holcom to provide that the Director Acquisition Bonuses will terminate and expire immediately upon

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completion of this offering.

Securities Being Offered

The following descriptions are summaries of the material terms of our amended and restated certificate of incorporation and amended and restated bylaws, which will be effective upon completion of this offering. The descriptions of the common stock and preferred stock give effect to changes to our capital structure that will occur immediately prior to the completion of this offering. We refer in this section to our amended and restated certificate of incorporation as our certificate of incorporation, and we refer to our amended and restated bylaws as our bylaws.

General

Upon completion of this offering, our authorized capital stock will consist of                 shares of common stock, par value $0.001 per share, and                 shares of preferred stock, par value $0.001 per share, all of which shares of preferred stock will be undesignated.

As of June 30, 2015, 72,963,279 shares of our common stock were outstanding and held by 61 stockholders of record. This amount assumes (i) the conversion of all outstanding shares of our convertible preferred stock into common stock, which will occur immediately prior to the completion of this offering and (ii) the issuance of shares of common stock upon the conversion of all principal amount and accrued interests under our Notes (as discussed below) upon the completion of this offering, assuming that the offering is completed on                     , 2015. In addition, as of June 30, 2015, we had outstanding options to purchase 6,447,747 shares of our common stock under our 2008 Stock Option Plan, and a predecessor plan, at a weighted average exercise price of $0.08 per share, of which options to purchase an aggregate of 6,043,809 were exercisable.

Common Stock

The holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders. The holders of our common stock do not have any cumulative voting rights. Holders of our common stock are entitled to receive ratably any dividends declared by the board of directors out of funds legally available for that purpose, subject to any preferential dividend rights of any outstanding preferred stock. Our common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions.

In the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in all assets remaining after payment of all debts and other liabilities and any liquidation preference of any outstanding preferred stock. The shares to be issued by us in this offering will be, when issued and paid for, validly issued, fully paid and non-assessable.

Preferred Stock

Immediately prior to the completion of this offering, we expect that all outstanding shares of our convertible preferred stock will be converted into shares of our common stock. Immediately prior to the completion of this offering, our amended and restated certificate of incorporation will be amended and restated to delete all references to such shares of convertible preferred stock. Upon the completion of this offering, our board of directors will have the authority, without

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further action by our stockholders, to issue up to           shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting, or the designation of, such series, any or all of which may be greater than the rights of common stock. The issuance of our preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon our liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change in control of our company or other corporate action. Immediately after completion of this offering, no shares of preferred stock will be outstanding, and we have no present plan to issue any shares of preferred stock.

Convertible Promissory Notes

In fiscal 2012, we borrowed $3,250,000 through the issuance of certain convertible promissory notes to existing stockholders. These notes accrue interest at 8% per year and are convertible into shares of the Company’s Series C-2 Preferred Stock at a conversion price of $0.48 per share (the “Series C-2 Notes”). In fiscal 2013 and 2014, we borrowed $4,126,027 through the issuance of certain convertible promissory notes to new and existing investors. These notes accrue interest at 8% and are due upon demand of the holder. The holders may, in their sole discretion, convert all principal and accrued interest under these notes into shares of the Company’s Series D Preferred Stock at a conversion price of $0.25 per share (the “Series D Notes”). In  2015, we borrowed $780,000 through the issuance of certain convertible promissory notes to existing and new investors. These notes accrue interest at a rate of 8% per year and are convertible into shares of the Company’s Series D or Series E Preferred Stock at a conversion price of $0.25 per share (the “Series E Notes”, and together with the Series C-2 Notes and Series D Notes, the “Notes”).

We intend to enter into agreements with each holder of the Notes to provide that upon the completion of this offering, subject to certain limitations on the conversion of the Notes, all principal and accrued interest under the Notes will convert into an aggregate of            shares of common stock, assuming that the offering is completed on             2015. For more information on the Notes, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Convertible Note Financings.”

Warrants

As of June 30, 2015, we had outstanding warrants to purchase 954,375 shares of Series C convertible preferred stock and 1,171,875 shares of Series C-2 convertible preferred stock, together which are exercisable for an aggregate of 2,126,250 shares of common stock upon the completion of this offering. In addition, as of June 30, 2015, we had outstanding warrants to purchase an aggregate of 10,016,592 shares of our common stock.

On August 19, 2013, our largest stockholder, CrossCart LLC purchased preferred stock, promissory notes and warrants for common stock and preferred stock previously held by Lurie Investment Fund, LLC, another stockholder of the Company.  The warrants have a net exercise provision and contain provisions for the adjustment of the exercise price and the number of shares issuable upon the exercise of the warrant in the event of certain stock dividends, stock splits, recapitalizations, reclassifications and consolidations. The warrants for preferred stock are exercisable until their expiration on either (i) the earlier of certain dates in 2020 or a sale or merger of the Company, or (ii) the earlier of certain dates in 2022 or the conversion of the

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promissory notes as noted above. The warrants for common stock are exercisable until their expiration on June 19, 2018.

Registration Rights

Upon the completion of this offering, the holders of                  shares of our common stock, including shares issuable upon the conversion of our convertible preferred stock and Notes, or their permitted transferees, are entitled to rights with respect to the registration of these securities under the Securities Act, which we refer to as our registrable securities. These rights are provided under the terms of an investor rights agreement between us and certain holders of our common stock, Series A convertible preferred stock, Series B convertible preferred stock, and Series C convertible preferred stock. The investor rights agreement includes demand registration rights, short-form registration rights and piggyback registration rights. All fees, costs and expenses of underwritten registrations under these agreements will be borne by us and all selling expenses, including underwriting discounts and selling commissions, will be borne by the holders of the shares being registered.

Demand Registration Rights

Beginning 180 days after the completion of this offering, the holders of at least 60% of our Series C convertible preferred stock are entitled to demand registration rights. Under the terms of the investor rights agreement, upon the written request of such holders to sell registrable securities with an anticipated aggregate offering price (net of underwriting discounts and commissions) of at least $5.0 million, we will be required to use our best efforts to file a registration statement covering the offering and sale of such securities and use reasonable, diligent efforts to effect the registration of all or a portion of these securities for public resale. We are required to effect only two registrations pursuant to this provision of the investor rights agreement. In the event we register securities in connection with an underwritten offering, the underwriters will have the right to limit the number of shares included in such offering.

Short-Form Registration Rights

Upon the completion of this offering, the holders of at least 30% of our registrable securities are also entitled to short form registration rights. Pursuant to the investor rights agreement, if we are eligible to file a registration statement on Form S-3, upon the written request of such holders to sell registrable securities, we will be required to use our best efforts to effect a registration of such securities. In the event we register securities in connection with an underwritten offering, the underwriters will have the right to limit the number of shares included in such offering.

Piggyback Registration Rights

Upon the completion of this offering, the holders of our registrable securities are entitled to piggyback registration rights. If we register any of our securities either for our own account or for the account of other security holders, such holders are entitled to include their shares in the registration. In the event we register securities in connection with an underwritten offering, the underwriters will have the right to limit the number of shares included in such offering.

Indemnification

Our investor rights agreement contains customary cross-indemnification provisions, under which we are obligated to indemnify holders of registrable securities in the event of material

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misstatements or omissions in the registration statement attributable to us, and they are obligated to indemnify us for material misstatements or omissions attributable to them.

Expiration of Registration Rights

The registration rights granted under the investor rights agreement will terminate after the earlier of (i) the fifth anniversary of the Company’s first underwritten public offering of its common stock under the Securities Act, (ii) with respect to any holder of registrable securities, the date on which all of such holder’s shares can be sold during a three-month period without registration in reliance on Rule 144 under the Securities Act, (iii) the closing of a deemed liquidation event or (iv) termination of the agreement upon consent of the parties.

Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws and Delaware Law

Our certificate of incorporation and bylaws include a number of provisions that may have the effect of delaying, deferring or preventing another party from acquiring control of us and encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our board of directors rather than pursue non-negotiated takeover attempts. These provisions include the items described below.

Board Composition and Filling Vacancies

Our certificate of incorporation provides for the division of our board of directors into three classes serving staggered three-year terms, with one class being elected each year. Our certificate of incorporation also provides that directors may be removed only for cause and then only by the affirmative vote of the holders of 75% or more of the shares then entitled to vote at an election of directors. Furthermore, any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size of our board, may only be filled by the affirmative vote of a majority of our directors then in office even if less than a quorum. The classification of directors, together with the limitations on removal of directors and treatment of vacancies, has the effect of making it more difficult for stockholders to change the composition of our board of directors.

No Written Consent of Stockholders

Our certificate of incorporation provides that all stockholder actions are required to be taken by a vote of the stockholders at an annual or special meeting, and that stockholders may not take any action by written consent in lieu of a meeting. This limit may lengthen the amount of time required to take stockholder actions and would prevent the amendment of our bylaws or removal of directors by our stockholders without holding a meeting of stockholders.

Meetings of Stockholders

Our certificate of incorporation and bylaws provide that only a majority of the members of our board of directors then in office may call special meetings of stockholders and only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders. Our bylaws limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the meeting.

Advance Notice Requirements

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Our bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year. Our bylaws specify the requirements as to form and content of all stockholders’ notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting.

Amendment to Certificate of Incorporation and Bylaws

Any amendment of our certificate of incorporation must first be approved by a majority of our board of directors, and if required by law or our certificate of incorporation, must thereafter be approved by a majority of the outstanding shares entitled to vote on the amendment and a majority of the outstanding shares of each class entitled to vote thereon as a class, except that the amendment of the provisions relating to stockholder action, board composition, limitation of liability and the amendment of our bylaws and certificate of incorporation must be approved by not less than 75% of the outstanding shares entitled to vote on the amendment, and not less than 75% of the outstanding shares of each class entitled to vote thereon as a class. Our bylaws may be amended by the affirmative vote of a majority of the directors then in office, subject to any limitations set forth in the bylaws; and may also be amended by the affirmative vote of at least 75% of the outstanding shares entitled to vote on the amendment, or, if our board of directors recommends that the stockholders approve the amendment, by the affirmative vote of the majority of the outstanding shares entitled to vote on the amendment, in each case voting together as a single class.

Undesignated Preferred Stock

Our certificate of incorporation provides for                 authorized shares of preferred stock. The existence of authorized but unissued shares of preferred stock may enable our board of directors to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise. For example, if in the due exercise of its fiduciary obligations, our board of directors were to determine that a takeover proposal is not in the best interests of our stockholders, our board of directors could cause shares of preferred stock to be issued without stockholder approval in one or more private offerings or other transactions that might dilute the voting or other rights of the proposed acquirer or insurgent stockholder or stockholder group. In this regard, our certificate of incorporation grants our board of directors broad power to establish the rights and preferences of authorized and unissued shares of preferred stock. The issuance of shares of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance may also adversely affect the rights and powers, including voting rights, of these holders and may have the effect of delaying, deterring or preventing a change in control of us.

Section 203 of the Delaware General Corporation Law

Upon completion of this offering, we will be subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. Under Section 203, a

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business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:

· before the stockholder became interested, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

· upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding shares owned by persons who are directors and also officers, and employee stock plans, in some instances, but not the outstanding voting stock owned by the interested stockholder; or

· at or after the time the stockholder became interested, the business combination was approved by our board of directors and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.

Section 203 defines a business combination to include:

· any merger or consolidation involving the corporation and the interested stockholder;

· any sale, transfer, lease, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;

· subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

· subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; and

· the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person.

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Financial Statements

[To be provided by Company]

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PART III—EXHIBITS

Exhibit	Description of Document
1.1	Form of Underwriting Agreement*
2.1	Amended and Restated Certificate of Incorporation of the Issuer, as currently in effect
2.2	Second Amended and Restated Certificate of Incorporation, as in effect following the offering
2.3	Bylaws of the Issuer, as currently in effect*
2.4	Amended and Restated Bylaws, as in effect following the offering*
3.1	Third Amended and Restated Investors’ Rights Agreement
3.2	Form of Demand Promissory Note issued to CrossCart LLC
3.3	Form of Convertible Promissory Note
3.4	Line of Credit Note issued to CrossCart LLC
3.5	Form of Warrant to purchase Preferred Stock of the Company
3.6	Form of Warrant to purchase Common Stock of the Company
6.1†	License Agreement dated January 8, 2009 between the Company and The Curators of the University of Missouri
6.2	Letter Agreement dated December 23, 2013 by and among the Company, CrossCart LLC and Dr. Kevin R. Stone
6.3	Aperion Management Retention Plan
6.4	Aperion Amended and Restated Management Retention Plan
6.5	Lease Agreement dated December 17, 2008 by and among the Company and Titan Mac Fund I, LP, as amended on June 21, 2012.
6.6	Independent Consultant Agreement effective September 1, 2008 between the Company and David Cocke
6.7	2008 Stock Option/Stock Issuance Plan
8.1	Escrow Agreement*
10.1	Power of Attorney
11.1	Consent of Marcum LLP

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12.1	Opinion Of Morgan, Lewis & Bockius LLP*
13.1	Testing the water materials

* To be filed by amendment.

† Confidential treatment has been requested for certain information contained in this document. Such information has been omitted and filed separately with the Securities and Exchange Commission

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SIGNATURES

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of San Antonio, State of Texas, on September 18, 2015.

APERION BIOLOGICS, INC.
By:	/s/ Daniel R. Lee                                  Daniel R. Lee Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Daniel R. Lee and David Cocke, jointly and severally, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her, and in his or her name, place and stead, in any and all capacities, to sign the Offering Statement on Form 1-A of Aperion Biologics, Inc. and any or all amendments (including post-effective amendments) thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Offering Statement has been signed by the following persons in the capacities indicated.

Signature	Title	Date
/s/ Daniel R. Lee	Chief Executive Officer and Director	September 21, 2015
Daniel R. Lee	(Principal Executive Officer)
/s/ David Cocke	Chief Financial Officer	September 21, 2015
David Cocke	(Principal Financial Officer and Principal Accounting Officer)
/s/ David W. Anderson	Director	September 21, 2015

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/s/ France Dixon Helfer	Director	September 21, 2015
France Dixon Helfer
/s/ Alfred Holcomb	Director	September 21, 2015
Alfred Holcomb
/s/ Kevin R. Stone, M.D.	Director	September 21, 2015
Kevin R. Stone, M.D.
/s/ Mike Ward	Director	September 21, 2015
Mike Ward

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PART II AND III

Preliminary Offering Circular Dated September 21, 2015

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission, which we refer to as the Commission.  Information contained in this Preliminary Offering Circular is subject to completion or amendment.  These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.

APERION BIOLOGICS, INC.

Best Efforts Offering of            Shares of Common Stock

This Offering Circular relates to the offer and sale of up to        shares of common stock of Aperion Biologics, Inc., a Delaware corporation.  We anticipate that the offering price will be between $         and $        per share.

	Price to Public	Underwriting Discounts and Commissions	Proceeds to Issuer
Per share:	$	$	$
Total Minimum:	$	$	$
Total Maximum:	$	$	$

Acting as Underwriter

See “Risk Factors” on page 9 to read about factors you should consider before buying shares of our common stock.

The underwriter has agreed to use its best efforts to procure potential purchasers for the shares of common stock offered pursuant to this Offering Circular.

The shares are being offered on an all or none basis. The offering will commence on the date of this Offering Circular. All investor funds received from the date of this Offering Circular to the closing date of this offering, which shall take place on         , 2015, will be deposited into an escrow account until closing. The closing date is also the termination date of this offering. If, on the closing date, investor funds are not received for the full amount of shares to be sold in this offering, the offering will terminate and any funds received will be returned promptly, without interest.

The Company is following the “Offering Circular” format disclosure under Form 1-A.

GENERALLY NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING LITERATURE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR APPLICABLE STATE SECURITIES LAWS, AND THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION. HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.

THIS OFFERING CIRCULAR CONTAINS ALL OF THE REPRESENTATIONS BY THE COMPANY CONCERNING THIS OFFERING, AND NO PERSON SHALL MAKE DIFFERENT OR BROADER STATEMENTS THAN THOSE CONTAINED HEREIN. INVESTORS ARE CAUTIONED NOT TO RELY UPON ANY INFORMATION NOT EXPRESSLY SET FORTH IN THIS OFFERING CIRCULAR.

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TABLE OF CONTENTS

Page

Offering Circular Summary	4
Risk Factors	9
Dilution	21
Underwriting	24
Use of Proceeds	26
Description of Business	28
Management’s Discussion and Analysis of Financial Condition and Results of Operations	51
Directors, Executive Officers and Significant Employees	54
Compensation of Directors and Executive Officers	57
Security Ownership of Management and Certain Securityholders	58
Interest of Management and Others in Certain Transactions	59
Securities Being Offered	63
Financial Statements for fiscal years ended September 30, 2014 and 2013, and for the nine-month period ended June 30, 2015 and 2014.	69
PART III—EXHIBITS	70
SIGNATURES	72

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OFFERING CIRCULAR SUMMARY

This summary highlights information contained elsewhere in this Offering Circular and does not contain all of the information that you should consider in making your investment decision.  Before investing in our common stock, you should carefully read this entire Offering Circular, including our consolidated financial statements and the related notes and the information set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case included elsewhere in this Offering Circular.  Unless otherwise stated, all references to “us,” “our,” “we,” the “Company” and similar designations refer to Aperion Biologics, Inc.

Overview

We are a commercial-stage medical device company addressing the significant need for an alternative to human-based sources of tissues to be used in surgical procedures. Our lead product, the Z-Lig^®, is produced by a patent-protected process for porcine tendons and its safety and performance was demonstrated in multicenter, prospective randomized trials in Europe and South Africa.  In 2014, we received the CE Mark (the regulatory permission to market the product in Europe) for use initially as a knee joint anterior cruciate ligament (“ACL”) replacement in revision and multiligament procedures, which allows us to distribute the Z-Lig in any market that recognizes this approval.  We have been building the appropriate distribution channels, primarily focusing on establishing a network of distributors that have strong relationships with sports medicine doctors.

Z-Lig is the only known biological alternative to human tissue for ACL replacement.  Since Z-Lig is a biological implant that maintains a scaffold, it can become populated and remodeled with the patient’s own cells (similar to human-sourced tissue), referred to in the industry as “ligamentization”.  This ligamentization is one of the keys to Z-Lig’s proven ability to be highly functional in patients many years post-implantation. Our propriety process is protected by an extensive portfolio of patents and patent applications, including 23 issued patents in the U.S. and internationally.

Our Solution

To solve for xenotransplant (transplants between the two different species) rejection problems, we developed the Z-Process, which is a proprietary process that immunochemically modifies animal tissue so that it is compatible with the human immune system.  The Z-Process addresses both α-gal (galactose) and non-gal antigens on the xenograft (graft from another species) to create porcine tendons that can be safely used in humans while still maintaining their biological scaffold activity. Using the Z-Process, we developed the Z-Lig^® device as an immunocompatible, porcine-derived ACL reconstruction alternative that provides a readily available, off-the-shelf solution and is strong, sterile, cost-effective and consistent.

Our Product Candidate Pipeline

In addition to the ACL, our processing technology represents a platform that can also potentially be applied to opportunities involving cartilage, soft tissue patches (extracellular matrices), bone, heart valves, vascular grafts, collagen and other tissues throughout the body.

The Company has several product families in clinical and preclinical development and research stages that fall into four general groupings:

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• Z-Lig – family of devices designed for use in a range of ligament reconstruction procedures, in addition to the initial application for the ACL.

• Z-Patch – an extracellular matrix product used in soft tissue repair and augmentation procedures.

• Z-Fix – a bone-based product for biologic fixation in ACL reconstruction procedures which would be complementary to the Z-Lig device permitting an all-biologic ACL reconstruction.

• Z-Meniscus – a meniscus device which can be used in the repair or reconstruction of meniscal injuries and defects.

Our Strategies

Our contact with clinicians confirmed that the initial market need for the Z-Lig is comprised of those revision and multiligament knee joint cases where a graft option is required to achieve the desired clinical result. The first phase of our European roll-out calls for the targeting of a select number of markets where human or synthetic graft options are accepted; in particular those markets whose sites participated in our European and South African (EUSA) clinical trials.  Thus, the initial target markets for Z-Lig distribution include Italy, South Africa, Poland, Spain, UK, and the Benelux countries (Netherlands, Belgium, Luxembourg).  We have identified and signed with a select group of distributors that have met our selection criteria, which include existing complementary product lines, market share, financial stability, and willingness to invest in the product line.  In these markets, we are introducing the product through a targeted approach by focusing on clinicians chosen by our investigative surgeons and our distribution partners.

Supporting our indirect distribution efforts will be Aperion direct personnel specifically tasked with sales management and also clinical marketing specialists for training and technical/scientific field education.

The next distribution phase is expected to expand our application of use to include all ACL indications and furthermore to add European and Asian markets that accept the CE Mark, with a specific focus on high-volume clinical centers or those specializing in knee injuries.  The third and final phase would include pan-European expansion into markets in the EU and continued introduction in markets outside the United States that accept the CE Mark and potential distribution into non-European nations whose regulatory bodies require additional regulatory approval.

We intend to build a sizable revenue base with the Z-Lig in overseas (outside U.S.) markets over the next several years.  Our marketing efforts in the U.S. are contingent on obtaining FDA approval for the Z-Lig and other devices.   The FDA has granted us an unconditional approval for a clinical trial of the Z-Lig in the United States.  We plan to market our products in the U.S. after the trial is completed and FDA approval is obtained.

Our Risks

An investment in our common stock involves a high degree of risk. You should carefully consider the risks summarized below. These risks are discussed more fully in the “Risk Factors”

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section immediately following this prospectus summary. These risks include, but are not limited to, the following:

· We have incurred significant operating losses since inception and may continue to incur losses for the foreseeable future;

· We only recently received approval in Europe to commercialize our Z-Lig products, and we have no significant experience or capability to sell our products on a commercial scale;

· Our Z-Lig products may not gain market acceptance among surgeons, physicians, patients, healthcare payors and the medical community;

· We may not be able to generate long-term or additional positive clinical data to support or expand our commercialization efforts;

· We may not be able to protect our intellectual property; and

· CrossCart LLC, our controlling stockholder, controls all aspects of our business.

Company and Other Information

We were initially incorporated under the laws of the State of California as CrossCart, Inc., in 1996.  In June 2008, CrossCart, Inc. was reincorporated under the laws of the State of Delaware, and in May 2009, CrossCart, Inc. changed its name to “Aperion Biologics, Inc.” Our principal executive office is located at 11969 Starcrest Dr. San Antonio, TX 78247, and our telephone number is (210) 858-7070. Our website address is www.aperionbiologics.com. We do not incorporate the information on or accessible through our website into this Offering Circular, and you should not consider any information on, or that can be accessed through, our website a part of this Offering Circular.

We own various U.S. federal trademark registrations and applications, and unregistered trademarks, including the following marks referred to in this Offering Circular: “Z-Lig” and “Aperion Biologics”. All other trademarks or trade names referred to in this Offering Circular are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Offering Circular are referred to without the symbols ^® and ^™, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

This Offering Circular summary highlights information contained elsewhere and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire Offering Circular, including our financial statements and the related notes included elsewhere in this Offering Circular. You should also consider, among other things, the matters described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in each case appearing elsewhere in this Offering Circular.

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The Offering

Common stock offered by us	Shares
Common stock to be outstanding immediately after this offering	Shares
Use of proceeds	We intend to use approximately $700,000 of net proceeds from this offering to pay certain accounts payable.  We also intend to use a portion of the net proceeds to repay outstanding principal amounts and interest on certain demand notes and line of credit notes issued to CrossCart LLC in the amount of approximately $186,720, including accrued interest.  We also intend to use approximately $300,000 of net proceeds to pay certain compensation owed to our employees as a result of the reduction of their salaries and fees.  We intend to use the remaining net proceeds to launch our commercialization plan for Z-Lig products in Europe, South Africa and other countries that accept our approved CE Mark; fund post-market registry studies of Z-Lig; conduct pre-clinical and R&D activities for additional product candidates; and initiate clinical trials for Z-Lig products in the U.S.  See “Use of Proceeds” on page 26.
Risk factors	You should carefully read “Risk Factors” on page 9 in this Offering Circular for a discussion of factors that you should consider before deciding to invest in our common stock.

The number of shares of our common stock to be outstanding after this offering is based on 72,963,279 shares of our common stock outstanding as of June 30, 2015 and excludes:

· 6,447,747 shares of common stock issuable upon the exercise of stock options outstanding as of June 30, 2015 at a weighted average exercise price of $0.08 per share;

· 12,142,842 shares of common stock issuable upon the exercise of warrants outstanding as of June 30, 2015 at a weighted average exercise price of $0.08 per share, which warrants prior to the completion of this offering are exercisable to purchase common stock or convertible preferred stock, assuming such warrants will not be exercised prior to the completion of this offering;

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· 1,888,775 shares of common stock reserved for future issuance under our 2008 Stock Option/Stock Issuance Plan;

Unless otherwise indicated, all information in this Offering Circular reflects or assumes the following:

· the filing of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws, which will occur immediately prior to the completion of this offering;

· the conversion of all of our outstanding shares of convertible preferred stock into an aggregate of 37,504,969 shares of common stock upon the completion of this offering, including shares of common stock to be issued as cumulative dividends accrued under such preferred stock;

· the issuance of 31,366,725 shares of common stock upon the conversion of approximately an aggregate of $9,838,058 in outstanding principal and accrued interest on our convertible promissory notes (which is currently convertible into shares of our preferred stock but will be amended to be convertible into shares of our common stock in connection with the offering), upon the completion of this offering, at an average conversion price of $0.31 per share, assuming that the offering is completed on            ;

· the issuance of additional shares of common stock as a result of anti-dilution adjustments provided in our certificate of incorporation; and

· a one-for-        reverse split of our common stock, which became effective on           .

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Risk Factors

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below along with all of the other information contained in this Offering Circular, including our financial statements and the related notes, before deciding whether to purchase our common stock. If any of the adverse events described in the following risk factors, as well as other factors which are beyond our control, actually occurs, our business, results of operations and financial condition may suffer significantly. As a result, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock.

Risks Related to Our Business and Finance

We have incurred significant operating losses since inception, anticipate that we will continue to incur losses for the foreseeable future and will need to raise additional capital.

We have generated operating losses since we began operations in 2008, and our net losses attributable to common stockholders for the fiscal year ended September 30, 2014 and 2013 were $3.29 million and $5.45 million respectively. We expect to continue to incur additional operating losses for the foreseeable future as we plan the commercialization of Z-Lig products and continue our clinical and pre-clinical studies.  Our recurring operating losses and our need for additional sources of capital to fund our ongoing operations raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended September 30, 2014 with respect to this uncertainty. If the time required to generate material revenues and achieve profitability is longer than we currently anticipate, or if we are unable to raise new capital through equity or obtain debt financing or other sources of funding, we may be forced to curtail or suspend our operations, which would have a material adverse effect on the value of your investment.

We expect capital outlays and operating expenditures to increase over the next several years as we establish and expand our marketing infrastructure to commercialize our Z-Lig products. Following the completion of this offering, we believe our financial resources will be adequate to sustain our current operations at least through           .  However, we will need to raise additional capital. We cannot be certain that we will be able to obtain financing on terms acceptable to us, or at all. Our failure to obtain adequate and timely funding will materially adversely affect our business and our ability to develop our products and would have a material adverse effect on the value of your investment.

We only recently received approval in Europe to commercialize our Z-Lig products, and we have no significant experience or capability to sell our products on a commercial scale.

Our future is significantly dependent on the commercial success of our Z-Lig family of products.  We have only recently received a CE Mark in April 2014 that allowed us to conduct limited sales in select European markets beginning in February 2015.  As a result, we have no significant history or experience in selling Z-Lig or any other products in Europe or in any other markets, and we have limited relationships with surgeons, physicians, clinicians and hospitals that may purchase or use our products.  In order for us to commercialize our products successfully, we will need to develop, or obtain through outsourcing arrangements, the capability to market and

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sell our products on a commercial scale.  We may not have the ability and sufficient resources to establish the infrastructure and organizations needed to execute these functions, which can be complex and costly.  Our effort to commercialize Z-Lig products is also subject to a number of additional risks, which could have a material adverse effect on the value of your investment, including:

· competitors’ established relationships with our potential customers;

· limitations in our ability to demonstrate the advantages of our products compared to competing products and the relative safety, efficacy and ease of use of our products;

· our inability to convince doctors and hospitals to use our products; and

· the introduction and market acceptance of competing products and technologies.

Our Z-Lig products may not gain market acceptance among surgeons, physicians, patients, healthcare payors and the medical community.

A critical element in our commercialization strategy is to persuade and educate the medical community on the safe and effective use of our products and how Z-Lig products differentiate from the existing supplies of surgical issues.  Surgeons, physicians and hospitals may not perceive the benefits of our products and may be unwilling to change from the devices they are currently using. A number of factors may limit the market acceptance of our Z-Lig products,including the following:

· rate of adoption by healthcare practitioners;

· rate of a product’s acceptance by the target population;

· timing of market entry relative to competitive products;

· availability of third-party reimbursement;

· government review and approval requirements;

· extent of marketing efforts by us and third-party distributors or agents retained by us; and

· side effects or unfavorable publicity concerning our products or similar products.

Therefore, even after we have demonstrated the effectiveness of the Z-Lig products, we may not be able to commercialize these products successfully if we cannot achieve an adequate level of market acceptance. Our inability to successfully commercialize our products will have a material adverse effect on the value of your investment.

We may experience defects and manufacturing issues in our supplies of animal issues or raw materials.

As we continue to expand our clinical development and commercialization activities, we expect to scale up the manufacturing and supplies of animal tissues that are the main component of our Z-Lig products.  We may not be able to control or maintain a consistent and high quality of

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raw materials, such as porcine tissues, or uncover defects prior to implantation in humans. In the past, we observed and experienced contamination in porcine tissues resulting from the processing and handling of these materials during clinical trials, which led to bacterial infections associated with the grafts in patients implanted with Z-Lig in the trial.  While we have implemented stringent validation, safety and corrective procedures and intend to conduct additional post-market studies to confirm the effectiveness of such preventive measures, there is no guarantee that we can eliminate this risk in the future.  In addition, external factors outside of our control may affect the quality of our supplies of animal or porcine issues.  For example, swine diseases or pandemics may severely reduce the supply of porcine tissues required to manufacture our Z-Lig products.  Mishandling or lack of quality control at our third-party suppliers may also negatively impact our ability to obtain a sufficient and acceptable level of porcine tissues to meet our needs.  Our failure to eliminate contamination and deficiency in the animal and porcine issues used in our products may require us to incur additional costs to implement preventive measures, or cause significant delays and disruptions in the development and commercialization of our products, which would have an adverse effect on our business operations and financial condition.

The safety and efficacy of our products is supported by limited clinical data, and we may not be able to generate long-term or additional positive clinical data to support or expand our commercialization efforts.

We have obtained a CE Mark to market and sell our Z-Lig products in Europe based on the 6- and 12-month data collected from our clinical studies in 2013 and the longer term (12 years) safety data from the U.S. pilot safety trial.  We have committed to continue these clinical studies to support post-market commercial activities in Europe and to meet certain post-market approval requirements by European regulatory agencies.  In addition, we intend to conduct additional clinical studies to support further commercialization efforts and expand the markets for our Z-Lig products.  For example, the CE Mark we received in April 2014 is limited to revision and multiligament ACL surgeries and does not cover primary ACL surgeries.  We have established post-market clinical plans to generate additional data required to expand the indication of  Z-Lig products to cover primary ACL surgeries, which would allow us to reach a broader ACL reconstruction market.  There is no guarantee that we can duplicate the positive results from our earlier trials for future studies or generate the required data to support the expansion of Z-Lig indication.  Our failure to do so may result in the loss of CE Mark approval or other regulatory approvals, delays, failures in the adoption of our products by surgeons and physicians, damage to our reputation and legal claims against us.

In addition, any negative data from our post-market clinical studies may adversely impact our ability to conduct clinical trials and seek regulatory approval of our products from the FDA to market our products in the United States.  Furthermore, we are developing several products based on our Z-process that would allow a commercialization path based on FDA’s Section 510(K) pre-market clearance procedures.  This procedure is shorter and typically requires the submission of less supporting documentation than other FDA approval processes and does not require long-term clinical studies.  As result, we may encounter difficulties and delays in marketing these products which otherwise may not be the case if the products have been proven safe and effective in more extensive and long-term clinical trials.

Our clinical studies of our current or future products may not produce results necessary to support regulatory clearance or approval in the United States or elsewhere.

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We plan to seek FDA approval of Z-Lig by conducting pivotal clinical trials in the United States.  While we have conducted a limited safety pilot study in the United States showing that Z-Lig was safe, and we have received a CE Mark based on the clinical studies in Europe and South Africa, there is no guarantee that the same results will be duplicated in a clinical trial with a larger patient population in the United States.  Our inability to achieve acceptable results in future clinical studies would have a material adverse effect on our business operations and financial condition and the value of your investment.

If third-party payors fail to provide appropriate levels of reimbursement for the use of our products, our revenues could be adversely affected.

Sales of our products depend on the availability of adequate reimbursement from third-party payors. In each market in which we do business, our inability to obtain reimbursement approval or the failure of third-party payors to reimburse health care providers at a level which justifies the use of our products instead of cheaper alternatives will hurt our business.

Moreover, we are unable to predict what changes will be made to the reimbursement methodologies used by third-party payors in the future. We cannot be certain that under current and future payment systems, in which healthcare providers may be reimbursed a set amount based on the type of procedure performed, such as those utilized by Medicare and in many privately managed care systems, the cost of our products will be justified and incorporated into the overall cost of the procedure. A failure by third-party payors to provide appropriate levels of reimbursement for the use of our products will have a material adverse effect on our business operations and financial condition and the value of your investment.

As we expand into multiple international markets, we will face similar risks relating to adverse changes in coverage and reimbursement procedures and policies in those markets.  Reimbursement and healthcare payment systems vary significantly among markets in different jurisdictions. Our inability to obtain international coverage and reimbursement approval, or any adverse changes in coverage and the reimbursement policies of foreign third-party payors, could negatively affect our ability to sell our products.

We rely on third party suppliers for our raw materials, including porcine tissues, and their inability to supply us with an adequate supply of materials could harm our business.

We rely on third-party suppliers to supply and manufacture the raw materials, including porcine tissues, for the development of our products.  To be successful, our suppliers must be able to provide us with products and components in substantial quantities, in compliance with regulatory requirements (including ISO 22442), in accordance with agreed upon specifications, at acceptable cost and on a timely basis. Among other factors, our anticipated growth could strain the ability of suppliers to deliver an increasingly large supply of products, materials and components. If we are unable to obtain sufficient quantities of high quality components to meet customer demand on a timely basis, we could lose customers, our reputation may be harmed and our business could suffer.

In addition, we currently use one supplier for the supply of porcine tissues required to manufacture our Z-Lig products, biologics, and components. Our dependence on one supplier involves several risks, including limited control over pricing, availability, quality and delivery schedules. If any one or more of our suppliers cease to provide us with sufficient quantities of our components in a timely manner or on terms acceptable to us, we would have to seek alternative sources of supplies. We could incur significant delays while we locate and engage

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alternative qualified suppliers, including delays associated with qualifying the new supplier to meet all applicable regulatory requirements in the United States, Europe and other markets in which we develop and sell our products.  Even if we are able to identify an alternative supplier, we might not be able to negotiate or receive the same or more favorable terms as those provided by our existing suppliers. Any such disruption or increased expenses could harm our commercialization efforts and adversely affect our ability to generate revenue. Any inability to meet our customers’ demands for these products could lead to decreased sales and harm our reputation and result in the loss of customers, which would have a material adverse effect on our business operations and financial condition and the value of your investment.

Failure to attract, retain, and motivate skilled personnel may delay our commercialization plans and research and development efforts.

Our commercial success depends on our continued ability to attract, retain, and motivate highly qualified management and scientific personnel. Competition for skilled and qualified personnel in the medical device industry is intense. If we lose the services of personnel with the necessary skills, including the members of our senior management team, it could significantly impede our commercialization and research and development objectives. Replacing key personnel and consultants may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop, gain regulatory approval of and commercialize products successfully.

Our international operations subject us to certain risks.

We intend to market our Z-Lig products initially in select European countries and in South Africa, including Denmark, United Kingdom, Netherlands, Belgium, Spain, Italy and Poland.  We also have plans to expand our commercialization activities to other non-European countries that accept the CE Mark, such as Canada, Turkey, Saudi Arabia, Australia and Korea.  We will also pursue various clinical and pre-clinical activities in the United States and Europe. Our international operations will subject us to rules, regulations and customs of multiple jurisdictions, and compliance with these rules and regulations is costly and exposes us to penalties for non-compliance. Other laws and regulations that can significantly impact us include various anti-bribery laws, including the U.S. Foreign Corrupt Practices Act and anti-boycott laws, as well as export controls laws. Any failure to comply with applicable legal and regulatory obligations could impact us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties, denial of export privileges, seizure of shipments and restrictions on certain business activities. Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our sales activities.

Our international operations expose us to additional risks, including:

· difficulties in enforcing or defending intellectual property rights;

· pricing pressure that we may experience internationally;

· third-party reimbursement policies that may require some of the patients who receive our products to directly absorb medical costs or that may necessitate the reduction of the selling prices of our products;

· competitive disadvantage to competition with established business and customer relationships;

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· the imposition of additional U.S. and foreign governmental controls or regulations; changes in duties and tariffs, license obligations and other non-tariff barriers to trade;

· foreign currency exchange rate fluctuations;

· difficulties in communicating with our employees, partners and collaborators, and maintaining consistency with our internal guidelines;

· difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; and

· difficulties in establishing and maintaining an effective internal control system to ensure timely and accurate financial reporting.

If we experience any of these risks, our sales in international countries may be harmed and our results of operations would suffer.

We may face product liability claims that could result in costly litigation and significant liabilities.

Manufacturing and marketing of our products, and clinical testing of our products under development, may expose us to product liability and other tort claims. Although we have, and intend to maintain, liability insurance, the coverage limits of our insurance policies may not be adequate and one or more successful claims brought against us may have a material adverse effect on our business and results of operations. Additionally, product liability claims could negatively affect our reputation, product sales, and our ability to obtain and maintain regulatory approval for our products.

Risks Relating to Our Intellectual Property

If we are unable to protect our intellectual property, our business will be negatively affected.

The market for medical devices is subject to frequent litigation regarding patent and other intellectual property rights. It is possible that our patents or licenses may not withstand challenges made by others or protect our rights adequately.

Our success depends in large part on our ability to secure effective patent protection for our products and processes in Europe and the United States. We have filed and intend to continue to file patent applications to protect our proprietary technology. However, we face the risks that:

· we may fail to secure necessary patents prior to or after obtaining regulatory clearances, thereby permitting competitors to market competing products; and

· our already-granted patents may be re-examined, invalidated or not extended.

We also own trade secrets and confidential information that we try to protect by entering into confidentiality agreements with our employees and other parties. However, the confidentiality agreements may not be honored or, if breached, we may not have sufficient remedies to protect our confidential information. Further, our competitors may independently learn our trade secrets or develop similar or superior technologies. To the extent that our consultants, key employees

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or others apply technological information to our projects that they develop independently or others develop, disputes may arise regarding the ownership of proprietary rights to such information, and such disputes may not be resolved in our favor. If we are unable to protect our intellectual property adequately, our business and commercial prospects will suffer.

Because it is difficult and costly to protect our proprietary rights, and third parties have filed patent applications that are similar to ours, we cannot ensure the proprietary protection of our technologies and products.

Our commercial success will depend in part on obtaining patent protection of our technology and successfully defending any of our patents that may be challenged. The patent positions of medical device companies can be highly uncertain and can involve complex legal and factual questions, and we cannot predict the breadth of claims allowed in patents we own or license.

We are a party to certain license agreements that give us rights under specified patents and patent applications, including a license agreement with the University of Missouri. Our current licenses, and our future licenses frequently will, contain performance obligations. If we fail to meet those obligations, the licenses could be terminated. If we are unable to continue to license these technologies on commercially reasonable terms, or at all, we may be forced to delay or terminate our product development and research activities.

We are unable to exercise the same degree of control over intellectual property that we license from third parties as we exercise over our internally developed intellectual property. We do not control the prosecution of certain of the patent applications that we license from third parties; therefore, the patent applications may not be prosecuted as we desire or in a timely manner.

The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:

· we or our licensors will be the first to file patent applications for these inventions;

· the patents of others will not have an adverse effect on our ability to do business;

· others will not independently develop similar or alternative technologies or reverse engineer any of our products, processes or technologies;

· any of our pending patent applications will result in issued patents;

· any patents issued or licensed to us or our collaborators or strategic partners will provide a basis for commercially viable products or will provide us with any competitive advantages;

· any patents issued or licensed to us will not be challenged and invalidated by third parties; or

· we will develop additional products, processes or technologies that are patentable.

Others have filed and in the future are likely to file patent applications that are similar to ours. The costs of litigating any infringement claim could be substantial. Moreover, we cannot predict whether we, our collaborators, or strategic partners would prevail in any actions. In addition, if the relevant patent claims were upheld as valid and enforceable and our products or processes

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were found to infringe the patent or patents, we could be prevented from making, using, or selling the relevant product or process unless we could obtain a license or were able to design around the patent claims. We can give no assurance that such a license would be available on commercially reasonable terms, or at all, or that we would be able to successfully design around the relevant patent claims. There may be significant litigation in our industry regarding patent and other intellectual property rights, which could subject us to litigation. If we become involved in litigation, it could consume a substantial portion of our managerial and financial resources.

We rely on trade secrets to protect technology where we believe patent protection is not appropriate or obtainable. Trade secrets, however, are difficult to protect. While we require employees, and consultants to enter into confidentiality agreements, we may not be able to adequately protect our trade secrets or other proprietary information or enforce these confidentiality agreements.

We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts.

Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. We cannot guarantee that our products, or manufacture or use of our product candidates, will not infringe third-party patents. Furthermore, a third party may claim that we are using inventions covered by the third party’s patent rights and may go to court to stop us from engaging in our normal operations and activities, including making or selling our product candidates. These lawsuits are costly and could affect our results of operations and divert the attention of managerial and scientific personnel. Some of these third parties may be better capitalized and have more resources than us. There is a risk that a court would decide that we are infringing the third party’s patents and would order us to stop the activities covered by the patents. In that event, we may not have a viable way around the patent and may need to halt commercialization of the relevant product candidate. In addition, there is a risk that a court will order us to pay the other party damages for having violated the other party’s patents. In addition, we may be obligated to indemnify our licensors and collaborators against certain intellectual property infringement claims brought by third parties, which could require us to expend additional resources. The pharmaceutical and biotechnology industries have produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.

Patent litigation is costly and time consuming, even in cases where the claims against us are without merit. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully or have infringed patents declared invalid, we may incur substantial monetary damages, encounter significant delays in bringing our product candidates to market and be precluded from manufacturing or selling our product candidates.

International patent protection is particularly uncertain, and if we are involved in opposition proceedings in foreign countries, we may have to expend substantial sums and management resources.

The laws of some foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. For example, certain countries do not grant patent claims that are directed to the treatment of humans. We may participate in opposition

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proceedings to determine the validity of our foreign patents or our competitors’ foreign patents, which could result in substantial costs and diversion of our efforts.

The medical device industry is characterized by extensive patent litigation, and we could become subject to litigation that could be costly, result in the diversion of management’s attention, and harm our business and financial condition.

Our success depends in part on not infringing the patents or violating the other proprietary rights of others. Significant litigation regarding patent rights occurs in the medical industry, including among companies focused on regenerative medicine. It is possible that U.S. and foreign patents and pending patent applications controlled by third parties may be alleged to cover our Z-Process. Our competitors in Europe, the United States and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and sell our products. At any given time, we may be involved as either a plaintiff or a defendant in a number of patent infringement actions, the outcomes of which may not be known for prolonged periods of time.

The large number of patents, the rapid rate of new patent applications and issuances, the complexities of the technologies involved and the uncertainty of litigation significantly increase the risks related to any patent litigation. Any potential intellectual property litigation also could force us to do one or more of the following:

· stop selling, making, or using products that use the disputed intellectual property;

· obtain a license from the intellectual property owner to continue selling, making, licensing, or using products, which license may require substantial royalty payments and may not be available on reasonable terms, or at all;

· incur significant legal expenses;

· pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing;

· pay the attorney fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; or

· redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and/or infeasible.

If any of the foregoing occurs, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products, all of which could have a material adverse effect on our business, results of operations and financial condition. Any litigation or claim against us, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation. Further, as the number of participants in the regenerative tissue industry grows, the possibility of intellectual property infringement claims against us increases.

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Risks Related to Our Industry

We are in a highly competitive market segment, and if our competitors are better able to develop and market products that are safer, more effective, less costly, easier to use or otherwise superior than any products that we may develop, our business will be adversely impacted.

The medical device industry is highly competitive and subject to technological change. Our success depends, in part, upon our ability to maintain a competitive position in the development of technologies and products for use in the ACL knee reconstruction graft and other orthopaedic markets. Any product we develop that achieves regulatory clearance or approval will have to compete for market acceptance and market share. We believe that the primary competitive factors in ACL replacement graft markets are clinical effectiveness, product safety, reliability and durability, and eligible patient populations, physician experience and comfort with use of a particular device, ease of use, product support and service, sales force experience and relationships and price. We face significant competition in the United States and internationally, and we expect the intensity of competition will increase over time.  We compete with companies that provide allograft and traditional xenograft solutions for orthopaedic surgical procedures.  Many of the companies developing or marketing competing products enjoy several advantages to us, including:

· greater financial and human resources for product development, sales and marketing;

· greater name recognition;

· long established relationships with physicians and hospitals;

· longer-term clinical trial data due to earlier regulatory approval;

· the ability to offer rebates or bundle multiple product offerings to offer greater discounts or incentives; and

· more established sales and marketing programs and distribution networks; and

Our competitors may develop and patent processes or products competitive with us, obtain regulatory clearance or approvals for competing products more rapidly than us or develop more effective or less expensive products or technologies that render our technology or products obsolete or less competitive. We also face fierce competition in recruiting and retaining qualified sales, scientific, and management personnel, establishing clinical trial sites and enrolling patients in clinical studies. Our inability to successfully compete with existing and future market competitors will have a material adverse effect on our business operations and financial condition and the value of your investment.

Our business is subject to extensive governmental regulation that could make it more expensive and time consuming for us to introduce new or improved products.

Our products must comply with regulatory requirements imposed by various regulatory agencies. These requirements involve lengthy and detailed laboratory and clinical testing procedures, sampling activities, an extensive agency review process, and other costly and time-consuming procedures. It often takes several years to satisfy these requirements, depending on the complexity and novelty of the product. We also are subject to numerous additional licensing

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and regulatory requirements relating to safe working conditions, manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances. Some of the most important requirements we face include:

· European Union CE mark requirements;

· FDA Regulations;

· Medical Device Quality Management System Requirements (ISO 13485:2003); and

· Occupational Safety and Health Administration requirements.

Government regulation may impede our ability to conduct clinical studies and to manufacture our existing and future products. Government regulation also could delay our marketing of new products for a considerable period of time and impose costly procedures on our activities. The regulatory agencies may not approve any of our future products on a timely basis, if at all. Any delay in obtaining, or failure to obtain, such approvals could negatively impact our marketing of any future products and reduce our product revenues.

Our products remain subject to strict regulatory controls on manufacturing, marketing and use. We may be forced to modify or recall a product after release in response to regulatory action or unanticipated difficulties encountered in general use. Any such action could have a material effect on the reputation of our products and on our business and financial position.

Further, regulations may change, and any additional regulation could limit or restrict our ability to use any of our technologies, which could harm our business. We could also be subject to new international, federal, state or local regulations that could affect our research and development programs and harm our business in unforeseen ways. If this happens, we may have to incur significant costs to comply with such laws and regulations, which will harm our results of operations.

Risks Related to Our Common Stock and Corporate Structure

CrossCart LLC controls all aspects of our business.

CrossCart LLC (“CrossCart”) is our largest and controlling stockholder and currently beneficially owns approximately 78.5% of our outstanding shares of common stock on a fully-diluted basis assuming the conversion of all of our outstanding preferred stock and convertible notes.  Following the completion of this offering, CrossCart will beneficially own approximately      % of our outstanding shares of common stock.  In addition, Dr. Kevin R. Stone, Chairman of our Board of Directors, is the controlling member and manager of CrossCart.  In addition, CrossCart is our most significant creditor and historically we have depended on the funding of CrossCart and Dr. Stone to maintain our operations.  As a result, CrossCart and Dr. Stone are and will be able to exercise significant control over our business operations and on all matters requiring stockholders’ approval, including the election of directors, approval of significant corporate transactions and the definition of rights and privileges of all securities.  Due to CrossCart’s and Dr. Stone’s controlling position, we may take actions with respect to our business that may conflict with the desire of other stockholders.

An active trading market for our common stock may not develop and you may not be able to resell your shares at or above the initial offering price.

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Prior to this offering, there has been no public market for shares of our common stock.  In the absence of an active trading market for our common stock, investors may not be able to sell their common stock at or above the initial public offering price or at the time that they would like to sell.   In addition, we intend to submit a listing application for our common stock to be listed on a national securities exchange, including the NASDAQ Capital Market (“NASDAQ”), and there is no guarantee that we can meet the listing standards or that such listing application will be accepted.  Even if such application is accepted and our common stock is listed on NASDAQ or other exchanges, an active trading market for our common stock may never develop, which will adversely impact your ability to sell our shares. If shares of common stock are not listed on NASDAQ or another national securities exchange, we anticipate that our common stock will be quoted at over-the-counter, or OTC markets, following the completion of this offering.  There is no assurance that an active trading market for our common stock will develop on the OTC market.

Our stock price may be influenced by public perception of alternative tissue replacement and government regulation of such technology.

External events in the field of ligament reconstruction or the use of animal-derived tissue in human transplantation may have a significant negative impact on the public perception and stock price of certain companies involved in this kind of work. Potential adverse events in this field may occur in the future that could result in increased governmental regulation of our Z-Lig device. These external events may have a negative impact on public perceptions of our business, which could cause our stock price to decline.

We do not intend to pay dividends on our common stock.

We have never paid dividends on our common stock and we currently intend to retain any future earnings and do not expect to pay any cash dividends on our common stock in the foreseeable future. The declaration and payment of all future dividends, if any, will be at the sole discretion of our board of directors, which retains the right to change our dividend policy at any time, and may be limited by our debt arrangements in place from time to time. Consequently, stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

Anti-takeover provisions in our certificate of incorporation and Delaware law could make an acquisition of the Company more difficult and could prevent attempts by our stockholders to remove or replace current management.

Provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws, which will be effective upon the completion of this offering, may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions may also prevent or delay attempts by stockholders to replace or remove our current management or members of our board of directors. These provisions include:  

· advance notice requirements for stockholder proposals and nominations;

· the inability of stockholders to act by written consent or to call special meetings;

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· the ability of our board of directors to make, alter or repeal our amended and restated bylaws: and

· the authority of our board of directors to issue preferred stock with such terms as our board of directors may determine.

The affirmative vote of the holders of at least 75% of our shares of capital stock entitled to vote, and not less than 75% of the outstanding shares of each class entitled to vote thereon as a class, is generally necessary to amend or repeal the above provisions that are contained in our amended and restated certificate of incorporation. In addition, absent approval of our board of directors, our amended and restated bylaws may only be amended or repealed by the affirmative vote of the holders of at least 75% of our shares of capital stock entitled to vote.

In addition, upon the completion of this offering, we will be subject to the provisions of Section 203 of the Delaware General Corporation Law, which limits business combination transactions with stockholders of 15% or more of our outstanding voting stock that our board of directors has not approved. These provisions and other similar provisions make it more difficult for stockholders or potential acquirers to acquire us without negotiation. These provisions may apply even if some stockholders may consider the transaction beneficial to them.

As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our common stock. These provisions might also discourage a potential acquisition proposal or tender offer, even if the acquisition proposal or tender offer is at a premium over the then-current market price for our common stock.

Dilution

If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering.

Our historical net tangible book value as of June 30, 2015 was ($28,398,077), or $(6.94) per share of our common stock.  Historical net tangible book value per share represents our total tangible assets less total liabilities divided by the number of shares of our common stock outstanding. Our pro forma net tangible book value (deficit) as of June 30, 2015 was approximately ($28,398,077), or ($0.39) per share of common stock.  Pro forma tangible book value per share represents our total tangible assets less total liabilities divided by the number of shares of common stock outstanding as of June 30, 2015 after giving effect to (i) the automatic conversion of all of the outstanding shares of our convertible preferred stock into an aggregate of 37,504,969 shares of our common stock upon the completion of this offering, including shares of common stock to be issued as cumulative dividends accrued under such preferred stock and (ii) approximately an aggregate of $9,838,058 in outstanding principal and accrued interest on our convertible promissory notes (which is currently convertible into shares of our preferred stock but will be amended to be convertible into shares of our common stock in connection with the offering), upon the completion of this offering, at an average conversion price of $0.31, assuming that the offering is completed on       2015.  Pro forma as adjusted net tangible book value per share gives further effect to the issuance of          shares of our common stock at an assumed initial public offering price of $         per share, the midpoint of the price range set forth on the cover page of this Offering Circular, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.  Our pro forma, as

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adjusted net tangible book value as of June 30, 2015 would have been $         million, or $         per share of common stock.  This represents an immediate increase in pro forma net tangible book value of $         per share to existing stockholders and an immediate dilution in pro forma net tangible book value of $         per share to investors purchasing common stock in this offering.

The following table illustrates this per share dilution:

Assumed initial public offering price per share		$____
Historical net tangible book value per share as of June 30, 2015	$(28,398,077)
Decrease attributable to the conversion of outstanding convertible preferred stock and convertible promissory notes	$____
Pro forma net tangible book value per share as of June 30, 2015
Increase per share attributable to new investors	$____
Pro forma, as adjusted net tangible book value per share after this offering
Dilution per share to investors in this offering

The following table summarizes on an as adjusted basis as of June 30, 2015, the difference between the number of shares of common stock purchased from us, the total consideration paid and the average price per share paid by existing stockholders and by new investors, assuming an initial public offering price of $         per share, the midpoint of the price range set forth on the cover page of this Offering Circular, and before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:

	Shares Purchased				Total Consideration(1)				AveragePrice per Share
	Number	Percent			Amount	Percent
Existing stockholders				%	$			%	$
New investors									$
Total			100	%	$		100	%

(1) A $1.00 increase (decrease) in the assumed initial public offering price of $         per share, the midpoint of the price range set forth on the cover of this Offering Circular, would increase (decrease) the total consideration paid to us by new investors and total consideration paid to us by all stockholders by $         million, assuming that the number of shares offered by us, as set forth on the cover page of this Offering Circular, remains the same and after deducting estimated placement agent fees and estimated offering expenses payable by us.  An increase (decrease) of 1.0 million shares in the number of shares offered by us would increase (decrease) the total consideration paid

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to us by new investors and total consideration paid to us by all stockholders by $         million, assuming the assumed initial public offering price of $         per share remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

As of June 30, 2015, options to purchase 6,447,747 shares of common stock were outstanding at a weighted average exercise price of $0.08 per share and warrants to purchase 12,142,842 shares of common stock and preferred stock were outstanding at a weighted average exercise price of $0.08 per share.  Assuming all of our outstanding options and warrants are exercised, new investors will own approximately     % of our outstanding shares while contributing approximately     % of the total amount paid to fund our company.

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Underwriting

We and WR Hambrecht + Co, LLC (the underwriter) have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, the underwriter has agreed to use its best efforts to procure potential purchasers for the shares of our common stock offered hereby. This offering is being undertaken on a best efforts only basis. The underwriter is not required to take or pay for any specific number or dollar amount of our common stock.

The shares are being offered on an all or none basis.  Investor funds will be deposited into an escrow account for the benefit of investors set up by          at           . The offering will not be completed unless we sell the number of shares specified on the cover page of this Offering Circular. All investor funds received prior to the closing will be deposited into the escrow account until closing. The escrow account will be opened on the date of this Offering Circular and will remain open until the closing date. All funds received into the escrow account after the pricing of the offering will be held in a non-interest bearing account in accordance with Rule 15c2-4 under the Exchange Act. The escrow account will not be opened until the date of this Offering Circular. All funds must be transmitted directly by wire to the specified bank account at            per the instructions disseminated at pricing by the underwriter.           will not accept or handle any funds. On the closing date, the escrow agent will notify the underwriter whether the full amount necessary to purchase the shares to be sold in this offering has been received. If, on the closing date, investor funds are not received in respect of the full amount of shares to be sold in this offering, then all investor funds that were deposited into the escrow account will be returned promptly to investors, and the offering will terminate. The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriter.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions payable by us	$	$
Proceeds, before expenses, to us	$	$

Certain expenses of the underwriter (excluding discounts and commissions) of up to $          are payable by us. Shares sold to the public will initially be offered at the initial public offering price set forth on the cover of this Offering Circular. Any shares sold to securities dealers may be sold at a discount of up to $           per share from the initial public offering price. After the initial offering of the shares, the offering price and the other selling terms may be subject to change. The offering of the shares is subject to receipt and acceptance and subject to the right to reject any order in whole or in part.

We and our officers, directors, and holders of five percent or more of our common stock have agreed, or will agree, with the underwriter, subject to certain exceptions, that, without the prior written consent of the underwriter, we and they will not, directly or indirectly, during the period ending 90 days after the date of the Offering Circular:

· offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any shares of the our common stock or any securities convertible into or exchangeable or exercisable for our common stock, whether now owned or

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hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition; or

· enter into any swap or any other agreement or any transaction that transfers, in whole or in part, the economic consequence of ownership of our common stock, whether any such swap or transaction is to be settled by delivery of our common stock or other securities, in cash or otherwise

This agreement does not apply, in our case, to securities issued pursuant to existing employee benefit plans or securities issued upon exercise of options and other exceptions, and in the case of our officers, directors and other holders of our securities, exercise of stock options issued pursuant to a stock option or similar plans, and other exceptions.

Prior to the offering, there has been no public market for the shares. The initial public offering price will be determined by negotiation between us and the underwriter. The principal factors to be considered in determining the initial public offering price will include:

· the information set forth in this Offering Circular and otherwise available to the underwriter;

· our history and prospects and the history of and prospects for the industry in which we compete;

· our past and present financial performance;

· our prospects for future earnings and the present state of our development;

· the general condition of the securities markets at the time of this offering;

· the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

· other factors deemed relevant by the underwriter and us.

We intend to submit an application with The NASDAQ Stock Market LLC (“NASDAQ”) to list shares of our common under the symbol “ZLIG.” In order to meet one of the requirements for listing our common stock on NASDAQ, the underwriter intends to sell lots of 100 or more shares to a minimum of 300 beneficial holders.  If our common stock is not listed on NASDAQ, we expect that our common stock will be quoted on OTCQB immediately following this offering under the symbol “      “.

Any underwriter who is a qualified market maker on NASDAQ may engage in passive market making transactions on NASDAQ in accordance with Rule 103 of Regulation M of the Exchange Act, during the business day prior to the pricing of the offering, before the commencement of offers or sales. Passive market makers must comply with applicable volume and price limitations and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent bids are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded.

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We have agreed to indemnify the underwriter against certain liabilities, including liabilities under the Securities Act. The underwriter and its affiliates are engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriter and its affiliates may in the future perform various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer. The underwriter and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Selling Restrictions

Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (SIX) or on any other stock exchange or regulated trading facility in Switzerland. This Offering Circular has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, the Company, the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (CISA). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

Use of Proceeds

We estimate that the net proceeds to us from the sale of               shares of common stock in this offering will be approximately $        based upon an assumed initial offering price of $          per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We anticipate that we will use approximately $700,000 of net proceeds from the offering to repay certain outstanding accounts payable, including trade payables, consulting and professional fees.  We also intend to repay outstanding principal amounts and accrued interest owed under our demand notes (the “Demand Notes”) and a line of credit note (the “LOC Note”) issued to CrossCart LLC.   The outstanding principal of each Demand Note carries an interest rate of 8% per annum, which may be increased to 10% if an event of default occurs.  As of June 30, 2015, the total amount outstanding under the Demand Notes was $125,093,

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including accrued interest.  The LOC Note bears interest at a rate of 10% per annum, and all principal and accrued interest will be due and payable on May 1, 2016.  The LOC Note contains customary events of default. If the Company fails to pay all amounts due by May 1, 2016, the interest on the remaining outstanding balance will accrue at a rate of 12% per annum.  As of June 30, 2015, the total amount outstanding under the LOC Note was $61,627, including accrued interest.

We also intend to use approximately $300,000 of the net proceeds to pay certain compensation owed to our employees as a result of the reduction of their salaries, including approximately $210,000 of reduced compensation owed to our Chief Executive Officer and Chief Financial Officer.  For a description of the salary reduction, see Compensation of Directors and Executive Officers on page 57.

We anticipate that we will use the remaining net proceeds, approximately $       , from this offering to:

· launch our commercialization plan for Z-Lig products in Europe, South Africa and other countries that accept our approved CE Mark, including the establishment of sales, marketing and distribution infrastructure, expansion of our processing and manufacturing capacity to a commercial scale and hiring of additional personnel;

· fund post-market registry studies of Z-Lig in Europe, South Africa and other select markets;

· conduct pre-clinical and R&D activities for product candidates; and

· initiate clinical trials for Z-Lig products in the U.S.

We anticipate using the remaining amounts, if any, for general corporate purposes.

The expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our commercialization effort, the results from clinical trials and preclinical studies, the amount of cash available from other sources and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.

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Description of Business

Overview

Aperion Biologics, Inc. (“ABI”), headquartered in San Antonio, Texas, is a commercial-stage medical device company addressing the significant need for an alternative to human-based sources of tissues to be used in surgical procedures.  Our lead product, the Z-Lig, is a patent-protected porcine tendon currently in limited commercial release for use initially as an anterior cruciate ligament (ACL) replacement in revision and multiligament knee joint procedures (see Figure 1).  Z-Lig is the only known biological alternative to human tissue for ACL replacement.  Since the Z-Lig is a biological implant that maintains a scaffold, it can become populated and remodeled with the patient’s own cells (similar to human-sourced tissue), referred to in the industry as “ligamentization”.  This ligamentization is one of the keys to Z-Lig’s proven ability to be highly functional in patients for many years after implantation.  Our propriety process is protected by an extensive portfolio of patents and patent applications, including 23 issued patents in the U.S. and internationally.

 

Figure 1:  ABI’s Z-Lig^® (in product packaging on right) for use in ACL replacement surgery.

With the exception of synthetic ACL replacements, which are deemed inadequate by most orthopaedic surgeons , the only current ACL replacement choices (see Figure 2) include using tendon harvested from another part of the patient’s own body or tendon from a human cadaver (autograft and allograft, respectively).  These existing choices have a number of shortcomings.  As for autografts, the main clinical issue is the need for a second surgical site for harvesting.  This results in longer operation times, increased patient pain and morbidity, longer rehabilitation time and reduction of function at the harvest site.  Many clinicians believe autograft harvesting actually causes “harm” to patients by sacrificing one part of the human body to fix another.

As for allografts, the main clinical issue is the lack of supply of tissue of adequate quality.  Allografts are harvested from cadaveric donors.  The quality of allografts can be quite variable due to the age, sex, size, genetics, and medical condition of the donors and how the allograft tissue is processed.  Because tissue donation is not commonplace, the supply of allograft tissue can be quite variable.  Even in the U.S. with over an estimated 300,000 ACL replacements performed annually, less than 25% of these procedures were performed using allograft.  The remaining patients must have the graft harvested from their own bodies.

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Figure 2:  Torn ACLs can be replaced with human-based or synthetic grafts.

The need for an alternative to human-sourced grafts has been recognized in the medical community.  The only non-human commercialized grafts are synthetics which tend to quickly wear, degenerate and fail.  Synthetic grafts are not approved for use in the U.S. and we are not aware of any in clinical development in the U.S.  In Europe, synthetic grafts have extremely limited commercial acceptance and are primarily used for patients who wish to return to sport in the shortest time period possible.  We believe that the lack of durability of a synthetic graft can mainly be attributed to its inability to regenerate (as tissue-based implants do) after wear from use.  The only synthetic graft in development in Europe is a resorbable polymer based scaffold graft currently in clinical safety trials and will require an additional clinical study prior to commercial availability.

Given the issues with synthetic grafts, we believe that animal tissue is the only viable alternative to human-sourced ACL grafts.  No other company sells or has in human clinical development an animal-based (xenograft) ACL product.

The xenograft market is a well-accepted segment of the medical device industry.  Xenografts from porcine, bovine and equine sources have been used as heart valves, extracellular matrices (patches), injectable collagen and other replacement/augmentation tissues for many years.  Our products are different from currently commercialized xenografts in that they (i) act as biological scaffolds (unlike, for example, heart valves) and (ii) do not illicit an immunological reaction (unlike, for example, extracellular matrices and injectable collagen).

We were originally incorporated in the State of Delaware under the name “CrossCart, Inc.” CrossCart Inc. was established in 1996 to develop xenograft replacement tissues including cartilage, meniscus cartilage, soft tissue devices, and ligaments.  Its efforts to do so were then focused on ligaments due to the ability to  measure objectively the outcomes, the presence of an FDA ligament guidance document, and the large unmet needs.  The Company developed the Z-Lig process to be flexibly applied to each of these tissue devices.  Due to the limitations of the CrossCart name, the Company was renamed Aperion Biologics Inc. in 2008 and established a manufacturing facility in San Antonio.

CrossCart, Inc. is a separate and distinct entity from CrossCart LLC, which was formed in 2013 as an investment vehicle to purchase outstanding securities the Company held by a previous controlling stockholder.  In addition, Dr. Kevin R. Stone, a member of our Board of Directors, is the controlling member and manager of CrossCart LLC.

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Industry and Market Opportunities

ABI believes that regenerative medicine is one of the markets with the highest growth potential within the medical device industry.  The potential size of the tissue engineering market totals $74 billion according to industry research.  We estimate that the market expenditures for ACL autografts and allografts total over $2 billion worldwide, including $750 million in the U.S., $625 million in Europe and $750 million in the rest of the world.  These figures include both the cost of allografts (approximately $2,500 per procedure based on our calculation) and the direct surgical costs of the autograft harvesting and subsequent direct incremental rehabilitation and medication costs related to the second surgical site (approximately $2,500 per procedure in total based on our calculation).

We believe that the global supply of quality allografts does not sufficiently meet the demand for knee ligament procedures.  Furthermore, the demand is expected to be driven higher by the expanding aging and active population suffering from degenerative ailments.  Over 250,000 ACL reconstruction surgeries are performed in Europe annually.  The vast majority of such surgeries were performed using autografts.  Throughout most of Europe, allografts are available on a very limited basis and the need for an alternative option is more acute.

We have also conducted a study to estimate of the size of the potential markets applicable to our earlier stage pipeline, including Z-Patch, Z-Fix, and Z-Meniscus.  Based on this study, we believe the total addressable U.S. and European markets for extracellular matrices, wound healing, bone replacement and meniscus replacement are $3.6 billion, $5.0 billion, $2.1 billion,  and $300.0 million, respectively.

Current Treatment and Limitations

The major problems with the existing ACL replacement graft market are (i) autografts require a second surgical site which causes significant additional cost and morbidity; (ii) allografts are in short supply, are highly inconsistent in quality and can transmit human disease; (iii) synthetic grafts are unable to regenerate and therefore fail due to the continuous abrasion from regular use; and (iv) traditional xenografts have been plagued with rejection or lose their ability to be populated with the host’s cells.

Below are the specific issues within each category of graft:

Problems with Human-Sourced Grafts (Autografts and Allografts)

Autografts

As shown in Figure 3 below, during an autograft procedure, a second surgical site is chosen on the patient’s body and tendon (patellar tendon or hamstring) is harvested.  Consequently, the patient suffers from additional pain, morbidity and scarring at the harvest site.  The requirement for a second surgical site prolongs operating time and causes a more complex and extended recovery period.  Most patients have impaired function, including muscle weakness and many even develop arthritis at the autograft harvest site.  The direct surgical costs of the autograft harvesting and the subsequent direct incremental rehabilitation and medication costs are high and it is approximately $2,500 per procedure.  In addition, patients’ own tendons available for harvesting are of limited supply and do not grow back.  Given that many active patients reinjure their repaired ACL or injure their other ACL, autografts may not be a viable follow-on procedure.

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Figure 3: Harvesting of autograft patellar tendon

Allografts

Supply of cadaver tissue remains extremely constrained and demand for high quality tissue significantly outstrips the supply.  One allograft tendon is needed for each ACL replacement.  Only half of the 25,000 cadavers available in the U.S. annually provide tissue meeting the specific requirements of orthopaedic tissue donation and, of those that meet the requirements, the yield is only about six harvested grafts suitable for ACL replacement per cadaver.  Therefore, of the over 300,000 ACL replacements performed annually in the U.S., approximately 20-25% of these procedures were performed using allograft.  Outside the U.S., the availability of allografts is even more limited on a country by country basis.  Of these procedures performed with an allograft, we believe a significant portion were performed with a graft that would generally be considered by most surgeons to be less than ideal, typically because the graft was not: (i) the preferred type (bone-tendon-bone, bone-tendon or soft tissue); (ii) the preferred length; or (iii) from a young enough donor.

Allografts have been shown to have inconsistent characteristics due to the broad range of ages of the tissue donors.  Published studies document the biomechanical properties of human allografts based on age (see Figure 4).  Tensile testing has been performed on allografts from different aged donors.  Tensile testing to failure from different allograft donors, as shown in the chart below,  demonstrate that the effect of donor age on the strength of allografts can be significant.  For example, an allograft from a 66-75 year old donor can only withstand (i) approximately 60% of the stress load that an 18-35 year old allograft can withstand or (ii) approximately 40% of the stress load that a Z-Lig can withstand.  Surgeons and certain patients are aware of the importance of the age of the cadaver from which the allograft is derived and given the preference for young donors, the supply shortage of quality allografts is more pronounced.

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Figure 4:Tensile Strength of the Z-Lig BTB and BTB Allografts from Donors of Various Age Ranges

Allografts are produced in tissue banks which are regulated differently than medical devices by the FDA.  Product from tissue banks is not subject to the FDA approval process and is therefore not subject to the same controls and regulations as is a medical device.  Despite a range of improvements in industry monitoring and oversight made beginning predominantly in 2005, soft tissue allograft infections in patients continue to be reported and have resulted in recalls of allografts from several tissue banks.  While allografts are generally safe, the risk of human disease transmission continues to exist.

In addition to the disadvantage discussed above, the availability of allograft is even more restricted in Europe and other international markets.  These patients are often left with little to no choice but to use autografts because the allograft market in these markets is severely underdeveloped due to legal, cultural and religious issues.  Allografts in some international markets are only available from hospital-based or regional tissue banks.  The quality, processing and consistency of these grafts have even greater variability and thus limits allograft acceptance.

Problems with Non-Human Grafts (Synthetic Grafts and Traditional Xenografts)

Synthetic Grafts

Numerous attempts have been made to develop artificial ligament devices.  Ligaments made from Dacron, carbon fiber, Gore-Tex and other chemicals/fibers have been tested by competitors.  However, we believe that no synthetic device to date has possessed the necessary biological and biomechanical properties to achieve long-term success because they not have supported meaningful cellular remodeling by the human’s own cells.  The only graft that has survived the test of time in the ACL indication are biologic grafts. Regardless of these limitations, a limited number of synthetic devices are available outside the U.S. but the acceptance of such devices by surgeons has been very low.  Combination devices, which include a synthetic device augmented with a human allograft, have seen only limited technical success and they  do not address most of the issues discussed above regarding human allograft sourcing and use.

Xenografts

Specific types of antibodies in humans,known as anti-gal antibodies, bind to the α-gal antigen

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on animal-based grafts and initiate a rapid immune rejection process.  The α-gal-mediated rejection may be prevented by: (i) removing or deactivating the antigens found on the xenograft or (ii) sourcing the xenograft from an animal that has been genetically modified to remove or eliminate α-gal antigens. 

Deactivation of antigens involves crosslinking -- a chemical manipulation of the xenograft to make it acceptable to the human body.  However, too much crosslinking results in a xenograft that is incapable of acting as a biological scaffold and thereby incapable of becoming populated with the patient’s own cells (no ligamentization occurs).  The ability of a xenograft to become remodeled and incorporated into the host has been shown to be vital to the long-term performance of the implant.  Too little crosslinking results in the patient’s immune system attacking the xenograft and rejecting it either acutely or over the longer-term (see Figure 4 below).  Historical attempts by competitors to use xenografts have ended mostly with failure.  Companies have attempted to develop animal-based products for the ACL market using high concentrations of glutaraldehyde to attenuate recognition of antigens on the graft, previously successfully used to “fix” porcine heart valves, but were abandoned due to the frequent failure of subsequent implants. 

Figure 5: Impact Chemical Cross Linking on Biologic Properties

We believe that previous failure of knee-related xenograft was mainly due to local toxicity and synovitis caused by residuals of the chemical crosslinking agent leaching into the surrounding joint areas and not rapidly dissipating.  Knee capsules, unlike heart valves and rotator cuffs, generally have very little turnover of surrounding fluid, and, as a result, residual crosslinking agent does not have the opportunity to meaningfully dissipate or be removed.

An alternative method to prevent α-gal-mediated rejection is by using genetically altered animals.  Genetic alteration has been shown to be technically feasible in pigs. However, scaled-up production of such pigs has not occurred because genetically modified pigs have not been found to be completely void of the α-gal antigen nor reliably reproduce offspring free of the α-gal antigen.  We  believe the resultant production cost and regulatory hurdles will be very significant, are we are not aware of any company that is attempting to scale-up production of genetically modified pigs for commercial tissue use.

Our proprietary approach has been shown to solve both the rejection as well as the compatibility issues.  Currently, we believe we are the only company that is pursuing an animal-derived ACL implant.  See “Our Solutions and Advantages” section for additional details.

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Our Solutions and Advantages

To solve the xenotransplant rejection problems mentioned above, we developed the Z-Process^®.  The Z-Process is a proprietary process that immunochemically modifies animal tissue so that it is compatible with the human immune system (see Figure 6 below).  The Z-Process addresses both α-gal and non-gal antigens on the xenograft.  Our Z-Process also creates porcine tendons for safe use in humans while still maintaining biological scaffold activity of the implant.  Using our Z-Process, we developed the Z-Lig device as an immunocompatible, porcine-derived ACL reconstruction alternative which provides a readily available, off-the-shelf solution that is strong, sterile, and reproducible.  The process and resultant product is protected by our extensive portfolio of patents and patent applications.  See “—Intellectual Property”

Figure 6: Z-Process Effect on Immune Response

We use α (alpha) -galactosidase enzyme to cleave the terminal galactose of the gal antigen so that the carbohydrate chain remaining on the animal tissue is the same in its structure as the carbohydrate chains present in humans.  Importantly, our technology uses α-galactosidase enzyme to remove α-gal antigens from non-primate animal tissues, including ligaments, cartilage, bone, heart valves, vascular tissue, injectable collagen and other tissues.  We are not aware of any competing technology that acts as a replacement for α-galactosidase for cleaving the gal antigen while still maintaining the tissue’s biological scaffold.  Therefore, we believe that competitors are prevented from deactivating the α-gal antigen from specific animal tissues without either (i) infringing ABI’s patents or (ii) making the xenograft non-functional or inert and incapable of incorporating the host’s own cells.

Figure 7:Advantages of the Z-Lig versus Other Graft Options

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While the α-galactosidase enzyme treatment solves the α-gal rejection issue, it has no known effect on the non-gal immune response.  To address the non-gal response, low level chemical crosslinking is utilized to control the response due to the non-gal antigens.  This multi-step process was developed by our team and refined over many years to the final, highly specific and reproducible process used in the clinical trials.  Our process patents cover the crosslinking treatment of tissues for non-gal antigens and subsequent sterilization using forms of e-beam irradiation.

Outside of autografts and allografts, Z-Lig represents a new and unique method in the industry in that it incorporates the host’s cells.  When first implanted, Z-Lig contains no live cells.  Z-Lig is gradually populated and remodeled by the patient’s own cells, eventually yielding a mature human ligament through the process of ligamentization.  We believe that Z-Lig remodels at a similar rate as human allografts, with substantial ligamentization occurring within 6 to 12 months and complete remodeling within two to three years.  This remodeling is key to Z-Lig’s long-term functionality.

In regenerative medicine much of the work with stem cells, growth factors and bioactive agents is also focused on the development of an ideal scaffold.  Many different techniques have been employed to replicate the architecture and organization of normal tissue and organs, i.e. non-woven and woven materials, development of porous materials, 3-D printing, etc.  All of these efforts may have shortcomings in terms of the architecture, mechanical properties and biological-materials interactions, among others.  We believe scaffolds produced using the Z-Process may offer optimal properties in terms of the natural architecture, target mechanical properties, and inherent material properties of a biological substrate.   The use of scaffolds produced using the Z-Process could represent a sizeable advance in the development of regenerative therapies.

Product Candidates and Pipeline

The Company’s product pipeline is summarized in Figure 8 below:

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Figure 8: Product Pipeline

The Company currently has four product candidates in clinical and preclinical development and research stages.  Below is the current status, clinical results and regulatory strategy for the product candidates in the portfolio:

Z-Lig^® Family - The Z-Lig family of devices are designed for use in a range of ligament reconstruction procedures, especially the initial application for the anterior cruciate ligament (ACL).  The device is sourced from animal tissue but is sized and has the requisite biological and mechanical properties for use in these type procedures.  A key advantage of this device is that little training is required for its use.  The use of the device does not require the surgeon to change his surgical technique, his preferred fixation system, nor his rehabilitation protocols.

We received the CE Mark for the BT+ (bone-tendon) and BTB (bone-tendon-bone) versions of the Z-Lig Device Family for revision and multiligament ACL reconstruction (ACLR) procedures.  We have developed a portfolio of data supportive of clinical safety and performance to enable the opportunity to market the device in the EU.  We also have plans to provide additional clinical data required to expand our approved indication to the full ACL indication to cover all ACL procedures, including primary ACL surgeries.  The Z-Lig has thus been evaluated to demonstrate its suitability as a biocompatible graft alternative to allograft and/or autograft through bench testing and extensive in vivo testing.  We plan to expand indications as well as introduce a ST (soft tissue) version to complete the spectrum of ligament reconstruction devices for the Z-Lig Device Family.

Z-Patch – an extracellular matrix product used in soft tissue repair and augmentation procedures, such as hernia and Achilles tendon repair.  Sourced from porcine dermis, this product has potential applications in orthopaedics, general, reconstructive, plastic and wound care indications.  In the U.S., this product may be developed and approved through the 510(k) clearance route under the FDA process.

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Z-Fix – a xenograft bone based product which is a biologic fixation device for ACL reconstruction and would be complementary to the Z-Lig device (all biologic ACL reconstruction).  In the U.S., this product may be developed and approved through the 510(k) clearance route.  Designs using bone could be expanded to include indications such as bone graft repair and spacer implants used in spine surgery.

Z-Meniscus – a xenograft meniscus device which can be use in the repair or reconstruction of meniscal injuries and defects.  In the U.S. and markets outside the U.S., this device would require additional clinical data prior to regulatory approval and commercialization.

Our Current Status – Clinical Results with the Z-Lig

After extensive review of our regulatory dossier, we were granted the CE Mark for the Z-Lig device for multiligament and revision ACL procedures in April 2014.  The dossier was an extensive summary of the science, preclinical, validation data and included the data collected from the European and South African multicenter study. We are also committed to plans for continued clinical and medical evaluation of this device family to insure the processing related issues have been addressed (post-market controls, reporting / vigilance, and long-term safety and performance).  The additional data on 20 to 30 subjects at one year period will be submitted to support the indication expansion to the full ACL indication.  In addition, we have committed to post-market safety evaluations and plans to continue Z-Lig Subject follow-up for an extended period of time (up to 60 month follow-up) for post-market surveillance purposes, which will generate the additional clinical data for market expansion opportunities both in the existing markets covered by the CE Mark and in the U.S.

In 2012, we initiated our multicenter, prospective, controlled (allograft), randomized and blinded clinical study in Europe and South Africa and subjects enrolled in the trial have surpassed the 36 month long-term follow-up period.  This study enrolled sixty-six subjects (n=66).  All time points to complete the endpoint analysis for Primary Performance and Efficacy have been achieved, therefore the study continues  for the purpose of collecting additional post-market safety data.  Generally, the failure of ACL grafts occurs within the early post-implantation window (3 months after the operation), when the ligamentization process has initiated and graft strength is most vulnerable.  Our assessment with the Primary Performance measure (primary endpoint for CE Marking) supported the conclusion of non-inferiority of Z-Lig versus allograft, with 100% success in all subjects at 6 months follow-up in the PP population.  Assessment of clinically relevant success outcomes such as patient activity, patient satisfaction, stability, functional and effusion resulted in compelling data showing comparable performance to the allograft control.

Surgeons using the device (our study Principal Investigators) have reported consistent, comparable or superior quality of the Z-Lig graft materials in comparison to allograft controls.  Surgeons have reported that the Z-Lig graft has a superior bone plug material, is easily used and managed during surgery, and requires no change to their standard surgical procedure.

Within the initial 12 months, bacterial infections associated with the graft were reported in 6 subjects implanted with Z-Lig in this study.  We conducted a proactive and extensive safety investigation which concluded that the infections were caused by contamination of incoming tissue and processing deficiencies.  Excepting these cases of bacterial infection, it was concluded that the reported complications are consistent with those found in the medical and scientific literature and were unrelated to the graft.  We have implemented a robust corrective action plan to address the sources of bacterial contamination, and these validation activities

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have been completed to verify that the corrective actions were sufficient and effective and that sterility can be assured.  Our corrective action plan and validation data were reviewed by the Notified Body for CE Marking and they required no additional action by us.  We plan to execute additional post-market study to confirm the effectiveness of the corrective actions.

U.S. Human Clinical Results

Z-Lig is currently under development in the U.S. under an Investigational Device Exemption (IDE) with the FDA.  Z-Lig’s development trials follow the FDA guidance document on Intra-Articular Knee Ligament Reconstruction Devices.  The safety testing modules conducted for CE Mark approval can also support FDA approval of Z-Lig as well as 510(k) approvals of follow-on products.

The results of the U.S. safety pilot study demonstrated that the Z-Lig was safe (see Figure 7 below).  Data from the human clinical study demonstrated the long-term safety and feasibility of the Z-Lig device.  The study included 10 subjects followed for 2 years under the protocol.  This group represented a highly active subject population, including subjects with high pre-injury Tegner activity levels (competitive athletes with Tegner ratings 8-10), subjects with clinically significant comorbidities, and subjects undergoing revision ACL surgeries.  These are all known risk factors to outcomes following ACL surgery.  The device performed as intended during the surgical procedure and post-surgically through progressive weight bearing and return to normal activities.  The grafts were well-tolerated without observation of a deleterious immunogenic response.  In 4 of the 10 subjects, non-device related adverse events were experienced either due to vigorous sports activities (e.g., sports injury, rupture) or events related to the initial procedure (e.g., fixation, procedure error).  No systemic diseases or secondary infections resulted from the implantation of the device and there was no acute immune response or long-term rejection response exhibited by any of the subjects.  The 12-month results of the pilot study described below were submitted to the FDA, leading to unconditional acceptance by the FDA of a pivotal clinical trial protocol.  As assessed by the operating surgeon and two non-affiliated orthopaedic knee specialists, five of six evaluable subjects presented with functional grafts at the 24-month post-operative time point and satisfied all success criteria, including effusion, knee laxity (KT 1000), pivot shift, Lachmans and Anterior Drawer tests.  Assessment by MRI also showed significant remodeling and maturation of the functioning grafts.  One of six evaluable patients that presented without a functional graft had a tibial bone fixation that loosened.

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Figure 9: Five Year Outcomes from U.S. Safety Pilot Study

The above figure (Figure 9) describes the outcomes of subjects five years postsurgery.  Recently, we completed 12-year follow-up on the five evaluable patients with functional grafts.  Safety of the devices continued to be exhibited throughout the 12-year interval, and all evaluable patients continued to demonstrate graft function with knee stability.  The nature and rate of complications and adverse events seen during this feasibility study were similar to those cited in the literature.  In April 2014, we received unconditional approval from FDA to move forward with its pivotal efficacy trial.

The pivotal efficacy trial will involve 326 patients at up to 10 clinical sites.  The study will be controlled, randomized and evaluator-blinded.  Half of the patients will receive Z-Lig while the other half will receive an allograft control.  The study’s primary endpoint is non-inferiority of function of Z-Lig (relative to allograft) at 12 months and 24 months post-implant.  We plan to continue discussions with the FDA regarding ways to optimize the study through randomization schemes, the number of clinical sites and discussions surrounding the data gathered during the European trial.

The body of data in support of the safety and performance of the Z-Lig Device Family is thus consistent and extensive, with multiple studies concluding that the Z-Lig Device Family performs in accordance with design criteria and has demonstrated adequate safety and performance in support of its intended use.  Studies for long-term efficacy analysis have been completed (reported herein) and post-market surveillance studies are in effect for ongoing assessment.

Preclinical Studies

Prior to the clinical experience, we conducted controlled studies in 20 Rhesus monkeys to evaluate Z-Lig’s safety and performance prior to use in humans.  Our studies showed that knee joints of monkeys implanted with a Z-Lig displayed normal motion and laxity within a few weeks post implantation.  This normal motion and laxity was maintained for the entire one-year period of the study.  Serological studies of these monkeys showed a transient production of non-gal

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antibodies that was deemed to have substantially decreased at approximately nine months post-implantation due to the gradual replacement of the pig tissue and matrix by the recipient’s own cells and tissue.  Biomechanical analysis of the implants after one year in monkeys demonstrated characteristics similar to those of the control (monkey allograft) and a significant return to normal leg function (as also seen in the allograft-implanted monkey).  Histological studies of the implants one year post-implantation revealed effective replacement of the porcine tissue components with those of the recipient, demonstrating that the device served as a scaffold that supported gradual remodeling with the monkey’s own cells.  In addition to these animal studies, we also successfully completed initial safety and performance studies, including cytotoxicity, acute systemic toxicity, pyrogenicity, residual risk assessment, viral safety, viral inactivation, tensile strength and dynamic abrasion.

Our Marketing & Distribution Strategy

Markets and Methods of Distribution

The orthopaedic surgery marketplace is fragmented with many clinicians focused on certain types of surgical procedures, such as trauma, total joints, spine, sports medicine. Our marketing efforts will be focused on developing awareness of the Z-Lig to stakeholders treating sports or activity related injuries.  The scope of our marketing and distribution efforts  includes the patients who desire their specific expertise  and suppliers who service their needs.  The identification of this market segment and the key opinion leaders enable a more efficient, focused sales and marketing effort.   Additionally since the Z-Lig device does not require changes to surgical technique and thus avoids additional costs for training, marketing activities are focused on educating on the science, technology and the previous clinical experiences.

The following describes our plans to initiate marketing and distribution activities as an independent organization through a distribution model.  With the CE Mark approval, we intend to introduce the Z-Lig ACLR device through a focused, phased market introduction (see Figure 10).  We believe the initial market need for the Z-Lig are revision and multiligament cases where a graft option is typically required to achieve the desired clinical result. Initially we intend to target a select number of markets where human or synthetic graft options are accepted, in particular those nations whose sites participated in our European and South African (EUSA) clinical trials, which includes Italy, South Africa, Poland, Spain, UK, and the Benelux countries (Netherlands, Belgium, Luxemburg).  We will utilize indirect distribution channels who have met our selection criteria (i.e. existing/complementary product lines, market share, financial, willing to invest in the product line, among others).  In these select markets, we will introduce the product through a targeted approach, clinicians chosen by our investigative surgeons and/or our distribution partners.  Supporting the efforts of our indirect distribution channel will be direct personnel specifically tasked with sales management and clinical marketing specialists for training and technical/scientific field education.  The next distribution phase will expand our distribution reach to additional European and Asian markets that accept the CE Mark, with a specific focus on high-volume clinical centers or those specializing in knee injuries.  The third and final phase would include pan-European expansion into markets in the EU and continued global introduction in markets outside the United States who accept the CE Mark and potential distribution into non-European nations whose regulatory bodies require additional regulatory approval.

The following describes the main elements our proposed structured rollout in each region:

• Identify Targets in Each Country

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o Clinicians

o Distributors

• Adapt Brand Messaging and Marketing Communication

o Define messaging

o Marketing Materials adapted for local markets

o Product Training material: develop Sales and Surgeon training (product and technology) presentations.

o Sales Operations:  Ordering and shipping processes

• Seed and Expansion stage

§ Sales training meetings in each market with distributors

§ Distributors identify 4-10 “launch” clinicians

§ Clinician Referrals

§ Surgeon-based symposia

• Tradeshows – national/in-country – European Society of Sports Traumatology, Knee Surgery, & Arthroscopy (ESSKA), International Society of Arthroscopy, Knee Surgery and Orthopaedic Sports Medicine (ISAKOS), European Federation of National Associations of Orthopaedic Sports Traumatology (EFOST), and others.

• “Surgeons selling surgeons” - Company sponsored symposia

• Post Sale Monitoring and Partnering

Figure 10: Z-Lig Phased Launch Plan

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Phase 1 (launch to 12-18 months)

Distribution efforts will be in 6 to 10 markets which have accepted options for ACL reconstruction (allograft and synthetic), have reimbursement pathways for graft alternatives, and/or are countries where we have conducted our clinical evaluations. Some of these initial markets may be characterized as:

· Major markets which utilize graft options such as allograft, xenograft or synthetic; clinicians who are receptive to the use of alternatives.

· Markets with minimal coding restraints.

· Markets where we have conducted our clinical evaluations to take advantage of our clinical successes and leverage our study clinicians and key opinion leaders (KOLs) to introduce and penetrate the local markets.

· Collaboration with our distributors or clinical investigators; initial distribution in each market will focus on a select number of thought leader clinicians to effect an orderly  launch of our product and gain clinical experience and feedback, verify current sizing and surgical techniques, and help insure success and traction in the marketplace.

· This limited release will enable us to gather first hand data, establish successes and help fine tune training and marketing activities.

· In some markets release will take the form of a registry to establish a clinical database for the local market and obtain product performance feedback.  The data will also be used for broader marketing and reimbursement activities in the future.

· Presence at key international medical events with exhibit supplemented with symposia or presentations.

Phase 2 (12-18 months to 24-36 months)

Efforts will focus on expanding our customer base in existing countries and extend our distribution to additional European markets with a specific focus on high-volume clinical centers or those specializing in knee injuries.  This phase will also involve markets outside of Europe that accept the CE Mark (i.e. Canada, Turkey, Saudi Arabia, Australia and Korea).  Working with these centers may require implementation of additional “mini-studies” for clinical acceptance and reimbursement.  Continue our presence at international meetings and assist our distributors at national events.  Continue to add and train distributors is expansion markets.

Phase 3 (24 months and beyond)

Efforts will continue in the expansion of customer base in markets with established distribution. In addition to pan-European expansion in the EU markets, continued introduction in markets outside the United States who accept the CE Mark.  These non-European markets would include those whose regulatory bodies require additional regulatory submissions and approvals.  Developing access, advocacy and adoption in the non–European markets.

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Our Distributors

We require that each indirect distributor purchase stock of our products and store grafts and provide local distribution, billing, and collection for its designated markets.  Initially distributors will be directed to identify a select group of qualified clinicians to become users and potential key opinion leaders of the Z-Lig within their territory.

Choosing the right distribution partners as we move into the various international markets is key.  Some of the issues that have to be explored and expectations established with any potential business partner before distribution can begin are:

· A current presence in the geographic region in the orthopedic, sports medicine or sports traumatology market with existing products

· The experience, ability, or the desire to handle a regenerative medicine/tissue-based product (store, monitor, distribute, invoice, collect, etc)

· Presence in the target market including accounts and relationships with clinicians

· Presence at local, regional, and national logical meetings

· A willingness to invest in training their sales force and customers, and a willingness to invest in marketing, training and promotional activities that will drive distribution and acceptance of their products

· A willingness to invest in activities needed to establish products in their markets, including those related to establishing reimbursement.  Local knowledge of regulatory barriers and time to market conditions are valuable.

· Distributors with adequate financial resources

Quality of the product, safety, efficacy, and price are important, but the value of surgeon relationships and customer service are equally important factors for success.

Our Management, Direct Sales and Marketing Team

As we continue to advance our commercialization efforts and expand our operations, we expect to hire additional management members to execute our strategies.  These additional hires may include senior management positions overseeing our business development and regulatory affairs.  We also intend to hire additional personnel to enhance our financial reporting, accounting and auditing capabilities, which will ensure that we comply with any ongoing reporting requirements under the rules and regulations of the SEC.

We will initially use an indirect distribution model.  We intend to increase our headcounts by hiring additional sales and marketing employees, including a Vice President of European, Middle East and Africa Distribution Management responsible for establishing our distribution network, initiating and coordinating our distribution activities within the distribution network, and driving distribution objectives; and  Clinical Marketing Specialist(s) who will be focused on both surgeon and sales representative education on the science and technology surrounding the Z-Process, Z-Lig product, and our company.

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Marketing Approach

The introduction of an innovative technology, especially one for ligament reconstruction, will meet an unmet market need but will also encounter the challenges of clinical acceptance.  Our efforts to execute a Level I clinical trial with KOLs in Europe represent a significant step towards gaining scientific and clinical credibility.  The study design includes post-marketing surveillance out to 5 years as a means of providing continual product performance feedback.   We will focus on peer-to-peer marketing activities as a rapid and effective means of establishing credibility and market acceptance of our new technology.

Direct marketing efforts at logical meetings, symposiums and others are highly effective, especially those with clinician-to-clinician interactions.  For example, we have  conducted lunchtime symposiums or have had invited lectures at the ISAKOS (International Society of Arthroscopy, Knee Surgery and Orthopaedic Sports Medicine) and ESSKA (European Society for Sports Traumatology, Knee Surgery and Arthroscopy) meetings to introduce surgeons to the Z-Lig in a peer-to-peer environment.  We plan to repeat this successful format at additional international meetings.  Independent surgeon training symposia with KOLs will be encouraged/supported.  Exhibiting at major international meetings is planned and supporting local distributors to exhibit at in-country meetings will be encouraged.  Marketing efforts will also be expected by the local distribution channels to augment company efforts.

Use of Initial Market Feedback

In some markets, post launch market feedback will be collected from clinicians who have had the opportunity to use the product.  Data will be used to confirm safety and performance expectations as well as provide information for product enhancements, market reception and education or training opportunities.  We anticipate surveys to be sent to approximately 20-24 clinicians who have used the product in a minimum of 6 cases and can provide follow up assessments 6 and 12 months post-operative.  These surveys will be conducted with surgeons who have been targeted in our launch activities.

The Advantage of Clinical Registries

In addition to the ongoing multicenter trial (post-market surveillance), performance of smaller, local market studies as registries will be encouraged.  These additional studies have been proposed to supplement our CE Mark approval and may be needed to encourage clinical Z-Lig use in new markets (those outside of trial countries).  These studies can explore issues such as cost (reimbursement), performance versus autograft, overall operative time savings, and other advantages.

Competition

As has been mentioned elsewhere in the business section, the principal competition for our  Z-Lig device arises from other types of ACL graft materials: allograft (from cadaveric tissue) and synthetic (polymers that are designed to replicate the physical, strength characteristics of native human ligaments.  We do not believe that there are other xenograft (from other species) or biologic ligaments either in the market or under development by the established orthopaedic companies.  In some global markets, synthetic devices such as those produced by LARS, Xiros (Neoligaments) and Telos have limited clinical use due to their less than satisfactory clinical history.  Currently, the only synthetic device under clinical testing that we are aware of is a resorbable polymer-based scaffold that is being developed by Soft Tissue Regeneration.

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Intellectual Property

Our product candidates and Z-Process technology are protected by an extensive intellectual property portfolio.  As of June 30, 2015, we held 23 issued patents in the U.S. and internationally, consisted of 17 issued patents in the U.S. and 6 issued patents in Europe and Japan.  In addition, we currently hold 3 patent applications pending in the U.S. and Europe. These issued patents will expire between 2015 and 2024. ABI’s patent portfolio includes claims relating to treatment and application of specific tissues for a variety of medical and surgical uses.  The intellectual property portfolio includes combined patents of process and material composition that support deantigenation, sterilization and viral inactivation of a wide range of biological tissues.  ABI has exclusive rights to the only known method for humanizing non-primate animal grafts for replacement of ligaments, bone, etc. in humans without making the graft inert.

Patents regarding Z-Process include coverage of key immunochemical modification and sterilization techniques as applied to a variety of animal-derived tissues, including connective tissue grafts (tendon, ligament, articular cartilage and fibrocartilage); cardiovascular tissues (heart valve and pericardium); and calcified and de-calcified bone (granular bone matrix, cortical and cancellous structural bone for struts, cages and machined implants).  The patent portfolio also includes immunochemical modifications of solubilized and homogenized dermal- and tendon-derived injectable collagen formulations.

In January 2009, we entered into a licensing agreement with the Curators of University of Missouri pursuant to which we obtained an exclusive right and license to use five U.S. Patents covering an alpha-galactosidase.  The license was obtained to ensure a viable source of alpha-galactosidase to use the Z-Process.  Under this license agreement, we are required to pay royalty in an amount equal to a percentage in the low single digits of net sales of licensed products. In addition, we are required to pay an annual minimum royalty payment of $35,000.  All payments under this agreement will be terminated if the aggregate amount paid under the agreement (including both sale royalties and minimum royalty payments) equals to a specified amount.

Manufacturing

Z-Lig raw materials are sourced from suppliers that meet ABI’s strict quality and performance requirements and are compliant with ISO 22442 standards.  Through simple, predictable ramp-up of the breeding and processing of the pigs and supply chain redundancies, we believe we can readily meet all of the expected market demand.  Accordingly, we have not entered into any formal supply agreements with our suppliers to provide a guaranteed volume of raw materials.   In addition, by utilizing varying ages and strains of pig, we established a flexible manufacturing process that permits us to adjust the size of our Z-Lig products to accommodate the demand of customers.

Government Regulation

Our products are medical devices that are subject to extensive regulation by government authorities in the European Union (the “EU”), the United States and in other countries and jurisdictions, including South Africa, and non-EU European countries. These governmental authorities regulate the marketing and distribution of medical devices in their respective geographies. The regulations cover the entire life cycle of the product, including the research, development, testing, manufacture, quality control, packaging, storage, labeling, advertising and

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promotion of the devices. In addition, post-approval monitoring and reporting, as well as import and export of medical devices, are subject to regulatory requirements.

Review and approval of medical devices in the EU

The EU has a coordinated system for the authorization of medical devices. The EU Medical Devices Directive (Council Directive 93/42/EEC, as amended) sets out the basic regulatory framework for medical devices in the European Union. In the EU our medical devices must comply with the Essential Requirements in Annex I to the EU Medical Devices Directive, which we refer to as the Essential Requirements. Compliance with these requirements is a prerequisite to be able to affix the Certificate of Conformity mark, or CE Mark, to our medical devices, without which they cannot be marketed or sold in the European Economic Area, or EEA. To demonstrate compliance with the Essential Requirements we must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification. Except for low risk medical devices (Class I with no measuring function and which are not sterile), where the manufacturer can issue a CE Declaration of Conformity based on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure requires the intervention of a third-party organization designated by competent authorities of an EU country to conduct conformity assessments, which is referred to as a Notified Body. The Notified Body would typically audit and examine products' technical file and the quality system for the manufacture, design and final inspection of the devices before issuing a CE Certificate of Conformity demonstrating compliance with the relevant Essential Requirements.  To date, we have used the CE Marking process to satisfy the conformity standards required to market and sell our Z-Lig products in the EU.

With respect to implantable devices or devices classified as Class III in the EU, the manufacturer must conduct clinical studies to obtain the required clinical data, unless reliance on existing clinical data from similar devices can be justified. As part of the conformity assessment process, depending on the type of devices, the Notified Body will review the manufacturer's clinical evaluation process, assess the clinical evaluation data of a representative sample of the devices' subcategory or generic group, or assess all the clinical evaluation data, verify the manufacturer's assessment of that data and assess the validity of the clinical evaluation report and the conclusions drawn by the manufacturer.  To date, we have conducted clinical studies in Europe and South Africa to obtain clinical data as part of the clinical evaluation process.

Even after we receive a CE Certificate of Conformity enabling us to affix the CE Mark on a product and to sell our product in the EEA countries, a Notified Body or a competent authority may require post-marketing studies of our product. Failure to comply with such requirements in a timely manner could result in the withdrawal of our CE Certificate of Conformity and the recall or withdrawal of our product from the market in the EU, which would prevent us from generating revenue from sales of that product in the EEA. Moreover, each CE Certificate of Conformity is valid for a maximum of five years, but more commonly three years. Our current CE Certificates of Conformity are valid through 2019 for our Z-Lig products.   At the end of each period of validity we are required to apply to the Notified Body for a renewal of the CE Certificate of Conformity. There may be delays in the renewal of the CE Certificate of Conformity or the Notified Body may require modifications to our products or to the related Technical Files before it agrees to issue the new CE Certificate of Conformity.

In addition, we must inform the Notified Body that carried out the conformity assessment of the medical devices we market or sell in the EEA of any planned substantial changes to our devices

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that could affect compliance with the Essential Requirements or the devices' intended purpose. The Notified Body will then assess the changes and verify whether they affect the products' conformity with the Essential Requirements or the conditions for the use of the devices. If the assessment is favorable, the Notified Body will issue a new CE Certificate of Conformity or an addendum to the existing CE Certificate of Conformity attesting compliance with the Essential Requirements. If it is not, we may not be able to continue to market and sell the product in the EEA.

On September 26, 2012, the European Commission adopted a package of legislative proposals designed to replace the existing regulatory framework for medical devices in the EU. These proposals provide for a revision of the current regulatory framework for medical devices in the EU to strengthen patient safety, transparency and product traceability. The proposals, for instance, include reinforced rules governing clinical evaluation throughout the life of the device, improved traceability of devices in the supply chain, including a phased and risk-based introduction of unique device identification, or UDI, improved market surveillance and vigilance, as well as better co-ordination between national regulators, increased powers for Notified Bodies to undertake unannounced inspections and strengthened supervision of Notified Bodies by member states. The European Commission's proposals may undergo significant amendments as they are reviewed by the European Council and European Parliament as part of the EU legislative process. If and when adopted, the proposed new legislation may prevent or delay the EU approval or clearance of our products under development or may impact our ability to modify our currently EU approved or cleared products on a timely basis and impose additional costs relating to clinical evaluation, vigilance and product traceability.

Marketing and sales considerations in the EU

In the EU, medical devices may be promoted only for the intended purpose for which the devices have been CE Marked. Failure to comply with this requirement could lead to the imposition of penalties by the competent authorities of the EU Member States. The penalties could include warnings, orders to discontinue the promotion of the medical device, seizure of the promotional materials and fines. Promotional materials must also comply with various laws and codes of conduct developed by medical device industry bodies in the EU governing promotional claims, comparative advertising, advertising of medical devices reimbursed by the national health insurance systems and advertising to the general public.

Post-approval monitoring in the EU

Additionally, all manufacturers placing medical devices into the market in the EU are legally bound to report any serious or potentially serious incidents involving devices they produce or sell to the competent authority in whose jurisdiction the incident occurred. In the EU, manufacturers must comply with the EU Medical Device Vigilance System. Under this system, incidents must be reported to the relevant authorities of the EU countries, and manufacturers are required to take field safety corrective actions to reduce a risk of death or serious deterioration in the state of health associated with the use of a medical device that is already placed on the market.

Third-party reimbursement

In the United States and most other major joint implant markets, third-party payors, including government health programs, commercial health insurers and managed care organizations, reimburse hospitals and other medical facilities an aggregate amount for all elements of a joint

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replacement procedure, including operating room time, patient care and the joint replacement product. As a result, our products generally are not reimbursed separately, but instead are subject to the limits imposed by third-party payors on the coverage and reimbursement of procedures that utilize our products.

Sales of our products will depend, in part, on the extent to which the costs of such procedures involving the use of our products cleared by the EU and other jurisdictions will be covered by third-party payors, including government health programs in the United States, such as Medicare and Medicaid, commercial health insurers and managed care organizations. The process for determining whether a payor will provide coverage for a particular procedure may be separate from the process for setting the price or reimbursement rate that the payor will pay for the procedure once coverage is approved. Third party payors may limit coverage to particular procedures on an approved list, or formulary, which might not include all of the approved procedures involving the use of our products for a particular indication.

In the EU, pricing and reimbursement schemes vary widely from country to country. In many foreign markets, pricing of medical devices is subject to governmental control. In the United States, there have been, and we expect that there will continue to be, a number of federal and state proposals to limit payments by governmental payors for medical devices, and the procedures in which medical devices are used. While we cannot predict whether such legislative or regulatory proposals will be adopted, the adoption of such proposals could have a material adverse effect on our business, financial condition and profitability.

Review, approval and clearance of medical devices in the United States

Medical devices in the United States are strictly regulated by the FDA. Unless an exemption applies, a medical device may not be marketed in the United States unless it has been cleared through filing of a 510(k) premarket notification, or 510(k), or approved by the FDA pursuant to a premarket approval application, or PMA. The information that must be submitted to the FDA in order to obtain clearance or approval to market a new medical device varies depending on how the medical device is classified by the FDA. Medical devices are classified into one of three classes depending on the level of control necessary to assure the safety and effectiveness of the device. Class I devices have the lowest level or risk associated with them, and are subject to general controls, including labeling, premarket notification and adherence to the Quality System Regulations (“QSRs”). Class II devices are subject to general controls and special controls, including performance standards. Class III devices, which have the highest level of risk associated with them, are subject to most of the aforementioned requirements as well as to premarket approval. Most Class I devices and some Class II devices are exempt from the 510(k) requirement, although manufacturers of these devices are still subject to registration, listing, labeling and QSR requirements.

The PMA process is more complex, costly and time consuming than the 510(k) clearance procedure. A PMA must be supported by extensive data, including technical, preclinical, clinical, manufacturing, control and labeling information, that demonstrate the safety and effectiveness of the device for its intended use. After a PMA is submitted, the FDA has 45 days to determine whether it is sufficiently complete to permit a substantive review. If the PMA is complete, the FDA will file the PMA. The FDA is subject to performance goal review times for PMAs and may issue a decision letter as a first action on a PMA.

In evaluating a 510(k), the FDA will determine whether the device has the same intended use as the predicate device, and (a) has the same technological characteristics as the predicate

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device, or (b) has different technological characteristics, and (1) the data supporting substantial equivalence contains information, including appropriate clinical or scientific data, if deemed necessary by the FDA, that demonstrates that the device is as safe and as effective as a legally marketed device, and (2) does not raise different questions of safety and effectiveness than the predicate device. Most 510(k)s do not require clinical data for clearance, but the FDA may request such data. The FDA seeks to review and act on a 510(k) within 90 days of submission, but it may take longer if the agency finds that it requires more information to review the 510(k).

Our Z-Lig products are classified as Class III medical devices.  We intend to obtain regulatory approval of our Z-Lig products by filing a PMA with the FDA.   The PMA process for the Z-Lig may be subject to additional clinical evaluation under an Investigational Device Exemption (IDE) to collect more human clinical data prior to filing a PMA. We intend to rely on the 510(k) premarket notification process to obtain FDA clearance for our product candidates which may pursue this regulatory pathway.

Investigational device exemption

A clinical trial to support safety and effectiveness of the device is typically required for a PMA and, in a small percentage of cases, the FDA may require a clinical study in support of a 510(k) submission. A manufacturer that wishes to conduct a clinical study involving the device is subject to the FDA's Investigational Device Exemption, or IDE, regulation. The IDE regulation distinguishes between significant and nonsignificant risk device studies and the procedures for obtaining approval to begin the study differ accordingly. Also, some types of studies are exempt from the IDE regulations. A significant risk device presents a potential for serious risk to the health, safety, or welfare of a subject. Significant risk devices are devices that are substantially important in diagnosing, curing, mitigating or treating disease or in preventing impairment to human health. Studies of devices that pose a significant risk require both FDA approval and an approval of an independent institutional review board, or IRB, prior to initiation of a clinical study. Nonsignificant risk devices are devices that do not pose a significant risk to the human subjects. A nonsignificant risk device study requires only IRB approval prior to initiation of a clinical study.

An IDE application is considered approved 30 days after it has been received by the FDA, unless the FDA otherwise informs the sponsor prior to 30 calendar days from the date of receipt, that the IDE is granted (“approved”), granted  with conditions, or disapproved. The clinical trial must be conducted in accordance with applicable regulations, including but not limited to the FDA's IDE regulations and current good clinical practices. A clinical trial may be suspended by the FDA, the IRB or the sponsor at any time for various reasons, including a belief that the risks to the study participants outweigh the benefits of participation in the trial.

Post-marketing restrictions and enforcement

After a device is placed on the market, numerous regulatory requirements apply. These include: compliance with the QSR and other compliance requirements; labeling regulations, which prohibit the promotion of products for uncleared or unapproved or "off-label" uses and impose other restrictions on labeling; and medical device reporting obligations, which require that manufacturers investigate and report to the FDA adverse events, including deaths, or serious injuries that may have been or were caused by a medical device and malfunctions in the device that would likely cause or contribute to a death or serious injury if it were to recur.

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Facilities

We lease a 4,000 square foot facility in San Antonio, Texas, under a lease agreement that was recently renewed and will expire on December 31, 2018, at our option. The facility has a 1,000-square foot Class 8 clean room area which contains four 100-square foot modular clean rooms of Class 6 to Class 7 certification.  We believe that we have adequate capacity to support Z-Lig and other production requirements for clinical trials through commercial launch in Europe and the U.S.  The remainder of ABI’s facility is used for product development, distribution and general and administrative purposes

Legal Proceedings

We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to a medical device business. These matters may include product liability, intellectual property, employment, and other general claims. We accrue for contingent liabilities when it is probable that a liability has been incurred and the amount can be reasonably estimated. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

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Management’s Discussion and Analysis ofFinancial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and related notes appearing at the end of this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled "Risk Factors" and elsewhere in this Offering Circular.

Aperion Biologics, Inc. (“we” or the “Company”) is a commercial-stage medical device company addressing the significant unmet need for an alternative to human-based sources of tissues to be used in surgical procedures. Our core technology platform is an enzymatic stripping of the key carbohydrate antigens followed by a unique conversion process that both “humanizes” and sterilizes animal tissues without unduly affecting their biomechanical or biological properties.  The Company’s lead product, the Z-Lig, is a patent-protected porcine tendon currently in limited commercial release for use initially as an anterior cruciate ligament (ACL) replacement in revision and multiligament knee joint procedures.  Z-Lig is the only known biological alternative to human tissue for ACL replacement.  Since the Z-Lig is a biological implant that maintains a scaffold, it can become populated and remodeled with the patient’s own cells (similar to human-sourced tissue), referred to in the industry as “ligamentization.”  This ligamentization is one of the keys to Z-Lig’s proven ability to be highly functional in patients for many years after implantation.  Our propriety process is protected by an extensive portfolio of patents and patent applications, including 23 issued patents in the U.S. and internationally.

The Company’s primary activities since its inception have been the development and implementation of its business plans, performing research on its platform technology, conducting clinical trials on its products in both animals and humans, pursuing regulatory approvals to market its product in U.S. and international markets, and raising capital.  In April 2014 the Company received the CE Mark to allow commercial sales of the Z-Lig in foreign markets that accept the CE Mark (primarily Europe).  The first commercial sale took place in February 2015.

The Company was founded in October 1996 under the name CrossCart, Inc.  The Company changed its name to Aperion Biologics, Inc. (a Delaware corporation) in May 2009.  To date, the Company has funded its business primarily with the proceeds from private placements of equity and debt securities.

Results of Operations

The Nine Months ended June 30, 2015 as compared to June 30, 2014

As mentioned above, the Company commenced its first commercial sale of Z-Lig in February 2015 and recognized $27,000 of sales during the nine months ended June 30, 2015.  There were no sales during the nine months ended June 30, 2014.

Costs related to clinical studies decreased by $38,833 from $165,896 for the nine months ended June 30, 2014 to $127,063 for the nine months ended June 30, 2015.  The decrease was primarily driven by lower expenses associated with the Company’s clinical trials outside of the United States.

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Research and development expenses decreased by $16,429 from $56,345 for the nine months ended June 30, 2014 to $39,916 for the nine months ended June 30, 2015, primarily due to completion of an R&D consulting contract which reduced expenses $15,174 between the periods.

Sales, general and administrative expenses increased by $19,421 from $1,099,724 for the nine months ended June 30, 2014 to $1,119,145 for the nine months ended June 30, 2015.  Sales and marketing activities related to the launch of the Z-Lig product increased $103,451.  In addition, consulting activities related to fundraising resulted in an increase of $100,734 for the period.  Offsetting these increases were a decrease of $55,262 in salary and personnel costs in operations, a decrease of $48,567 in legal fees and a decrease of $84,469 and in regulatory expenses due to the completion of the CE Mark application process.

Other expenses increased for the period primarily as a result of higher interest expense related to the Company’s borrowings to support its activities, as interest expense increased $91,564 between the periods.  This increase was driven by the increase in the total amount of average interest bearing debt from $6,400,014 for the nine months ended June 30, 2014 to $7,956,327 for the nine months ended June 30, 2015.

Fiscal Year ended September 30, 2014 as compared to September 30, 2013 

Operating expenses decreased by $1,537,299 from $3,389,580 in fiscal year 2013 to $1,852,281 in fiscal year 2014.  The decrease was primarily due to the completion of the Company’s clinical trials outside of the U.S. and related follow-up examinations, data gathering and compilation activities and reduced salary and personnel expenses.

Research and development expenses decreased by $358,599 from $417,844 in fiscal year 2013 to $59,245 in fiscal year 2014, primarily due to a reduction of salary and personnel expenses and reduced use of consultants.

Sales, general and administrative expenses decreased by $604,906 from $2,101,434 in fiscal year 2013 to $1,496,528 in fiscal year 2014.  The decrease was primarily attributed to a $226,098 reduction in spending in our Quality Assurance department related to the completion of significant activities relating to our CE Mark application and the adverse event investigation in our clinical trials, a $133,404 decrease in salary and personnel expenses in the Sales department, and a $178,832 decrease in salary and personnel expenses in our Operations Department as a result of the completion of process validation production, which was offset by an increase of $57,411 in fees related to fundraising activities and an increase of $62,499 in fees to Board members due to increasing the size of the Board of Directors.

Other expenses increased for the period primarily as a result of higher interest expense related to the Company’s borrowings to support its activities, as interest expense increased $234,931 between the periods.  This increase was driven by the increase in the total amount of average interest bearing debt from $4,537,000 for fiscal year 2013 to $6,600,014 for fiscal year 2014.

Liquidity and Capital Resources

We had cash of $124,769 at September 30, 2014 and $258,564 at June 30, 2015, sourced primarily from the proceeds received in private placements of convertible promissory notes.

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As of September 30, 2014, the Company had working capital deficit and a stockholders’ deficiency of $12,132,432 and $25,990,881, respectively. During the year ended September 30, 2014, the Company incurred a net loss attributable to common stockholders of $3,291,838. The Company has not generated any material revenues and has incurred net losses since inception. Our recurring operating losses and our need for additional sources of capital to fund our ongoing operations raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended September 30, 2014 with respect to this uncertainty.

Since August 2013, the Company has relied primarily on the issuance of convertible promissory notes to fund its continuing operations.  Most of this funding has been provided by CrossCart, LLC, which is the Company’s largest shareholder and controlled by Dr. Kevin R. Stone, who is the Chairman of the Board of Directors of the Company.  As of June 30, 2015 the Company had borrowed $6,825,615 from CrossCart, LLC and other related parties.   As of June 30, 2015, we had a total of $8,156,027 in outstanding principal amount of convertible promissory notes, the majority of which have matured and are due and payable, and we have not been able to make payments due to the lack of funding.  However, we expect to enter into an agreement with each noteholder, including CrossCart LLC, to (i) waive any default resulting from such non-payment of notes and (ii) provide that all outstanding amount due under the convertible promissory notes will be converted into shares of our common stock immediately following the completion of the offering at the initial conversion price.

We believe that the net proceeds from this offering of approximately $           will be sufficient to fund our current operations at least through the end of calendar year           , and thereafter we may need additional capital to continue our operations. We do not expect to be able to satisfy our cash requirements solely through sales of the Z-Lig in the near future, therefore we expect to rely on equity and debt financing to fund our operations.  The sale of additional equity securities could result in additional dilution to our stockholders and those securities may have rights senior to those of our common stock. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations.

We cannot assure that we will have sufficient capital to finance our growth and business operations or that such capital will be available on terms that are favorable to us or at all. We are currently incurring operating deficits that are expected to continue for the foreseeable future, and as we begin to prosecute our marketing plan, we expect our operating deficit will continue to grow initially until we begin to generate a sufficient level of revenue from our commercialization efforts.

Plan of Operations

Since the receipt of the CE Mark in April 2014, the Company has developed a detailed marketing plan that will initially focus on distribution efforts of its Z-Lig products in 6 to 10 markets that have accepted options for ACL reconstruction (allograft and synthetic), have reimbursement pathways for graft alternatives, and/or are countries where we have conducted our clinical trials.  We intend to use an indirect distribution model and focus on peer-to-peer marketing activities as a rapid and effective means of establishing credibility and market acceptance of our new technology.  We intend to increase our headcount by hiring additional sales and marketing employees, including a Vice President of EMEA Distribution Management responsible for establishing our distribution network, initiating and coordinating our distribution

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activities within the distribution network, and driving distribution objectives.  We also intend to hire Clinical Marketing Specialist(s) who will be focused on both surgeon and sales representative education on the science and technology surrounding the Z-Process, Z-Lig product, and our Company.  In later years the Company intend to expand into other countries to broaden the reach of Z-Lig.

The Company recognizes that following the completion of this offering, it will need to raise additional capital in order to meet its obligations and execute its business plan within the next two years. If the Company is unable to raise sufficient additional funds through this offering, it will be required to develop and implement an alternative plan to further extend payables, reduce overhead or scale back its business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

Directors, Executive Officers and Significant Employees

The following table sets forth information regarding our executive officers, directors and significant employees, including their ages as of June 30, 2015:

Name and Principal Position	Age	Term of Office	Approximate hours per week for part-time employees
Executive Officers
Daniel Lee, Chief Executive Officer and Director	54	Since August 2008	_
David Cocke, Chief Financial Officer	50	Since September 2008	_
Directors
David W. Anderson	62	Since February 2012	_
France Dixon Helfer	62	Since March 2014	_
Alfred G. Holcomb	63	Since 2008	_
Kevin R. Stone, M.D.	60	Since our inception	_
Mike Ward	44	Since March 2014	_
Significant Employee
Lance Johnson, Vice President Quality	49	Since November 2010	--

Executive Officers

Daniel R. LeeMr. Lee has been serving as our Chief Executive Officer since August 2008. Prior to joining us, from July 2006 to August 2008, Mr. Lee was Director of Marketing at Smith & Nephew Endoscopy, a sports medicine technology company, responsible for its TRUREPAIR business unit.  From November 2003 to July 2006, Mr. Lee was Director of Marketing at OsteoBiologics, Inc., a medical supply company providing off-the-shelf bio-absorbable implant for articular cartilage, which was acquired by Smith & Nephew Endoscopy in 2006.  Prior to joining OsteoBiologics, Inc., Mr. Lee was the Director of Marketing for Regeneration Technologies, Inc (“RTI”), a leading allograft tissue processor for orthopaedic surgical applications, from 1999 to 2003.  Prior to joining RTI, he was the Director of the Sports Medicine Research and Development group at Surgical Dynamics, a subsidiary of U.S. Surgical Corporation.  He is a member of the Society for Biomaterials and the American Association of

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Tissue Banks where he holds a Certified Tissue Bank Specialist certification.  He currently holds thirteen (13) patents on implants and instruments used in orthopaedic and general surgery.  Mr. Lee holds an M.S. in Biomedical Engineering from the University of Alabama at Birmingham and a B.A. in Materials Science and Engineering from the Johns Hopkins University.

David Cocke  Mr. Cocke has been serving as our Chief Financial Officer since September 2008.  Since 1997, Mr. Cocke has been serving as a General Manager of NuPak Medical, Ltd., an ISO 13485-certified contract manufacturing medical device company. He was responsible for all aspects of management, including sales, finance and operations. Prior to that, from November 1993 to May 1996, Mr. Cocke was Chief Financial Officer of NuTech, Inc., a technology incubator subsidiary for KCI, a leader in tissue-based products for surgical procedures and wound healing.  From 1991 to 1993, he was Director at the Corporate Development department at KCI. Prior to KCI, David was employed by GE Capital in its Corporate Finance Group and Salomon Brothers Inc in its Investment Banking Group. Mr. Cocke holds an MBA from the University of Virginia’s Darden Graduate School of Business Administration and a BBA with High Honors from the University of Texas at Austin.

Directors

David W. Anderson.  Mr. Anderson has been our director since February 2012.  Since September 2014, Mr. Anderson has been serving as the Chief Executive Officer of Orteq Ltd., an orthopedic medical device and regenerative medicine company focused on sports medicine.  He also serves as Chairman of the Board of Gentis, Inc. a clinical stage spinal implant company which he joined in 2004.  From 1999 to 2004, he was the founder and a director of Replication Medical, Inc., an orthopedic medical device company focused on spine surgeries.  From 1994 to 1999, he served as the Chief Executive Officer of Bionx Implants, Inc., a leading manufacturer and marketer of reinforced polymer implants.  From 1986 to 1989, he was the founder and Executive Vice President of Osteotech, Inc., a global leader in providing biologic solutions for regenerative medicine, which was acquired by Medtronic Inc. in 2010. Mr. Anderson also served as the Chief Executive Officer of Kensey Nash Corporation, a medical device company, from 1992 to 1994, and Sterilox Technologies, a manufacturer of non-toxic disinfectants, from 2000 to 2004. Mr. Anderson holds a B.S. in Chemical Engineering from Cornell University.  Mr. Anderson brings to the Board over 25 years of experiences in entrepreneurship, strategic transactions and financing in the medical device industry.

France Dixon Helfer.  Ms. Helfer has been our director since February 2014.  Ms. Helfer is currently the President and Chief Executive Officer of TinyKicks LLC, a University of California healthcare technology company based in Irvine, California, since January 2015.  From September 2011 to September 2014, Ms. Helfer was the President, Chief Executive Officer and Director of Halo Healthcare Inc., a medical device and diagnostics company focused on the detection and screening of breast cancer.  Prior to that, from August 2004 to January 2008, Ms. Helfer was the President and Founder of Pegasus Biologics, Inc., which was acquired by Baxter Healthcare Inc.  Prior to that, Ms. Helfer held a number of executive positions at various biotechnology companies,including Medtronic, Xenotech Labs, SORIN Bimedica, Eclipse Surgical and MMDDataDirect.  Ms. Helfer serves on the boards of various business organizations and academic institutions, including Chapman University’s Crean College of Health and Behavioral Sciences. Ms. Helfer holds a B.A. in Biologic Sciences from California State University, Fullerton.  Ms. Helfer brings to the Board over 20 years of experience as a senior level executive in the medical device industry.

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Alfred G. Holcomb.  Mr. Holcomb has been our director since 2008.  Since 2004, Mr. Holcomb has been serving as the Vice President of Acquisition and Divestutures at Lewis Energy Corp., an oil drilling company,where he led the completion of numerous strategic transactions.  From 1978 to 2004, Mr. Holcomb was a partner at the law firm of Schoenbum, Curphy & Scanlan.  Mr. Holcomb has been an active speaker on the Eagle Ford in conferences around the world.  Mr. Holcomb  holds his B.A. in Finance in from University of Texas, a J.D. from St. Mary's University School of Law and a LL.M. in Taxation from New York University.  Mr. Holcomb brings to the Board extensive experience and knowledge on strategic, legal and financial matters.

Kevin R. Stone, M.D.   Dr. Stone is the founding scientist of our company and served as our Chief Executive Officer from 1996 to 2008, as a director since our inception and as our Chairman of the Board since 2014.  Dr. Stone is a renowned orthopaedic surgeon and founded the Stone Clinic in 1988, an orthopedic clinic focused on biologic approaches to treating joint injuries.  He is also the Founder and Chairman of Stone Research Foundation, an independent research institution investigating new techniques for joint health, arthritis and human performance, since 1996.  Dr. Stone is the controlling member and manager of CrossCart LLC, our controlling stockholder.  Dr. Stone is also an attending staff at the California Pacific Medical Center and the San Francisco Surgery Center.  From 1999 to 2003, Dr. Stone served as the Chief Executive Officer and Chairman of the Board of Joint Juice, Inc. (now Post Holdings, Inc.). Dr. Stone is also the founder and Chief Executive Officer of Rescue Reel, LLC since 2006 and the founder of ProprioSense Holdings, LLC since 2012.   Dr. Stone holds an A.B. cum laude in biology from Harvard College and an M.D. from the University of North Carolina School of Medicine, residency training in general surgery at Stanford University and orthopaedics at Harvard and Fellowship trained in knee surgery and sports medicine.  Dr. Stone is recognized internationally as a leading expert and authority of advanced orthopedic surgical and rehabilitation techniques to repair damaged cartilage and ligaments. He brings to the Board extensive expertise, knowledge and experience in the field of orthobiologic medicine and provides us with significant management, operational and financial support.

Mike Ward.   Mr. Ward has been our director since March 2014.  Mr. Ward has been serving as the Vice President, Corporate Development at BioNano Genomics, Inc., a genomic mapping company, since March 2014.  Prior to joining BioNano Genomics, Inc., from 2009 to 2013, Mr. Ward was a Vice President at Lurie Investment Fund, LLC, the venture capital arm of Ann and Robert H. Lurie Foundation, where he was responsible for managing the life sciences venture capital and private equity investments of the foundation.  Prior to 2009, Mr. Ward worked for more than 15 years in the investment banking industry, holding various positions at Leerink Partners, Credit Suisse, Dresdner Kleinwort Wasserstein, BMO and Vector Securities.  Mr. Ward also serves on the boards of the following healthcare companies: Nanosphere, Inc., a publicly traded molecular diagnostics company and CytoPherx, Inc., an acute renal failure-focused therapeutic medical device company.  Mr. Ward holds a B.S. in finance from the University of Illinois. Mr. Ward brings to the Board over 20 years of life-sciences dedicated investment banking, venture capital and private equity experiences.

Significant Employee

Lance Johnson.  Mr. Johnson has been serving as our Vice President, Quality since November 2010.  Prior to joining us, he was the Quality Manager at Zimmer Spine, the orthopaedic spine division of Zimmer, Inc., from March 2009 to October 2010. From March 2005 to November 2009, Mr. Johnson was the Associate Quality Engineering Manager for Abbott Spine, an orthopaedic spine company, working specifically with new product development teams.  In addition, he served as an investigator with the FDA from 1989 to 2005.  From 1994 to 2005, he

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was the resident investigator in charge of the Austin field office and as contributor to the FDA international cadre. During his time at the FDA, he audited medical device firms in the US, Europe and Canada.  Mr. Johnson received his Medical Device Level II certification in 1998 and received his Level II Auditor certification in 2003. Lance trained and certified FDA, Texas, and BSI auditors during his career with the FDA. Mr. Johnson holds a B.S. in Biotechnology from Oklahoma State University.

Compensation of Directors and Executive Officers

The following table represents information regarding the total compensation earned by the three highest paid individuals who served as an executive officer or director of the Company as of June 30, 2015:

Name and Principal Position	Cash Compensation ($)	Other Compensation ($)(2)	Total Compensation ($)
Daniel R. Lee, Chief Executive Officer	$235,000	$23,349	$258,349
David Cocke, Chief Financial Officer(1)	$60,000	$4,239	$64,239
Kevin R. Stone, Chairman of the Board	$45,833	$0	$45,833

(1) Mr. Cocke is performing his services as Chief Financial Officer pursuant to the Independent Consulting Agreement, dated September 1, 2008.

(2) Represents stock-based compensation of stock options issued to the Chief Executive Officer and Chief Financial Officer.

The aggregate cash compensation of all of our directors for the fiscal year ended September 30, 2014 was $142,499. In addition, we have granted, in the aggregate, stock options to purchase to a total of 330,000 shares of our common stock to our directors (excluding Mr. Lee), during the fiscal year ended September 30, 2014.

As part of our effort to preserve cash, since July 2013, we have reduced, in full or partially, the salaries of our Chief Executive Officer, Chief Financial Officer and other full time employees until the Company has received financing of at least $2.0 million (beyond any funding received from CrossCart LLC) or the signing of a license or distribution agreement with at least $2.0 million of upfront payments or milestone fees achievable within 12 months of signing.  Following the completion of this offering, we expect to pay the amount of such salaries to our Chief Executive Officer, Chief Financial Officer and other employees (the “Reduced Salary”).   As of June 30, 2015, the total amount of the Reduced Salary for the Chief Executive Officer and Chief Financial Officer was $210,604.  Since July 2013, we have reduced a total of $289,999 in cash compensation to our Board members as of June 30, 2015.  We expect to enter an agreement with the directors pursuant to which we will agree to pay 70% of such compensation by issuing an aggregate of 751,849 shares of our common stock to these directors, and that the remaining 30% of cash compensation owed to such directors will be paid in cash.

On December 16, 2013, our Board approved the Management Retention Plan, pursuant to which our management members, including the Chief Executive Officer and Chief Financial Officer, will receive a retention bonus upon an external financing of at least $2.0 million (beyond any funding received from CrossCart LLC) or the signing of a license or distribution agreement with at least $2.0 million of upfront payments or milestone fees achievable within 12 months of signing. As of June 30, 2015, and assuming the completion of this offering, the total amount of the management retention bonus for all eligible management members will be approximately

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$85,000, and we intend to pay this amount by issuing shares of common stock having the same value based on the public offering price.

Security Ownership of Management and Certain Securityholders

The following table sets forth certain information known to us regarding beneficial ownership of our capital stock as of June 30, 2015 for (i) all executive officers and directors as a group and (ii) each person, or group of affiliated persons, known by us to be the beneficial owner of more than ten percent (10%) of our capital stock.  The percentage of beneficial ownership in the table below is based on 72,963,279 shares of common stock deemed to be outstanding as of June 30, 2015 and gives effect to the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 37,504,969 shares of our common stock following the completion of this offering, including shares of common stock to be issued as cumulative dividends accrued under such preferred stock and (ii) the issuance of 31,366,725 shares of common stock upon conversion of approximately an aggregate of $9,838,058 in outstanding principal and accrued interest on our convertible promissory notes (which is currently convertible into shares of our preferred stock but will be amended to be convertible into shares of our common stock in connection with the offering), upon the completion of this offering, assuming that the offering is completed on            .In addition, shares of common stock that may be acquired by the stockholder within 60 days of June 30, 2015, pursuant to the exercise of stock options are deemed to be outstanding for the purpose of computing the percentage ownership of such shareholder, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned	Number of Shares Acquirable	Percent of Class
CrossCart LLC (1)	57,304,590	0(3)	78.5%
Dr. Kevin R. Stone (1) (2)	60,777,692	100,000(4)	83.2%
All executive officers and directors as a group	61,532,732	3,602,833(5)	85.1%

____________________________________________________________________________

(1) Dr. Kevin R. Stone, a director of the Company, is the controlling member and manager of CrossCart LLC.  As such, Dr. Stone may be deemed to have voting and dispositive power of all securities beneficially owned by CrossCart LLC reported herein.  Dr.  Stone disclaims beneficial ownership of all shares held by CrossCart LLC.  The mailing address of CrossCart LLC and Dr. Stone is 3727 Buchanan Street, San Francisco, CA 94123.

(2) All shares of common stock, warrants and convertible notes reported herein are held directly by the Stone Family Revocable Trust dated 9/20/90 (the “Trust”) for which Dr. Stone and Susan Stone serve as co-trustees.    As the co-trustee of the Trust, Dr. Stone is deemed to have beneficial ownership of all securities held by the Trust.

(3) Excludes 5,327,224 shares of common stock issuable upon exercises of warrants to purchase shares of our common stock and convertible preferred stock and the subsequent conversion of such shares of convertible preferred stock to shares of common stock.

(4) Includes 100,000 shares issuable upon exercise of stock options within 60 days of June 30, 2015 and  excludes 2,388,238 shares of common stock issuable upon exercises of warrants to purchase shares

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of our common stock and convertible preferred stock and the subsequent conversion of such shares of convertible preferred stock into shares of common stock.

(5)  Includes an aggregate of 3,602,833 shares of common stock issuable upon exercise of stock options within 60 days of June 30, 2015.

Interest of Management and Others in Certain Transactions

Transactions with CrossCart and Dr. Kevin Stone

Convertible Note Financing

Dr. Kevin Stone, a director of the Company, is a controlling member and the manager of CrossCart LLC, a California limited liability company (“CrossCart”).  Between August 19, 2013 and May 23, 2014, CrossCart loaned an aggregate of $1,520,015 to the Company in exchange for the issuance of eight (8) separate and identical convertible promissory notes in the principal amount of $200,000, $200,000, $150,000, $250,000, $250,000, $150,000, $150,000,$150,000, and $20,015 respectively (the “CrossCart Series D Notes”).  Each CrossCart Series D Note bears an interest of 8% per annum, which rate increases to 10% per annum upon maturity or if an event of default occurs.  In general, all principal and interest accrued under each CrossCart Series D Note is due and payable, upon demand at the sole option of CrossCart, following each such note’s maturity dates, all of which have occurred with the exception of the CrossCart Series D Note with a principal amount of $20,015 which matures on May 23, 2016.  The CrossCart Series D Notes contain customary events of default.  The principal and any accrued interest under the CrossCart Series D Notes are convertible, at CrossCart’s discretion, into shares of Series D Preferred Stock of the Company at an initial conversion price of $0.25 per share.  Under the terms of the CrossCart Series D Notes, the Company is required to use reasonable efforts to cause a sufficient number of shares of Series D Preferred Stock to be authorized and reserved for the conversion of such notes.  As of June 30, 2015 the total outstanding amount due under the CrossCart Series D Notes was $3,260,851, including accrued interest.  CrossCart has informed us that it does not intend to demand repayment of the CrossCart Series D Notes prior to the completion of this offering. In addition, we expect to enter into an agreement with CrossCart to provide that upon completion of this offering, all outstanding amounts due under the 2013 CrossCart Series D Notes will be automatically converted into shares of our common stock at the initial conversion price of $0.25 per share.

Demand Notes

On December 18, 2014, the Company issued a demand note to CrossCart for an aggregate principal amount of $120,000 (the “Demand Note”).  The outstanding principal of each Demand Note carries an interest rate of 8% per annum, which may be increased to 10% if an event of default occurs.  All principal and accrued interest under the Demand Note is due and payable, upon demand, at the sole option and discretion of CrossCart.  The Demand Note includes customary events of default.  The outstanding balance on the Demand Note as of June 30, 2015 was $125,093, including accrued interest.

In addition, as inducement to enter into the Demand Note, the Company granted CrossCart certain royalty rights (the “Royalty Right”), pursuant to which the Company agrees to pay a royalty equal to 5% of any net sales from products manufactured using the Company’s Z-Process on the first $12,000,000 of net sales.  The Royalty Right will expire on December 31,

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2016 or when $12,000,000 in net sales has been achieved.  The Royalty Right was further amended in connection with the execution of the Line of Credit Note as described below.  Furthermore, as inducement to enter into the Demand Note, the Company agreed to pay CrossCart a transaction bonus equal to 3% of the gross proceeds received from any control change transaction of the Company (“Transaction Bonus”).  In September 2015, the Company and CrossCart entered into an agreement to provide that CrossCart’s right to receive the Transaction Bonus will terminate and expire upon completion of this offering. As of June 30, 2015, the total amount outstanding under the Demand Note was $125,093, including accrued interest.

Line of Credit Note

On May 1, 2015, the Company entered into a Line of Credit Note with CrossCart that provides the Company with a credit line up to $100,000.  During the term of this note, the Company may request borrowings, with a minimum amount of $10,000 for each request, from CrossCart, and such request may be granted or denied at CrossCart’s sole discretion. The Company may repay the outstanding amount of this note at its discretion.  The note bears interest at rate of 10% per annum, and all principal amount and accrued interest will be due and payable on May 1, 2016.  The note contains customary events of default. If the Company fails to pay all amounts due by May 1, 2016, the interest on the remaining outstanding balance will accrue at a rate of 12% per annum.  As of June 30, 2015, the total amount outstanding under the Line of Credit Note was $61,627, including accrued interest.  In addition, as inducement to enter into the Line of Credit Note, the Company amended the Royalty Right such that CrossCart will be entitled to receive a 5% royalty on all net sales in excess of $12,000,000 without an expiration date (the “Additional Royalty Rights”). In September 2015, the Company and CrossCart entered into an agreement to provide that the Additional Royalty Rights will terminate and expire upon completion of this offering.

Extension of Warrants and Stock Options

On or about December 23, 2013, the Company entered into a letter agreement (the “Letter Agreement”) with CrossCart and Dr. Stone to extend the expiration dates of the following warrants held by CrossCart (the “Series C Warrants”):

· A warrant to purchase 10,625 shares of Series C Preferred Stock issued on July 25, 2007 having an exercise price of $0.48 per share and an expiration date of July 25, 2012.

· A warrant to purchase 6,250 shares of Series C Preferred Stock issued on August 14, 2007 having an exercise price of $0.48 per share and an expiration date of August 14, 2012.

The expiration dates of the two Series C Warrants were extended five (5) years from the initial expiration dates, such that the expiration dates are now July 25, 2017 and August 14, 2017, respectively.

In addition, the Letter Agreement extended the expiration date of stock options to purchase 100,000 shares of common stock of the Company, which was issued to Dr. Stone on February 11, 2003 with an exercise price of $0.45 per share.  The expiration date of such stock option was extended  to February 11, 2018.

Transaction between CrossCart and Lurie Investment

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On August 19, 2013, CrossCart, Dr. Stone, Lurie Investment Fund, L.L.C. (“Lurie”) and Alfa-Tech, L.L.C. (“Alfa-Tech” and, together with “Lurie”, the “Lurie Entities”) entered into a Stock and Note Purchase Agreement (the “Lurie Purchase Agreement”), pursuant to which CrossCart purchased from the Lurie Entities the following securities of the Company held by Lurie: (i) an aggregate of 937,602 shares of Series B Preferred Stock; (ii) an aggregate of 7,083,334 shares of Series C Preferred Stock; (iii) an aggregate of 12,952,917 shares of Series C-2 Preferred Stock; (iv) warrants to purchase an aggregate of 937,500 shares of Series C-1 Preferred Stock at an exercise price of $0.48 per share; (v) warrants to purchase an aggregate of 1,171,875 shares of Series C-2 Preferred Stock at an exercise price of $0.48 per share; (vi) warrants to purchase an aggregate of 3,217,849 shares of common stock at an exercise price of $0.01 per share; and (vi) convertible promissory notes in the aggregate principal amount of $5,000,000 (collectively, the “Lurie Securities”).  In exchange for the Lurie Securities, CrossCart agreed to pay the Lurie Entities cash consideration of $1.00 and certain contingent consideration upon the consummation of a sale of the Company, including the occurrence of a “deemed liquation event” as defined in the Company’s Certificate of Incorporation (the “Lurie Contingent Consideration”).  In general, the Lurie Contingent Consideration shall equal to 20% of the gross proceeds received by CrossCart from the Company in such sale to the extent the proceeds exceed CrossCart’s capital contribution made by the purchaser to the Company.

Change of Control Bonus

On March 3, 2012, the Company awarded Dr. Stone a bonus (the “Stone Bonus Agreement”) in the event of an acquisition of the Company.  An acquisition is defined as a sale, merger, consolidation, transfer or other disposition of all or substantially all (more than 80%) of the Company to another entity (the “Acquisition”).  An initial public offering of the Company’s Common Stock pursuant to an effective registration statement filed with the Securities and  Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), does not constitute an Acquisition.  Dr. Stone is entitled to receive a bonus award in an amount equal to 1% of the proceeds received in the Acquisition that occurred on or prior to December 16, 2013.  On December 16, 2013, the Board amended and extended the Stone Bonus Agreement to cover any Acquisition that occurs on or before the completion of an initial public offering of the Company’s stock pursuant to an effective registration statement filed with the Securities and Exchange Commission under the Securities Act.  In September 2015 the Company and Dr. Stone entered into an amendment to the Stone Bonus Agreement, pursuant to which the Stone Bonus Agreement will be terminated, and no bonus will be paid to Dr. Stone, upon the completion of this offering.

Transactions with Bruce Stone

Between May 22, 2014 and June 2, 2015, the Company issued three convertible promissory notes in the amount of $50,000, $35,000 and $40,000, respectively, to Mr. Bruce Stone, who is the brother of Dr. Kevin Stone, pursuant to Note Purchase Agreements dated April 17, 2014, November 12, 2014 and May 20, 2015, respectively (collectively, the “Bruce Stone Notes”).  Each note bears interest at a rate of 8% per annum, which may be increased to 10% per annum if an event of default occurs.  In general, all principal and interest accrued under each Bruce Stone Note are due and payable, upon demand at the sole option of Mr. Stone, on or after two years after the date of issuance.  The notes contain customary events of default.  The principal and any accrued interest under the Bruce Stone Notes are convertible, at Mr. Stone’s sole discretion, into shares of Series D Preferred Stock and in the case of the notes issued on November 12, 2014, into shares of Series E Preferred Stock, of the Company at an initial conversion price of $0.25 per share.  Under the terms of the Bruce Stone Notes, the Company is required to use reasonable efforts to cause a sufficient number of shares of Series D Preferred Stock

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authorized and reserved for issuance upon conversion of the notes.  As of June 30, 2015 the total amount outstanding under the Bruce Stone Notes was $131,407, including accrued interest.  In addition, we expect to enter into an agreement with Mr. Stone to provide that upon completion of this offering, all outstanding amount due under the Bruce Stone Notes will be automatically converted into shares of our common stock at the initial conversion price.

Management Retention Plan

On December 16, 2013, the Board approved the Management Retention Plan (the “Plan”), pursuant to which certain key employees, including Mr. Lee and Mr. Cocke, are entitled to receive a bonus upon the occurrence of specified events, provided that the participant must continue as an employee of the Company through the occurrence of the triggering event.  Under the Plan, upon an external financing (beyond any financing from CrossCart) of at least $2.0 million or a signing of a license or distribution agreement with at least $2.0 million of upfront payments or milestone payments achievable within 12 months of signing, Mr. Lee is entitled to receive a bonus equal to $35,000 plus a salary delta amount (the “Salary Delta Amount”), and Mr. Cocke is entitled to receive a bonus equal to $15,000 plus the Salary Delta Amount.  The Salary Delta Amount is calculated as the difference between the salary actually received after July 1, 2013 and the amount of salary such person would have received if the salary in effect during June 2013 had continued from July 2013 until the bonus is earned.  We expect to amend the Plan to provide that all bonuses under the Plan shall be paid in shares of common stock based on the public offering price in this offering.

In addition, the Plan also provides that upon closing of a deemed liquidation events specified in the Company’s certificate of incorporation or a sale of the Company’s securities representing 50% or more of total voting power of outstanding securities (the “Acquisition”), Mr. Lee and Mr. Cocke are entitled to receive certain bonus payments based, in part, on the amount of proceeds received by the Company in the Acquisition (the “Acquisition Bonus”).  We expect the Board to approve an amendment to the Plan to provide that the Acquisition Bonus will terminate and expire upon the completion of this offering.

Transactions with Directors

In December 2013, the  Company entered into a letter agreement with each of David W. Anderson and Alfred G. Holcomb, two of our directors, to provide certain acquisition bonus payments (the “Director Bonus Agreement”),  Under the Director Bonus Agreement, in the event of an acquisition of the Company or the occurrence of a “deemed liquidation” event under our certificate of incorporation (the “Acquisition”), each director will be eligible to receive the following cash bonus payments (the “Director Acquisition Bonuses”):

· if the proceeds of the Acquisition is at least $15 million and less than $25 million, a cash bonus of $100,000;

· if the proceeds of the Acquisition is at least $25 million and less than $100,000 million, a cash bonus of $250,000; and

· if the proceeds of the Acquisition is at least $100 million, a cash bonus equal to 10% of 4% of such proceeds.

We expect to enter into an agreement with each of Mr. Anderson and Mr. Holcom to provide that the Director Acquisition Bonuses will terminate and expire immediately upon

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completion of this offering.

Securities Being Offered

The following descriptions are summaries of the material terms of our amended and restated certificate of incorporation and amended and restated bylaws, which will be effective upon completion of this offering. The descriptions of the common stock and preferred stock give effect to changes to our capital structure that will occur immediately prior to the completion of this offering. We refer in this section to our amended and restated certificate of incorporation as our certificate of incorporation, and we refer to our amended and restated bylaws as our bylaws.

General

Upon completion of this offering, our authorized capital stock will consist of                 shares of common stock, par value $0.001 per share, and                 shares of preferred stock, par value $0.001 per share, all of which shares of preferred stock will be undesignated.

As of June 30, 2015, 72,963,279 shares of our common stock were outstanding and held by 61 stockholders of record. This amount assumes (i) the conversion of all outstanding shares of our convertible preferred stock into common stock, which will occur immediately prior to the completion of this offering and (ii) the issuance of shares of common stock upon the conversion of all principal amount and accrued interests under our Notes (as discussed below) upon the completion of this offering, assuming that the offering is completed on                     , 2015. In addition, as of June 30, 2015, we had outstanding options to purchase 6,447,747 shares of our common stock under our 2008 Stock Option Plan, and a predecessor plan, at a weighted average exercise price of $0.08 per share, of which options to purchase an aggregate of 6,043,809 were exercisable.

Common Stock

The holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders. The holders of our common stock do not have any cumulative voting rights. Holders of our common stock are entitled to receive ratably any dividends declared by the board of directors out of funds legally available for that purpose, subject to any preferential dividend rights of any outstanding preferred stock. Our common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions.

In the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in all assets remaining after payment of all debts and other liabilities and any liquidation preference of any outstanding preferred stock. The shares to be issued by us in this offering will be, when issued and paid for, validly issued, fully paid and non-assessable.

Preferred Stock

Immediately prior to the completion of this offering, we expect that all outstanding shares of our convertible preferred stock will be converted into shares of our common stock. Immediately prior to the completion of this offering, our amended and restated certificate of incorporation will be amended and restated to delete all references to such shares of convertible preferred stock. Upon the completion of this offering, our board of directors will have the authority, without

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further action by our stockholders, to issue up to           shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting, or the designation of, such series, any or all of which may be greater than the rights of common stock. The issuance of our preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon our liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change in control of our company or other corporate action. Immediately after completion of this offering, no shares of preferred stock will be outstanding, and we have no present plan to issue any shares of preferred stock.

Convertible Promissory Notes

In fiscal 2012, we borrowed $3,250,000 through the issuance of certain convertible promissory notes to existing stockholders. These notes accrue interest at 8% per year and are convertible into shares of the Company’s Series C-2 Preferred Stock at a conversion price of $0.48 per share (the “Series C-2 Notes”). In fiscal 2013 and 2014, we borrowed $4,181,027 through the issuance of certain convertible promissory notes to new and existing investors. These notes accrue interest at 8% and are due upon demand of the holder. The holders may, in their sole discretion, convert all principal and accrued interest under these notes into shares of the Company’s Series D Preferred Stock at a conversion price of $0.25 per share (the “Series D Notes”). In  2015, we borrowed $780,000 through the issuance of certain convertible promissory notes to existing and new investors. These notes accrue interest at a rate of 8% per year and are convertible into shares of the Company’s Series D or Series E Preferred Stock at a conversion price of $0.25 per share (the “Series E Notes”, and together with the Series C-2 Notes and Series D Notes, the “Notes”).

We intend to enter into agreements with each holder of the Notes to provide that upon the completion of this offering, subject to certain limitations on the conversion of the Notes, all principal and accrued interest under the Notes will convert into an aggregate of            shares of common stock, assuming that the offering is completed on             2015. For more information on the Notes, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Convertible Note Financings.”

Warrants

As of June 30, 2015, we had outstanding warrants to purchase 954,375 shares of Series C convertible preferred stock and 1,171,875 shares of Series C-2 convertible preferred stock, together which are exercisable for an aggregate of 2,126,250 shares of common stock upon the completion of this offering. In addition, as of June 30, 2015, we had outstanding warrants to purchase an aggregate of 10,016,592 shares of our common stock.

On August 19, 2013, our largest stockholder, CrossCart LLC purchased preferred stock, promissory notes and warrants for common stock and preferred stock previously held by Lurie Investment Fund, LLC, another stockholder of the Company.  The warrants have a net exercise provision and contain provisions for the adjustment of the exercise price and the number of shares issuable upon the exercise of the warrant in the event of certain stock dividends, stock splits, recapitalizations, reclassifications and consolidations. The warrants for preferred stock are exercisable until their expiration on either (i) the earlier of certain dates in 2020 or a sale or merger of the Company, or (ii) the earlier of certain dates in 2022 or the conversion of the

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promissory notes as noted above. The warrants for common stock are exercisable until their expiration on June 9, 2018.

Registration Rights

Upon the completion of this offering, the holders of                  shares of our common stock, including shares issuable upon the conversion of our convertible preferred stock and Notes, or their permitted transferees, are entitled to rights with respect to the registration of these securities under the Securities Act, which we refer to as our registrable securities. These rights are provided under the terms of an investor rights agreement between us and certain holders of our common stock, Series A convertible preferred stock, Series B convertible preferred stock, and Series C convertible preferred stock. The investor rights agreement includes demand registration rights, short-form registration rights and piggyback registration rights. All fees, costs and expenses of underwritten registrations under these agreements will be borne by us and all selling expenses, including underwriting discounts and selling commissions, will be borne by the holders of the shares being registered.

Demand Registration Rights

Beginning 180 days after the completion of this offering, the holders of at least 60% of our Series C convertible preferred stock are entitled to demand registration rights. Under the terms of the investor rights agreement, upon the written request of such holders to sell registrable securities with an anticipated aggregate offering price (net of underwriting discounts and commissions) of at least $5.0 million, we will be required to use our best efforts to file a registration statement covering the offering and sale of such securities and use reasonable, diligent efforts to effect the registration of all or a portion of these securities for public resale. We are required to effect only two registrations pursuant to this provision of the investor rights agreement. In the event we register securities in connection with an underwritten offering, the underwriters will have the right to limit the number of shares included in such offering.

Short-Form Registration Rights

Upon the completion of this offering, the holders of at least 30% of our registrable securities are also entitled to short form registration rights. Pursuant to the investor rights agreement, if we are eligible to file a registration statement on Form S-3, upon the written request of such holders to sell registrable securities, we will be required to use our best efforts to effect a registration of such securities. In the event we register securities in connection with an underwritten offering, the underwriters will have the right to limit the number of shares included in such offering.

Piggyback Registration Rights

Upon the completion of this offering, the holders of our registrable securities are entitled to piggyback registration rights. If we register any of our securities either for our own account or for the account of other security holders, such holders are entitled to include their shares in the registration. In the event we register securities in connection with an underwritten offering, the underwriters will have the right to limit the number of shares included in such offering.

Indemnification

Our investor rights agreement contains customary cross-indemnification provisions, under which we are obligated to indemnify holders of registrable securities in the event of material

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misstatements or omissions in the registration statement attributable to us, and they are obligated to indemnify us for material misstatements or omissions attributable to them.

Expiration of Registration Rights

The registration rights granted under the investor rights agreement will terminate after the earlier of (i) the fifth anniversary of the Company’s first underwritten public offering of its common stock under the Securities Act, (ii) with respect to any holder of registrable securities, the date on which all of such holder’s shares can be sold during a three-month period without registration in reliance on Rule 144 under the Securities Act, (iii) the closing of a deemed liquidation event or (iv) termination of the agreement upon consent of the parties.

Anti-Takeover Effects of Our Certificate of Incorporation and Bylaws and Delaware Law

Our certificate of incorporation and bylaws include a number of provisions that may have the effect of delaying, deferring or preventing another party from acquiring control of us and encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our board of directors rather than pursue non-negotiated takeover attempts. These provisions include the items described below.

Board Composition and Filling Vacancies

Our certificate of incorporation provides for the division of our board of directors into three classes serving staggered three-year terms, with one class being elected each year. Our certificate of incorporation also provides that directors may be removed only for cause and then only by the affirmative vote of the holders of 75% or more of the shares then entitled to vote at an election of directors. Furthermore, any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size of our board, may only be filled by the affirmative vote of a majority of our directors then in office even if less than a quorum. The classification of directors, together with the limitations on removal of directors and treatment of vacancies, has the effect of making it more difficult for stockholders to change the composition of our board of directors.

No Written Consent of Stockholders

Our certificate of provides that all stockholder actions are required to be taken by a vote of the stockholders at an annual or special meeting, and that stockholders may not take any action by written consent in lieu of a meeting. This limit may lengthen the amount of time required to take stockholder actions and would prevent the amendment of our bylaws or removal of directors by our stockholders without holding a meeting of stockholders.

Meetings of Stockholders

Our certificate of incorporation and bylaws provide that only a majority of the members of our board of directors then in office may call special meetings of stockholders and only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders. Our bylaws limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the meeting.

Advance Notice Requirements

66

Our bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year. Our bylaws specify the requirements as to form and content of all stockholders’ notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting.

Amendment to Certificate of Incorporation and Bylaws

Any amendment of our certificate of incorporation must first be approved by a majority of our board of directors, and if required by law or our certificate of incorporation, must thereafter be approved by a majority of the outstanding shares entitled to vote on the amendment and a majority of the outstanding shares of each class entitled to vote thereon as a class, except that the amendment of the provisions relating to stockholder action, board composition, limitation of liability and the amendment of our bylaws and certificate of incorporation must be approved by not less than 75% of the outstanding shares entitled to vote on the amendment, and not less than 75% of the outstanding shares of each class entitled to vote thereon as a class. Our bylaws may be amended by the affirmative vote of a majority of the directors then in office, subject to any limitations set forth in the bylaws; and may also be amended by the affirmative vote of at least 75% of the outstanding shares entitled to vote on the amendment, or, if our board of directors recommends that the stockholders approve the amendment, by the affirmative vote of the majority of the outstanding shares entitled to vote on the amendment, in each case voting together as a single class.

Undesignated Preferred Stock

Our certificate of incorporation provides for                 authorized shares of preferred stock. The existence of authorized but unissued shares of preferred stock may enable our board of directors to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise. For example, if in the due exercise of its fiduciary obligations, our board of directors were to determine that a takeover proposal is not in the best interests of our stockholders, our board of directors could cause shares of preferred stock to be issued without stockholder approval in one or more private offerings or other transactions that might dilute the voting or other rights of the proposed acquirer or insurgent stockholder or stockholder group. In this regard, our certificate of incorporation grants our board of directors broad power to establish the rights and preferences of authorized and unissued shares of preferred stock. The issuance of shares of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance may also adversely affect the rights and powers, including voting rights, of these holders and may have the effect of delaying, deterring or preventing a change in control of us.

Section 203 of the Delaware General Corporation Law

Upon completion of this offering, we will be subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. Under Section 203, a

67

business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:

· before the stockholder became interested, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

· upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding shares owned by persons who are directors and also officers, and employee stock plans, in some instances, but not the outstanding voting stock owned by the interested stockholder; or

· at or after the time the stockholder became interested, the business combination was approved by our board of directors and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.

Section 203 defines a business combination to include:

· any merger or consolidation involving the corporation and the interested stockholder;

· any sale, transfer, lease, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;

· subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

· subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; and

· the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person.

68

Aperion Biologics, Inc.

Financial Statements

September 30, 2014 and 2013

Aperion Biologics, Inc.

Table of Contents

	Page
Report of Independent Registered Public Accounting Firm	F-1
Financial Statements - September 30, 2014 and 2013
Balance Sheets	F-2
Statements of Operations	F-3
Statements of Changes in Stockholders' Deficiency	F-4
Statements of Cash Flows	F-5
Notes to Financial Statements	F-6

Financial Statements - Nine Months Ended June 30, 2015 and 2014
Condensed Balance Sheets	F-26
Condensed Statements of Operations	F-27
Condensed Statements of Cash Flows	F-28
Notes to Condensed Financial Statements	F-29

Report of Independent Registered Public Accounting Firm

To the Audit Committee of the Board of Directors and Stockholders of Aperion Biologics, Inc.

We have audited the accompanying balance sheets of Aperion Biologics, Inc. (the "Company") as of September 30, 2014 and 2013, and the related statements of operations, changes in stockholders' deficiency, and cash flows for the fiscal years then ended, and the related notes to the financial statements. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Aperion Biologics, Inc. as of September 30, 2014 and 2013, and the results of its operations and its cash flows for the fiscal years then ended in accordance with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not generated any material revenues and has incurred net losses since inception. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Marcum LLP

Marcum LLP

New York, NY

September 21, 2015

F-1

Aperion Biologics, Inc.

Balance Sheets

September 30, 2014 and 2013

	2014			2013
Assets
Current Assets
Cash	$	124,769		$	38,126
Inventory		62,054			62,175
Prepaid expenses and other current assets		8,185			99,324
Total current assets		195,008			199,625
Property and Equipment – net		61,453			53,266
Total Assets	$	256,461		$	252,891
Liabilities and Stockholders' Deficiency
Current Liabilities
Accounts payable	$	607,395		$	784,832
Convertible promissory notes		6,669,000			5,624,000
Advances payable		100,000			100,000
Accrued dividends		3,363,015			2,568,789
Payroll liabilities		157,035			31,407
Accrued liabilities		1,430,995			717,253
Total current liabilities		12,327,440			9,826,281
Convertible promissory notes, net of current maturities		707,027			-
Total liabilities		13,034,467			9,826,281
Commitments and contingencies
Redeemable convertible preferred stock – $0.001 par value
Series C – liquidation preference of $8,723,271 and $8,441,231, at September 30, 2014 and 2013, respectively, 10,000,000 shares designated, 7,344,792 shares issued and outstanding at September 30, 2014 and 2013		6,860,823			6,860,823
Series C-2 – liquidation preference of $8,093,071 and $7,580,885, at September 30, 2014 and 2013, respectively, 18,000,000 shares designated, 13,338,182 shares issued and outstanding at September 30, 2014 and 2013		6,352,052			6,352,052
Total redeemable convertible preferred stock		13,212,875			13,212,875
Stockholders' Deficiency
Convertible preferred stock – $0.001 par value, 35,250,000 shares authorized
Series A – liquidation preference of $669,453, 750,000 shares designated, 669,453 shares issued and outstanding at September 30, 2014 and 2013		669,453			669,453
Series B – liquidation preference of $13,617,853, 6,500,000 shares designated, 2,974,803 shares issued and outstanding at September 30, 2014 and 2013		13,617,853			13,617,853
Common stock – $0.001 par value
60,000,000 shares authorized, 4,041,584 shares issued and outstanding at September 30, 2014 and 2013		4,042			4,042
Additional paid-in capital		322,260			235,038
Accumulated deficit		(40,604,489	)		(37,312,651	)
Total stockholders' deficiency		(25,990,881	)		(22,786,265	)
Total Liabilities and Stockholders' Deficiency	$	256,461		$	252,891

The accompanying notes are an integral part of these financial statements

F-2

Aperion Biologics, Inc.

Statements of Operations

Years Ended September 30, 2014 and 2013

	2014			2013
Revenue	$	-		$	-
Costs and expenses:
Clinical studies		296,508			870,302
Research and development		59,245			417,844
Sales, general, and administrative		1,496,528			2,101,434
Total costs and expenses		1,852,281			3,389,580
Operating loss		(1,852,281	)		(3,389,580	)
Other income (expense):
Interest income		-			20
Interest expense		(645,331	)		(410,400	)
Total other expense		(645,331	)		(410,380	)
Net loss		(2,497,612	)		(3,799,960	)
Preferred stock: Series C convertible contractual dividends		(282,040	)		(282,040	)
Series C convertible deemed dividends		-			(838,753	)
Series C-2 convertible contractual dividends		(512,186	)		(529,141	)
Loss attributable to common stockholders	$	(3,291,838	)	$	(5,449,894	)
Per share data:
Net loss - basic and diluted	$	(0.62	)	$	(0.94	)
Series C convertible contractual dividends		(0.07	)		(0.07	)
Series C convertible deemed dividends		-			(0.21	)
Series C-2 convertible contractual dividends		(0.12	)		(0.13	)
Net loss attributable to common stockholders - basic and diluted	$	(0.81	)	$	(1.35	)
Weighted average number of common shares outstanding - basic and diluted		4,041,584			4,034,510

The accompanying notes are an integral part of these financial statements

F-3

Aperion Biologics, Inc.

Statements of Changes in Stockholders' Deficiency

Years Ended September 30, 2014 and 2013

	Preferred Stock
	Series A				Series B				Common Stock				Additional
													Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance at September 30, 2012		669,453	$	669,453		2,974,803	$	13,617,853		4,028,106	$	4,028	$	131,442	$	(31,862,757	)	$	(17,439,981	)
Exercise of stock options		-		-		-		-		13,478		14		642		-			656
Stock-based compensation		-		-		-		-		-		-		102,954		-			102,954
Preferred stock dividends		-		-		-		-		-		-		-		(811,181	)		(811,181	)
Preferred stock accretion		-		-		-		-		-		-		-		(838,753	)		(838,753	)
Net loss – year ended September 30, 2013		-		-		-		-		-		-		-		(3,799,960	)		(3,799,960	)
Balance at September 30, 2013		669,453		669,453		2,974,803		13,617,853		4,041,584		4,042		235,038		(37,312,651	)		(22,786,265	)
Stock-based compensation		-		-		-		-		-		-		87,222		-			87,222
Preferred stock dividends		-		-		-		-		-		-		-		(794,226	)		(794,226	)
Net loss – year ended September 30, 2014		-		-		-		-		-		-		-		(2,497,612	)		(2,497,612	)
Balance at September 30, 2014		669,453	$	669,453		2,974,803	$	13,617,853		4,041,584	$	4,042	$	322,260	$	(40,604,489	)	$	(25,990,881	)

The accompanying notes are an integral part of these financial statements

F-4

Aperion Biologics, Inc.

Statements of Cash Flows

Years Ended September 30, 2014 and 2013

	2014			2013
Cash Flows From Operating Activities
Net loss	$	(2,497,612	)	$	(3,799,960	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		87,222			102,954
Depreciation and amortization		33,928			59,274
Changes in operating assets and liabilities:
Inventory		121			42,215
Prepaid expenses and other current assets		91,139			(39,581	)
Accounts payable		(177,437	)		326,949
Accrued liabilities		839,370			512,555
Net cash used in operating activities		(1,623,269	)		(2,795,594	)
Cash Flows From Investing Activities
Purchase of property and equipment		(42,115	)		(15,876	)
Net cash used in investing activities		(42,115	)		(15,876	)
Cash Flows From Financing Activities
Proceeds from the issuance of convertible promissory notes		1,807,027			2,374,000
Payments of convertible promissory notes		(55,000	)		-
Stock options exercised		-			656
Net cash provided by financing activities		1,752,027			2,374,656
Net increase (decrease) in cash		86,643			(436,814	)
Cash at beginning of period		38,126			474,940
Cash at end of period	$	124,769		$	38,126
Supplemental Disclosures of Cash Flow Information
Cash paid for interest	$	3,190		$	-
Supplemental Disclosures of Noncash Flow Information
Accrual of preferred stock dividends	$	794,226		$	811,181
Accretion of preferred stock to liquidation value	$	-		$	838,753

The accompanying notes are an integral part of these financial statements

F-5

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

 1. Summary of Significant Accounting Policies

Business Organization and Nature of Operations

Aperion Biologics, Inc. ("ABI" or the "Company") is a clinical-stage medical device company that develops patented technology to make animal tissues usable for human medical applications without causing rejection by the body.  The core platform technology is an enzymatic stripping of the key carbohydrate antigens followed by a unique conversion process that both "humanizes" and sterilizes the tissues without unduly affecting their biomechanical or biological properties.

The Company's primary activities since its inception have been the development and implementation of its business plans, performing research on its platform technology, conducting clinical trials on its products in both animals and humans, pursuing regulatory approvals to market its product in US and international markets, and raising capital.  To date, the Company has not generated any material revenues from operations.

The Company was founded in October 1996 under the name CrossCart, Inc.  The Company changed its name to Aperion Biologics, Inc. (a Delaware corporation) in May 2009.  To date, the Company has funded its business with the proceeds of private placements of equity and debt securities.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates. The Company's significant estimates and assumptions include the fair value of the Company's stock, stock-based compensation, estimated useful lives of depreciable assets, and the valuation allowance relating to the Company's deferred tax assets.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of September 30, 2014 and 2013, the Company did not have any cash equivalents.

Inventory

Inventory is stated at the lower of cost (first-in, first-out method) or market (net realizable value).

Depreciation and Amortization

Property and equipment are stated at cost.  Depreciation and amortization are calculated on the straight-line method based on the following estimated useful lives:  machinery and equipment – 5 years; leasehold improvements – 4 years; computer equipment and software – 3 years; and furniture and fixtures – 5 years.  Amortization of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements.

Repairs and maintenance are expensed as incurred.  Major replacements and betterments are capitalized.

F-6

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

1.Summary of Significant Accounting Policies (Continued)

Impairment of Long-Lived Assets

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition.  In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets.  The factors considered by management in performing this assessment include current operating results, trends and prospects, and the effects of obsolescence, demand, competition, and other economic factors.  The Company has not identified any such impairment loss during the years ended September 30, 2014 and 2013.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities.  The components of the deferred tax assets and liabilities are individually classified as current and noncurrent based on their characteristics.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized.  As of September 30, 2014 and 2013, management evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and determined that it is more likely than not that the Company will not recognize the benefits of the deferred tax assets.  As a result, a full valuation allowance was recorded.  The valuation allowance increased by approximately $851,000 and $1,651,000 during the years ended September 30, 2014 and 2013, respectively.

U.S. GAAP prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company's financial statements as of September 30, 2014 and 2013. The Company does not expect any significant changes in the unrecognized tax benefits within twelve months of the reporting date.

The Company classifies interest expense and any related penalties related to income tax uncertainties as a component of income tax expense.  No interest or penalties have been recognized during the years ended September 30, 2014 and 2013.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur.  The Company's management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

F-7

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

1.Summary of Significant Accounting Policies (Continued)

If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.

Contingencies (Continued)

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Research and Development

Research and development costs are charged to operations when incurred.  The amounts charged in 2014 and 2013 were $59,245 and $417,844, respectively.

Stock-Based Payments

Stock-based compensation expense for all stock-based payment awards is based on the estimated fair value of the award. For employees and directors, the award is measured on the grant date.  For non-employees, the award is measured on the grant date and is then remeasured at each vesting date and financial reporting date.  The Company recognizes the estimated fair value of the award as compensation cost over the requisite service period of the award, which is generally the option vesting term.  The Company generally issues new shares of Common Stock to satisfy option and warrant exercises.

Fair Value Measurement

The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 "Fair Value Measurements and Disclosures" ("ASC 820") which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

The fair value of the Company's cash and accounts payable approximates the carrying amounts of such instruments due to their short maturity.  The fair value of the convertible promissory notes approximates the carrying amount because the rate and terms currently available to the Company approximate the rate and terms on the existing debt.

F-8

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

1.Summary of Significant Accounting Policies (Continued)

Convertible Instruments

U.S. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional as that term is described under applicable U.S. GAAP.

When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.  Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The Company also records, when necessary, deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred shares.

Preferred Stock

The Company applies the guidance enumerated in Distinguishing Liabilities from Equity Topic of the Accounting Standards Codification (ASC 480) when determining the classification and measurement of preferred stock. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value.  The Company classifies conditionally redeemable preferred shares, which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company's control, as temporary equity.  At all other times, the Company classifies its preferred shares in stockholders' deficiency.

Stock Warrants

The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) provides the Company with a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement) provided that such contracts are indexed to the Company's own stock. The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company's control), or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses classification of its stock warrants at each reporting date to determine whether a change in classification between assets and liabilities is required.  The Company's warrants to purchase preferred and common stock were issued in connection with certain of its convertible promissory notes and preferred stock. The Company evaluated the common stock warrants to assess their proper classification using the applicable criteria enumerated under U. S. GAAP and determined that the common stock warrants meet the criteria for equity classification in the balance sheet as of September 30, 2014 and 2013.  The Company evaluated the Series C and Series C2 preferred stock warrants to assess their proper classification using the applicable criteria enumerated under U. S. GAAP and determined that the Series C and Series C2 preferred stock warrants meet the criteria for liability classification, as they are exercisable into a redeemable security, as of September 30, 2014 and 2013.  These warrants are marked to market at each reporting period.  The Company has determined that the value of such liabilities are de minimus.

F-9

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

1.Summary of Significant Accounting Policies (Continued)

Sequencing Policy

The Company follows a sequencing policy for which in the event partial reclassification of contracts subject to ASC 815-40-25 is necessary, due to the Company's inability to demonstrate it has sufficient authorized shares, shares will be allocated on the basis of earliest issuance date of potentially dilutive instruments with the earliest grants receiving first allocation of shares. See Note 6.

Net Earnings (Loss) Per Share of Common Stock

Basic net earnings (loss) per share is computed by dividing net earnings (loss) attributable to Common Stockholders by the weighted average number of common shares outstanding during the period.  Diluted net earnings (loss) per share reflects the potential dilution that could occur if securities or other instruments to issue Common Stock were exercised or converted into Common Stock.  Potentially dilutive securities are excluded from the computation of diluted net earnings (loss) per share if their inclusion would be anti-dilutive and consist of the following:

	September 30,
	2014		2013
Options		6,260,247		5,602,747
Warrants to purchase common stock		10,016,592		10,016,592
Warrants to purchase preferred stock		2,126,250		2,126,250
Series A convertible preferred stock		669,453		669,453
Series B convertible preferred stock		4,238,070		4,238,070
Series C convertible preferred stock		11,624,713		10,976,345
Series C-2 convertible preferred stock		18,016,044		16,838,605
Convertible promissory notes, including accrued interest		22,555,764		11,865,172
Total potentially dilutive shares		75,507,133		62,333,234

Recently Issued Accounting Pronouncements

In June 2014, the FASB issued ASU No. 2014-10, "Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation," ("ASU 2014-10"). ASU 2014-10 removes the definition of a development stage entity from the Master Glossary of the ASC, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, ASU 2014-10 eliminates the requirements for development stage entities to (1) present inception-to-date information in the statements of operations, cash flows, and stockholders' equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The Company adopted ASU 2014-10 during the year ended September 30, 2014 which resulted in the removal of previously required development stage disclosures. The Company's activities are subject to significant risks and uncertainties, which are detailed in Note 2.

F-10

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

1.Summary of Significant Accounting Policies (Continued)

Recently Issued Accounting Pronouncements (Continued)

In June 2014, the FASB issued ASU No. 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period," ("ASU 2014-12"). The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC Topic No. 718, "Compensation - Stock Compensation" as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in ASU 2014-12 either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company does not anticipate that the adoption of ASU 2014-12 will have a material impact on its financial statements.

In August 2014, the FASB issued ASU No. 2014-15,"Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern" ("ASU 2014-15"). ASU 2014-15, which is effective for annual reporting periods ending after December 15, 2016, extends the responsibility for performing the going-concern assessment to management and contains guidance on how to perform a going-concern assessment and when going-concern disclosures would be required under U.S. GAAP. The Company does not anticipate that the adoption of ASU 2014-12 will have a material impact on its financial statements. Management's evaluations regarding the events and conditions that raise substantial doubt regarding the Company's ability to continue as a going concern have been disclosed in Note 2.

Subsequent Events

Management has evaluated subsequent events to determine if events or transactions occurring through September 21, 2015, the date on which the financial statements were available to be issued require adjustment or disclosure in the Company's financial statements.

2.Going Concern and Management's Liquidity Plans

As of September 30, 2014, the Company had working capital deficit and a stockholders' deficiency of $12,132,432 and $25,990,881, respectively. During the year ended September 30, 2014, the Company incurred a net loss of $2,497,612. The Company has not generated any material revenues and has incurred net losses since inception. Futhermore, as of the date of this report, the Company has $6,724,000 of convertible promissory notes that have matured and are in default. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

The Company recognizes it will need to raise additional capital in order to meet its obligations and execute its business plan for at least the next twelve month period. There is no assurance that additional financing will be available when needed or that management will be able to obtain such financing on terms acceptable to the Company and that the Company will become profitable and generate positive operating cash flow in the future. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead or scale back its business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

Accordingly, the accompanying financial statements have been prepared in conformity with U.S GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily represent realizable or settlement values. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

F-11

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

3.Inventory

Inventory consists of alpha-galactosidase, a raw material enzyme used in the manufacturing of the Company's core platform technology.

4.Property and Equipment

Property and equipment consist of the following:

	September 30,
	2014		2013
Machinery and equipment	$	248,731	$	206,616
Leasehold improvements		126,768		126,768
Computer equipment and software		56,735		56,735
Furniture and fixtures		23,122		23,122
		455,356		413,241
Less accumulated depreciation and amortization		393,903		359,975
Net property and equipment	$	61,453	$	53,266

Depreciation and amortization expense for the years ended September 30, 2014 and 2013 was $33,928 and $59,274, respectively.

5.Advance Payable

In 2007, the Company received a $100,000 advance payable from a potential strategic partner, which is due on demand.  This obligation bears interest of 9.5% per annum. At September 30, 2014 and 2013 the balance of this note was $100,000.  Accrued interest payable related to the note totaled $65,602 and $56,102 at September 30, 2014 and 2013, respectively, and is included as accrued liabilities on the balance sheets.

6.Convertible Promissory Notes

Related Parties

Dr. Kevin Stone, a director and majority beneficial shareholder of the Company, is the managing member and a controlling person of CrossCart LLC, a California limited liability company (CrossCart).  The Company issued convertible promissory notes to CrossCart and its predecessor-in-interest, Lurie Investments, Inc., totaling $1,120,015 during the year ended September 30, 2014 and $2,150,000 during the year ended September 30, 2013.  These notes bear interest of 8.0% per annum, which increases to 10% per annum if an event of default occurs. These notes have thirty days to two year terms and mature on various dates through May 2016. Interest is being accrued at the default rate of 10% on notes that have passed their maturity date. At September 30, 2014 and 2013, the balance of these notes totaled $6,520,015 and $5,400,000, respectively.  Accrued interest payable related to these notes totaled $1,093,186 and $493,428, at September 30, 2014 and 2013, respectively, and is included as accrued liabilities on the balance sheets.

Bruce Stone is the brother of Dr. Kevin Stone.  The Company issued a convertible promissory note to Bruce Stone in the amount of $50,000 during the year ended September 30, 2014.  This note bears interest of 8.0% per annum, which increases to 10% per annum if an event of default occurs. At September 30, 2014, the balance of this note totaled $50,000.  Accrued interest payable related to this note totaled $1,433 at September 30, 2014 and is included as accrued liabilities on the balance sheets.

F-12

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

6.Convertible Promissory Notes (Continued)

Related Parties (Continued)

As of September 30, 2014, the Company had $3,750,000 and $2,820,015 issued and outstanding principal amount of convertible promissory notes, plus $802,972 and $291,647 in accrued interest, that are convertible into Series C2 and Series D convertible redeemable preferred stock, respectively. As of the date of this report, Series D was not effected. As of September 30, 2013, the Company had $3,750,000 issued and outstanding principal amount, plus $430,056 in accrued interest, and $1,650,000 issued and outstanding principal amount, plus $63,372 in accrued interest, of convertible promissory notes that are convertible into Series C2 and Series D convertible redeemable preferred stock, respectively. The Series C2 Notes are convertible at $0.48 per share, subject to adjustment for stock-splits and similar transactions.  All of these notes are convertible at the option of the holder. The Series D Notes are convertible at $0.25 per share, subject to adjustment for stock splits or similar transactions.  Of the notes convertible into Series D convertible redeemable preferred stock, $1,050,000 are mandatorily convertible upon a qualified financing (as defined) and at the option of the holder and $1,770,015 are convertible solely at the option of the holder.

If all convertible instruments were to convert at the same time, the Company would not have sufficient common shares authorized. All of the notes contain language that provide that the conversion of the notes may be delayed until the proper number of shares is authorized and reserved, with the Company obligated to use its best efforts to cause a sufficient number of shares to be authorized and reserved as soon as practicable.

Unrelated Parties

The Company issued convertible promissory notes totaling $637,012 during the year ended September 30, 2014 and $224,000 during the year ended September 30, 2013.  These notes bear interest of 8.0% per annum, which increases to 10% per annum if an event of default occurs, and mature at various dates through September 3, 2016. After maturity, outstanding principal amount of the notes may be converted into shares of Series C-2 or Series D Convertible Preferred Stock. As of the date of this report, Series D was not effected.  During the year ended September 30, 2014, $55,000 of these notes was paid in full. At September 30, 2014 and 2013 the balance of these notes totaled $806,012 and $224,000, respectively.  Accrued interest payable related to the notes totaled $39,535 and $8,138, at September 30, 2014 and 2013, respectively, and is included as accrued liabilities on the balance sheets.

As of September 30, 2014, the Company had $806,012 issued and outstanding principal amount of convertible promissory notes, plus $39,535 in accrued interest, that are convertible into Series D preferred stock.  As of September 30, 2013, the Company had $224,000 issued and outstanding principal amount, plus $8,138 in accrued interest, of convertible promissory notes convertible into Series D preferred stock. The Series D notes are convertible at $0.25 per share, subject to adjustment for stock-splits and similar transactions.  All of these notes are convertible at the option of the holder.

If all convertible instruments were to convert at the same time, the Company would not have sufficient common shares authorized. All of the notes contain language that provide that the conversion of the Notes may be delayed until the proper number of shares is authorized and reserved, with the Company obligated to use its best efforts to cause a sufficient number of shares to be authorized and reserved as soon as practicable.

7.Stockholders' Deficiency

According to the Restated Certificate of Incorporation, as amended on May 18, 2011, the Company is authorized to issue 95,250,000 shares of all classes of stock, consisting of (1) 60,000,000 shares of common stock, par value $0.001 per share, and (2) 35,250,000 shares of preferred stock, par value $0.001 per share.

F-13

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

7.Stockholders' Deficiency (Continued)

Preferred Stock

Of the 35,250,000 shares of preferred stock at September 30, 2014 and 2013, 750,000 shares are designated as Series A convertible preferred stock, 6,500,000 shares are designated as Series B convertible preferred stock, 10,000,000 shares are designated as Series C convertible preferred stock and 18,000,000 are designated as Series C-2 convertible preferred stock.

The Series A convertible preferred stock, Series B convertible preferred stock, Series C convertible redeemable preferred stock and Series C2 convertible redeemable preferred stock are entitled to vote on an as-converted basis together with the holders of common stock as a single class, except as provided by law or other provisions of the certificate of incorporation. 

The Series C and C-2 convertible preferred stock have a liquidation preference over the Series B convertible preferred stock.  The Series B convertible preferred stock has a liquidation preference over the Series A convertible preferred stock and would share in assets on a pro-rata basis.  The Series A convertible preferred stock has a liquidation preference over common stock and would share in assets on a pro-rata basis.

The preferred stock is subject to mandatory conversion upon the occurrence of either (a) the closing of the sales of shares of common stock at a price of at least $2.40 per share (subject to adjustment) in a public offering pursuant to the Securities Act of 1933, resulting in at least $50 million in gross proceeds to the company or (b) upon the majority of vote of the holders of the Series C preferred stock (voting together as a class on an as-converted basis.)

Series A Convertible Preferred Stock

As of September 30, 2014 and 2013, 669,453 shares of $0.001 par value Series A convertible preferred stock were issued and outstanding.  The holders of Series A convertible preferred stock are entitled to receive, out of any funds legally available, dividends at the rate of 8% of the Series A original issue price per share per annum when and as declared by the Company's Board of Directors (the "Board").  Each share of Series A convertible preferred stock may be converted at the option of the holder into the number of shares of common stock determined by dividing the Series A original issue price by the Series A conversion price of $1.00. As Series A Shares are not subject to redemption, they are classified in stockholders' deficiency. From inception through the date of this report, the Board has not declared any Series A convertible preferred stock dividends.

Series B Convertible Preferred Stock

As of September 30, 2014 and 2013, 2,974,803 shares of $0.001 par value of Series B convertible preferred stock were issued and outstanding.  The holders of Series B convertible preferred stock are entitled to receive, out of any funds legally available, dividends at the rate of 8% of the Series B original issue price per share per annum when and as declared by the Company's Board.  Each share of Series B convertible preferred stock may be converted at the option of the holder into the number of shares of common stock determined by dividing the Series B original issue price by the Series B conversion price of $3.21. As Series B Shares are not subject to redemption, they are classified in stockholders' deficiency. From inception through the date of this report, the Board has not declared any Series B convertible preferred stock dividends.

F-14

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

7.Stockholders' Deficiency (Continued)

Series C Convertible Redeemable Preferred Stock

As of September 30, 2014 and 2013, 7,344,792 shares of $0.001 par value Series C convertible redeemable preferred stock were issued and outstanding.  Subsequent to April 29, 2013, the holders of a majority of the outstanding shares of Series C preferred stock may demand the Company redeem all or any portion of such stockholders' shares of Series C convertible redeemable preferred stock for a cash amount per share equal to the greater of two times the Series C original issue price plus any accrued unpaid dividends, whether or not declared, or the per share amount that would have been payable had all shares of Series C convertible redeemable preferred stock been converted into common stock.  Series C convertible preferred stock accrues dividends at the rate of 8% of the original Series C issue price from the date of issuance.  Each share of Series C convertible preferred stock may be converted at the option of the holder into shares of common stock at an initial conversion rate of $0.48 per share. The conversion rate is subject to adjustment for certain dilutive issuances of common stock and equivalents.

Since the Series C Shares are redeemable in certain circumstances which are considered to be outside the control of the Company, such shares have been classified as temporary equity.  The Series C shares were assessed under ASC 480, and determined that the contingency is not within the scope of ASC 480 because the shares are convertible at the option of the investor prior to redemption date and are not considered mandatorily redeemable. Because the preferred stock may be converted into common stock by the holder at any time, classification as mezzanine equity securities is required under SEC guidance because the redemption or conversion is at the option of the holder.  The Company has also analyzed the conversion option related to the Series C Shares and deemed that since an active market for such shares does not exist, the conversion option was not deemed readily convertible to cash.  Accordingly, the conversion option did not qualify as a derivative and was not bifurcated from the host instrument.

The Company has calculated accretion using the interest method, at a rate of 8%, through the earliest redemption date of April 30, 2013. The value of the shares is being accreted to the redemption value at April 29, 2013.  During the year ended September 30, 2013, the Company recorded accretion as a deemed dividend of $838,753. The accumulated accretion as of September 30, 2014 and 2013 totaled $3,525,500.

F-15

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

7.Stockholders' Deficiency (Continued)

Series C-2 Convertible Redeemable Preferred Stock

As of September 30, 2014 and 2013, 13,338,182 shares of $0.001 par value redeemable preferred stock were outstanding).  Subsequent to April 29, 2013, the holders of a majority of the outstanding shares of Series C-2 convertible redeemable preferred stock may demand the Company redeem all or any portion of such stockholders' shares of Series C-2 convertible redeemable preferred stock for a cash amount per share equal to the greater of Series C original issue price plus, any accrued unpaid dividends, whether or not declared, or the per share amount that would have been payable had all shares of Series C convertible redeemable preferred stock been converted into common stock.  Series C-2 convertible redeemable preferred stock accrues dividends at the rate of 8% of the original Series C issue price from the date of issuance.  Each share of Series C-2 convertible redeemable preferred stock may be converted at the option of the holder into shares of common stock at an initial conversion rate of $0.48 per share. The conversion rate is subject to adjustment for certain dilutive issuances of common stock and equivalents.

Since the Series C Shares are redeemable in certain circumstances which are considered to be outside the control of the Company, such shares have been classified as temporary equity.  The Series C shares were assessed under ASC 480, and determined that the contingency is not within the scope of ASC 480 because the shares are convertible at the option of the investor prior to redemption date and are not considered mandatorily redeemable. Because the preferred stock may be converted into common stock by the holder at any time, classification as mezzanine equity securities is required under SEC guidance because the redemption or conversion is at the option of the holder.  The Company has also analyzed the conversion option related to the Series C Shares and deemed that since an active market for such shares does not exist, the conversion option was not deemed readily convertible to cash.  Accordingly, the conversion option did not qualify as a derivative and was not bifurcated from the host instrument.

Preferred Stock Dividends

No dividends with respect to the Series A preferred stock and Series B preferred stock accrue.  At the discretion of the Board, dividends may be paid at the rate of 8% of the Series A and Series B original issue price.

Series C and Series C-2 preferred stock accrue cumulative dividends at the rate of 8% per annum of the original Series C issue price per share from the date of issuance.  Dividends accrue whether or not such dividends are earned or declared and whether or not sufficient funds are legally available.

Common Stock

Common stock stockholders have voting rights equal to one vote for each share of common stock held and will participate in dividends declared by the Board, subject to preferences of preferred stock stockholders.  Similarly, common stock stockholders share ratably in all distributions upon liquidation of the Company subject to preferences of preferred stock stockholders.

On November 17, 2012, an employee of the Company exercised options to purchase 5,618 shares of common stock in exchange for cash proceeds of $577, which was the exercise price in accordance with the applicable employee stock option agreement.

F-16

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

7.Stockholders' Deficiency (Continued)

Common Stock (Continued)

On July 22, 2013, an employee of the Company exercised options to purchase 7,860 shares of common stock in exchange for cash proceeds of $79, which was the exercise price in accordance with the applicable employee stock option agreement.

8.Stock Options

The Company's 2008 Stock – Option/Stock Issuance Plan (the "Plan") authorizes the grant of incentive stock options to employees, directors, and consultants of the Company.  As of September 30, 2014 and 2013, a total of 7,936,522 and 7,950,000 shares, respectively, of common stock of the Company have been reserved for issuance under the Plan and as of September 30, 2014, 2,076,275 shares were available for issuance.  Not included in this reserve are certain options, which were granted prior to and are outside of the 2008 Plan, and, as of September 30, 2014 and 2013, the number of shares of common stock issued outside the Plan totaled 400,000 and 600,000, respectively.  Awards that are forfeited generally become available for grant under the Plan.  Shares issued under the Plan are subject to transfer restrictions.

Stock options expire ten years from grant date and generally vest within two to four years with an exercise price fixed by the Plan administrator, but not less than the fair market value of the Company's shares of common stock on the option grant date.  During the year ended September 30, 2014, the Company issued 657,500 stock options to employees and consultants with an exercise price ranging from of $0.016 to $0.020 and fair values of $0.011 and $0.012 per share, respectively. The stock options granted in 2014 are subject to vesting over two to four years and have a term of ten years. During the year ended September 30, 2013, the Company issued 983,000 stock options to employees and consultants with an exercise price ranging from of $0.016 to $0.22 and fair values of $0.145 and $0.164 per share, respectively. The stock options granted in 2013 are subject to vesting over two to four years and have a term of ten years.

During the years ended September 30, 2014 and 2013, 0 and 226,522 options were forfeited, respectively, due to the termination of employees. The forfeited options were added back to the available pool for future issuance.

The following table represents stock option activity for the years ended September 30, 2014 and 2013:

						Weighted Average
	Stock Options					Exercise Price				Fair Value		Contractual		Aggregate
	Outstanding			Exercisable		Outstanding		Exercisable		Vested		Life (Years)		Intrinsic Value
Balance - September 30, 2012		4,859,747			2,901,883	$	0.10	$	0.08	$	0.08	$	10.00
Granted		983,000					0.10
Exercised		(13,478	)				0.05
Forfeited		(226,522	)				0.42
Balance - September 30, 2013		5,602,747			3,616,858		0.09		0.08		0.08		10.00
Granted		657,500					0.02
Exercised		-					-
Forfeited		-					-
Balance - September 30, 2014		6,260,247			5,177,077	$	0.08	$	0.08	$	0.08		10.00	$	8,854

F-17

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

8.Stock Options (Continued)

The following table summarizes information on stock options outstanding and exercisable as of September 30, 2014:

Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Term (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.010		1,775,747		4.75	$	0.010		1,765,747	$	0.010
	0.016		1,220,500		9.04		0.016		771,690		0.016
	0.103		2,189,000		7.08		0.103		1,945,879		0.103
	0.220		975,000		7.81		0.220		593,761		0.220
$	0.450		100,000		3.37	$	0.450		100,000	$	0.450
			6,260,247						5,177,077

On December 23, 2013, the Company extended the expiration date of 100,000 options to purchase common stock (exercise price of $0.45 per share) granted to Dr. Kevin Stone from January 31, 2014 to February 11, 2018. This action was taken by unanimous written consent of the Board of Directors of the Company.  The Company has evaluated the compensation expense of these extensions and judged them to be immaterial.

Stock-Based Compensation

For the years ended September 30, 2014 and 2013, stock-based compensation related to stock options totaled approximately $87,200 and $102,900, respectively.  As of September 30, 2014, total unrecognized stock option compensation expense is $77,353 which will be recognized as those options vest over a period of approximately four years. The amount of future stock option compensation expense could be affected by any future option grants or by any option holders leaving the Company before their grants are fully vested.

The fair value of each option grant is estimated at the date of grant using the Black-Scholes pricing model.  Volatility is based on average historical volatilities for public companies in similar industries over the expected term of the options.  The expected term of employee options represents the period of time that options granted are expected to be outstanding using the "plain vanilla" method.  For non-employee options, the contractual term is used. The risk-free rate is for periods within the contractual life of options and is based on the United States Treasury yield curve in effect at the time of grant. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company's forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the number of vested options as a percentage of total options outstanding. If the Company's actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the forfeiture rate in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

The weighted-average Black-Scholes assumptions are as follows:

	September 30,
	2014			2013
Term	5.5 to 10 years			7 to 10 years
Risk-free interest rate		1.07	%		1.07	%
Volatility		49.80	%		57.80	%
Expected dividend yield		-			-
Forfeiture rate		-			-

F-18

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

9.Warrants

Common Stock

During 2008, the Company issued warrants to purchase shares of common stock.  The warrants are exercisable through June 9, 2018.  The number of shares of common stock issuable under outstanding stock warrants at the end of September 30, 2014 and 2013 totaled 10,016,592 at an exercise price of $0.01 per share.

The following table represents common stock warrant activity for the years ended September 30, 2014 and 2013:

					Weighted Average
	Stock Options				Exercise Price				Fair Value		Contractual		Aggregate
	Outstanding		Exercisable		Outstanding		Exercisable		Vested		Life (Years)		Intrinsic Value
Balance - September 30, 2012		10,016,592		10,016,592	$	0.01	$	0.01	$	0.01	$	10.00
Granted		-				-
Exercised		-				-
Cancelled/forfeited		-				-
Balance - September 30, 2013		10,016,592		10,016,592		0.01		0.01		0.01		10.00
Granted		-				-
Exercised		-				-
Cancelled/forfeited		-				-
Balance - September 30, 2014		10,016,592		10,016,592	$	0.01	$	0.01	$	0.01		10.00	$	60,100

Series C and C-2 Preferred Stock

During 2006 through 2013, the Company issued warrants to purchase shares of Series C and C-2 preferred stock.  The warrants expire at various dates through 2023.  The number of shares of Series C preferred stock issuable under outstanding warrants at the end of September 30, 2014 and 2013 totaled 954,375 at an exercise price of $0.48 per share.  The number of shares of Series C-2 preferred stock issuable under outstanding warrants at the end of September 30, 2014 and 2013 totaled 1,171,875 at an exercise price of $0.48 per share.

In December 2012, the Company issued 156,250 warrants to CrossCart in connection with issuance of a convertible note. The warrants have an exercise price of $0.48 and a fair value of $0.216 per warrant. The warrants expire in ten years from date of issuance. The Company accounted for this warrant issuance as a liability when issued.  The value of the derivative is determined to be de minimus.

The following table represents Series C and C-2 preferred stock warrant activity for the years ended September 30, 2014 and 2013:

					Weighted Average
	Stock Options				Exercise Price				Fair Value		Contractual		Aggregate
	Outstanding		Exercisable		Outstanding		Exercisable		Vested		Life (Years)		Intrinsic Value
Balance - September 30, 2012		1,970,000		1,970,000	$	0.48	$	0.48	$	0.48	$	10.00
Granted		156,250				0.48
Exercised		-				-
Cancelled/forfeited		-				-
Balance - September 30, 2013		2,126,250		2,126,250		0.48		0.48		0.48		10.00
Granted		-				-
Exercised		-				-
Cancelled/forfeited		-				-
Balance - September 30, 2014		2,126,250		2,126,250	$	0.48	$	0.48	$	0.48		10.00	$	-

F-19

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

9.Warrants (Continued)

On December 23, 2013 the Company extended  the expiration date on 10,625 warrants to purchase Series C preferred stock (exercise price of $0.48 per share) from January 31, 2014 to July 25, 2017, and on 6,250 warrants to purchase Series C preferred stock (exercise price of $0.48 per share) from January 31, 2014 to August 14, 2017. This action was taken by unanimous written consent of the Board of Directors of the Company.  The Company has evaluated the compensation expense of these extensions and deemed them to be immaterial.

10.Income Taxes

The tax effects of temporary differences that give rise to deferred tax assets are as follows:

	September 30,
	2014			2013
Current
Accrued expenses	$	385,609		$	170,532
Non-current:
Net operating loss carryforward		6,992,613			6,429,889
Research and development credit carryforward		296,589			294,069
Patent costs		125,903			88,721
Property and equipment		10,438			6,942
Stock compensation		64,660			35,004
Total deferred tax asset		7,875,812			7,025,157
Valuation allowance		(7,875,812	)		(7,025,157	)
Deferred tax asset, net of valuation allowance	$			$	- -

A reconciliation of the statutory federal income tax rate to the Company's effective tax rate is as follows:

	Years Ended September 30,
	2014			2013
U.S. statutory federal rate		-34.00	%		-34.00	%
Permanent difference		0.04	%		0.08	%
R&D Tax Credit		-0.10	%		-0.61	%
Change in valuation allowance		34.06	%		43.43	%
True-up/other		0.00	%		-8.90	%
Income tax provision		0.00	%		0.00	%

F-20

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

10.Income Taxes (Continued)

The income tax provision consists of the following:

	Years Ended September 30,
	2014			2013
Federal
Current	$	-		$	-
Deferred		(850,652	)		(1,650,476	)
State and local
Current		-			-
Deferred		-			-
Change in valuation allowance		850,652			1,650,476
Income tax provision (benefit)	$	-		$	-

The Company files a United States federal income tax return, as well as franchise tax returns in various state jurisdictions.  The Company has available at September 30, 2014, an aggregated $20,566,389 of unused operating loss carryforwards that may be applied against future taxable income and that expire on various dates through 2034.

The net operating loss carryforwards will be subject to limitation by Internal Revenue Code Section 382. If an ownership change occurs under Code Section 382, the use of existing NOLs will be limited to an annual limitation. The Company estimates the amount of NOLs generated prior to May 31, 2013 and available to utilize against future taxable income is limited to an annual limitation of $318,655. The Company has not yet determined the exact amount of such limitation, and its estimate of the annual limitation may be subject to change.  Such NOLs will be available to offset future taxable income until utilized.  NOLs generated after June 1, 2013 are fully available to offset taxable income and begin expiring in 2021.

The Company has available at September 30, 2014, an aggregated $296,589 of unused research and development credits that may provide future tax benefits and that expire on various dates through 2034.

F-21

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

11. Commitments and Contingent Liabilities

Lease Commitments

The Company leases office space and certain equipment under noncancellable operating lease agreements.  The leases generally require the Company to pay certain maintenance, insurance, and other operating expenses.  Rental expense under operating leases totaled approximately $35,784 and $35,793 for the years ended September 30, 2014 and 2013, respectively.

Future minimum lease payments under noncancellable operating leases as of September 30, 2014 are as follows:

Year ending September 30,
2015	$	27,336
2016		1,740
2017		1,740
2018		1,740
2019		1,160
	$	33,716

Royalty Commitments

The Company has entered into a license agreement whereby the Company may use certain inventions and discoveries with its products.  The license agreement calls for sales royalties ranging from 1.5% to 1.9% on net sales less than $10 million and 1.2% to 1.6% on net sales greater than $10 million, with a minimum annual royalty of $35,000, which shall be creditable against the sales royalties.  The cumulative royalty payments to be paid under this agreement shall not exceed $3,500,000.  Unless terminated earlier under the provisions of the agreement, the license agreement will remain in force during the life of the patents for the products included in the agreement.  Royalty expense under this agreement totaled $35,000 for years ended September 30, 2014 and 2013.

The Company entered into a license agreement in 2003 which called for the payment of royalties and milestone payments related to the use of a certain enzyme. The Company has paid a total of $190,000 in royalty payments to date under this agreement, and has accrued $50,000 in additional royalty payments contingent upon the delivery of certain product documentation. The Company has not used the licensed enzymes since 2008. In 2014 the Company received a letter from the licensor alleging that Company owed additional payments under the license agreement; however, it is the opinion of the Company that no payments other than the amounts accrued are owed under this contract.

Transaction Bonus

In December 2014, the Company issued a demand note to CrossCart for an aggregate principal amount of $120,000 (the "Demand Note").  As an inducement to enter into the Demand Note, the Company agreed to pay CrossCart a transaction bonus (the "Transaction Bonus") equal to 3% of the gross proceeds received from any control change transaction of the Company.

F-22

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

11.Commitments and Contingent Liabilities (Continued)

Change of Control Bonus

In March 2012, the Company awarded Dr. Stone a bonus (the "Stone Bonus Agreement") in the event of an acquisition of the Company.  An acquisition is defined as a sale, merger, consolidation, transfer or other disposition of all or substantially all (more than 80%) of the Company to another entity (the "Acquisition").  An initial public offering of the Company's Common Stock pursuant to an effective registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), does not constitute an Acquisition.  Dr. Stone is entitled to receive a bonus award in an amount equal to 1% of the proceeds received in the Acquisition that occurred on or prior to the completion of an initial public offering of the Company's stock pursuant to an effective registration statement filed with the Securities and Exchange Commission under the Securities Act.

Management Retention Plan

In December 2013, the Board approved the Management Retention Plan (the "Plan"), pursuant to which certain executives are entitled to receive a bonus upon the occurrence of specified events, provided that the participant must continue as an employee of the Company through the occurrence of the triggering event.  Under the Plan, upon a significant external financing (beyond any financing from CrossCart) or a signing of a significant license or distribution agreement, the executives are to receive bonuses and any deferred compensation that would have been paid had full salaries been in effect from July 2013 through the date of the external financing/licensing agreement.  All unpaid salaries have been accrued in the Company's financial statements as of September 30, 2014 and 2013.

In addition, the Plan also provides that upon closing of a deemed liquidation event specified in the Company's certificate of incorporation or a sale of the Company's securities representing 50% or more of total voting power of outstanding securities, the executives are entitled to receive bonus payments based, in part, on the amount of proceeds received by the Company in the Acquisition.

Transactions with Directors

In December 2013, the Company entered into a letter agreement with two of its directors, to provide certain acquisition bonus payments (the "Director Bonus Agreement"), Under the Director Bonus Agreement, in the event of a deemed liquidation event specified in the Company's certificate of incorporation or a sale of the Company's securities representing 50% or more of total voting power of outstanding securities, the directors are entitled to receive bonus payments based, in part, on the amount of proceeds received by the Company in the Acquisition.

12. Major Supplier

The Company is dependent on a third party to supply inventory.  The loss or significant reduction in product availability from the supplier could have a material adverse effect on the Company.  The Company believes that its relationship with the supplier is satisfactory.

13. Subsequent Events

Payable Settlement

In March 2015, the Company settled an outstanding balance with a supplier totaling $105,000 by issuing a Convertible Promissory Note.

F-23

Aperion Biologics, Inc.

Notes to Financial Statements

September 30, 2014 and 2013

13. Subsequent Events (Continued)

Royalty Agreement Amendment

On September 7, 2015, CrossCart, LLC, Dr. Kevin Stone, and the Company agreed to terminate CrossCart's unlimited royalty on sales of products produced by the Company's proprietary manufacturing process, subject to completion of the Company's initial public offering of securities.  The royalty will now be capped after the first $12,000,000 of sales.

Convertible Promissory Notes

On September 1, 2015, the Company completed the sale of $200,000 of convertible promissory notes.  The notes convert into the Series E preferred stock at $0.27 per share at the option of the holder.  As of the date of this report, the Series E shares have not yet been effected.

Bonus Termination

On September 7, 2015, CrossCart, LLC, Dr. Kevin Stone, and the Company agreed to terminate the Transaction Bonus and Stone Bonus Agreement, subject to completion of the Company's initial public offering of securities.

Lease Commitment

On September 17, 2015 the Company received notice that its offer to extend its commercial lease on the property at 11969 Starcrest Drive was accepted by the landlord for a term beginning October 1, 2015 and ending December 31, 2018.

F-24

Aperion Biologics, Inc.

Financial Statements

June 30, 2015 and 2014

F-25

Aperion Biologics, Inc.

Condensed Balance Sheets

June 30, 2015 and September 30, 2014

	June 30, 2015 (unaudited)			September 30, 2014
Assets
Current Assets
Cash	$	258,564		$	124,769
Inventory		67,684			62,054
Prepaid expenses and other current assets		25,869			8,185
Total current assets		352,117			195,008
Property and Equipment – net		50,079			61,453
Total Assets	$	402,196		$	256,461
Liabilities and Stockholders' Deficiency
Current Liabilities
Accounts payable	$	768,031		$	607,395
Convertible promissory notes		6,976,027			6,669,000
Demand note		120,000			-
Line of credit		60,600			-
Advances payable		100,000			100,000
Accrued dividends		3,958,681			3,363,015
Payroll liabilities		283,932			157,035
Accrued liabilities		2,140,127			1,430,995
Total current liabilities		14,407,398			12,327,440
Convertible promissory notes, net of current maturities		1,180,000			707,027
Total liabilities		15,587,398			13,034,467
Commitments and contingencies
Redeemable convertible preferred stock –  $0.001 par value
Series C – liquidation preference of $8,934,801 and $8,723,271, at June 30, 2015 and September 30, 2014, respectively and outstanding at June 30, 2015 and September 30, 2014		6,860,823			6,860,823
Series C-2 – liquidation preference of $8,477,207 and $8,093,071, at June 30, 2015 and September 30, 2014, respectively 18,000,000 shares designated, 13,338,182 shares issued and outstanding at June 30, 2015 and September 30, 2014		6,352,052			6,352,052
Total redeemable convertible preferred stock		13,212,875			13,212,875
Stockholders' Deficiency
Preferred stock –  $0.001 par value, 35,250,000 authorized
Series A – liquidation preference of $669,453, 750,000 shares designated, 669,453 shares issued and outstanding at June 30, 2015 and September 30, 2014		669,453			669,453
Series B – liquidation preference of $13,617,853, 6,500,000 shares designated, 2,974,803 shares issued and outstanding at June 30, 2015 and September 30, 2014		13,617,853			13,617,853
Common stock – $0.001 par value
60,000,000 shares authorized, 4,091,584 and 4,041,584 shares issued and outstanding at June 30, 2015 and September 30, 2014, respectively		4,042			4,042
Additional paid-in capital		371,533			322,260
Accumulated deficit		(43,060,958	)		(40,604,489	)
Total stockholders' deficiency		(28,398,077	)		(25,990,881	)
Total Liabilities and Stockholders' Deficiency	$	402,196		$	256,461

The accompanying notes are an integral part of these condensed financial statements.

F-26

Aperion Biologics, Inc.

Condensed Statements of Operations

Nine Months Ended June 30, 2015 and 2014
(unaudited)

	2015			2014
Revenue	$	27,000		$	-
Cost of goods sold		12,946			-
Gross profit		14,054			-
Costs and expenses:
Clinical studies		127,063			165,896
Research and development		39,916			56,345
Sales, general, and administrative		1,119,145			1,099,724
Total costs and expenses		1,286,124			1,321,965
Operating loss		(1,272,070	)		(1,321,965	)
Other income (expense):
Royalty expense		(27,600	)		-
Interest expense		(561,132	)		(469,568	)
Total other expense		(588,732	)		(469,568	)
Net loss		(1,860,802	)		(1,791,533	)
Preferred stock:
Series C convertible contractual dividends		(211,530	)		(211,530	)
Series C-2 convertible contractual dividends		(384,136	)		(384,137	)
Loss attributable to common stockholders	$	(2,456,468	)	$	(2,387,200	)
Per share data:
Net loss - basic and diluted	$	(0.46	)	$	(0.44	)
Series C convertible contractual dividends		(0.05	)		(0.05	)
Series C-2 convertible contractual dividends		(0.09	)		(0.10	)
Net loss attributable to common stockholders - basic and diluted	$	(0.60	)	$	(0.59	)
Weighted average number of common shares outstanding - basic and diluted		4,047,650			4,041,584

The accompanying notes are an integral part of these condensed financial statements.

F-27

Aperion Biologics, Inc.

Condensed Statements of Cash Flows

Nine Months Ended June 30, 2015 and 2014
(unaudited)

	2015			2014
Cash Flows From Operating Activities
Net loss	$	(1,860,802	)	$	(1,791,533	)
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation		49,273			64,852
Depreciation and amortization
Changes in operating assets and liabilities: Inventory		11,374			28,861
Inventory		(5,630	)		-
Prepaid expenses and other current assets		(17,685	)		85,737
Accounts payable		265,636			(228,752	)
Accrued liabilities		836,029			583,950
Net cash used in operating activities		(721,805	)		(1,256,885	)
Cash Flows From Investing Activities
Purchase of property and equipment		-			(42,115	)
Net cash used in investing activities		-			(42,115	)
Cash Flows From Financing Activities
Proceeds from the issuance of convertible promissory notes		675,000			1,407,027
Payments of convertible promissory notes		-			(55,000	)
Proceeds from demand note		120,000			-
Proceeds from line of credit		60,600			-
Net cash provided by financing activities		855,600			1,352,027
Net increase in cash		133,795			53,027
Cash at beginning of period		124,769			38,126
Cash at end of period	$	258,564		$	91,153
Supplemental Disclosures of Cash Flow Information
Cash paid for interest	$	-		$	3,190
Supplemental Disclosures of Noncash Flow Information
Accrual of preferred stock dividends	$	595,666		$	595,667
Accretion of preferred stock to liquidation value	$	-		$	-
Conversion of accounts payable to a convertible promissory note	$	105,000		$	-

The accompanying notes are an integral part of these condensed financial statements.

F-28

Aperion Biologics, Inc.

Notes to Condensed Financial Statements

June 30, 2015 and 2014
(unaudited)

1. Summary of Significant Accounting Policies

Business Organization and Nature of Operations

Aperion Biologics, Inc. ("ABI" or the "Company") is a commercial-stage medical device company that develops patented technology to make animal tissues usable for human medical applications without causing rejection by the body.  The core platform technology is an enzymatic stripping of the key carbohydrate antigens followed by a unique conversion process that both "humanizes" and sterilizes the tissues without unduly affecting their biomechanical or biological properties.

The Company's primary activities since its inception have been the development and implementation of its business plans, performing research on its platform technology, conducting clinical trials on its products in both animals and humans, pursuing regulatory approvals to market its product in US and international markets, and raising capital.  The Company has not generated any material revenues from operations.  To date, the Company has funded its business with the proceeds of private placements of equity and debt securities.

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) that are considered necessary for a fair presentation of the condensed financial statements of the Company as of June 30, 2015 and 2014 and for the nine months ended June 30, 2015 and 2014. The results of operations for the nine months ended June 30, 2015 and 2014 are not necessarily indicative of the operating results for the full year ending September 30, 2015, or any other period. These condensed financial statements should be read in conjunction with the audited financial statements and related disclosures of the Company as of September 30, 2014 and for the year then ended, which are included elsewhere in this document.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates. The Company's significant estimates and assumptions include the fair value of the Company's stock, stock-based compensation, estimated useful lives of depreciable assets, and the valuation allowance relating to the Company's deferred tax assets.

Revenue

The Company recognizes revenues when its obligations to a customer are fulfilled relative to a specific product or service offering and all of the following conditions are satisfied: (i) persuasive evidence of an arrangement exists; (ii) the price is fixed or determinable; (iii) collectability is reasonably assured; and (iv) delivery has occurred or services have been rendered.

Revenue from products is recognized when the risks and rewards of ownership have been transferred to the customer, which is upon shipment.

F-29

Aperion Biologics, Inc.

Notes to Condensed Financial Statements

June 30, 2015 and 2014
(unaudited)

1.Summary of Significant Accounting Policies (Continued)

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur.  The Company's management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Research and Development

Research and development costs are charged to operations when incurred.  The amounts charged for the nine months ended June 30, 2015 and 2014 were $39,916 and $56,345, respectively.

Net Earnings (Loss) Per Share of Common Stock

Basic net earnings (loss) per share is computed by dividing net earnings (loss) attributable to Common Stockholders by the weighted average number of common shares outstanding during the period.  Diluted net earnings (loss) per share reflect the potential dilution that could occur if securities or other instruments to issue Common Stock were exercised or converted into Common Stock.  Potentially dilutive securities are excluded from the computation of diluted net earnings (loss) per share if their inclusion would be anti-dilutive and consist of the following:

	June 30,
	2015		2014
Options		6,447,747		6,260,247
Warrants to purchase common stock		10,016,592		10,016,592
Warrants to purchase preferred stock		2,126,250		2,126,250
Series A convertible preferred stock		669,453		669,453
Series B convertible preferred stock		4,238,070		4,238,070
Series C convertible preferred stock		12,191,368		11,543,000
Series C-2 convertible preferred stock		19,045,093		17,867,654
Convertible promissory notes, including accrued interest		30,090,630		23,200,286
Total potentially dilutive shares		84,825,203		75,921,552

F-30

Aperion Biologics, Inc.

Notes to Condensed Financial Statements

June 30, 2015 and 2014
(unaudited)

Summary of Significant Accounting Policies (Continued)

Recently Issued Accounting Pronouncements

Recent accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's financial statements upon adoption.

Subsequent Events

Management has evaluated subsequent events to determine if events or transactions occurring through September 21, 2015, the date on which the condensed financial statements were available to be issued require adjustment or disclosure in the Company's financial statements.

2.Going Concern and Management's Liquidity Plans

As of June 30, 2015, the Company had working capital deficit and a stockholders' deficiency of $14,055,281 and $28,398,077, respectively. During the nine months ended June 30, 2015, the Company incurred a net loss of $1,860,802. The Company has not generated any material revenues and has incurred net losses since inception. Futhermore, as of the date of this report, the Company has $6,724,000 of convertible promissory notes that have matured and are in default. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

The Company recognizes it will need to raise additional capital in order to meet its obligations and execute its business plan for at least the next twelve month period. There is no assurance that additional financing will be available when needed or that management will be able to obtain such financing on terms acceptable to the Company and that the Company will become profitable and generate positive operating cash flow in the future. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead or scale back its business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

Accordingly, the accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily represent realizable or settlement values. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

3.Inventory

Inventory raw materials include alpha-galactosidase, an enzyme used in the manufacturing of the Company's core platform technology, and untreated porcine tissue. Finished goods include porcine tissue that has been sterilized and packaged.

Inventory consists of the following:

	June 30, 2015		September 30, 2014
Raw materials	$	35,156	$	62,084
Finished goods		32,528		-
	$	67,684	$	62,084

F-31

Aperion Biologics, Inc.

Notes to Condensed Financial Statements

June 30, 2015 and 2014
(unaudited)

4.Convertible Promissory Notes

Related Parties

Dr. Kevin Stone, a director and majority beneficial shareholder of the Company, is the managing member and a controlling person of CrossCart LLC, a California limited liability company (CrossCart).  The Company previously issued convertible promissory notes to CrossCart and its predecessor-in-interest, Lurie Investments, Inc. At June 30, 2015 and September 30, 2014, the balance of these notes totaled $6,520,015.  Accrued interest payable related to these notes totaled $1,572,975 and $1,093,186, at June 30, 2015 and September 30, 2014, respectively, and is included as accrued liabilities on the condensed balance sheets.

Bruce Stone is the brother of Dr. Kevin Stone.  The Company issued convertible promissory notes to Bruce Stone totaling $75,000 during the nine months ended June 30, 2015.  These notes bear interest of 8% per annum, which increases to 10% per annum if an event of default occurs. At the noteholder's discretion, outstanding principal and any unpaid interest amounts of the notes may be converted into shares of Series D or Series E convertible preferred stock. At June 30, 2015 and September 30, 2014, the balance of these notes totaled $125,000 and $50,000, respectively.  Accrued interest payable related to these notes totaled $6,407 and $1,433 at June 30, 2015 and September 30, 2014, respectively, and is included as accrued liabilities on the balance sheets.

As of June 30, 2015, the Company had $3,750,000, $2,860,015 and $35,000 issued and outstanding principal amount of convertible promissory notes, plus $1,082,139, $495,485 and $1,758 in accrued interest, that are convertible into Series C2, Series D and Series E convertible redeemable preferred stock, respectively. As of September 30, 2014, the Company had $3,750,000 and $2,820,015 issued and outstanding principal amount of convertible promissory notes, plus $802,972 and $291,647 in accrued interest, that are convertible into Series C2 and Series D convertible redeemable preferred stock, respectively. As of the date of this report, Series D and Series E were not effected. The Series C2 notes are convertible at $0.48 per share, subject to adjustment for stock-splits and similar transactions.  All of these notes are convertible at the option of the holder.  The Series D notes are convertible at $0.25 per share, subject to adjustment.  Of the Series D amount above, $1,050,000 are contingently convertible upon a qualified financing (as defined) and $1,770,015 are convertible at the option of the holder.  The Series E notes are convertible at $0.25/share, subject to adjustment.  All of the Series E notes are convertible at the option of the holder.

If all convertible instruments were to convert at the same time, the Company would not have sufficient common shares authorized. All of the notes contain language that provide that the conversion of the notes may be delayed until the proper number of shares is authorized and reserved, with the Company obligated to use its best efforts to cause a sufficient number of shares to be authorized and reserved as soon as practicable.

Unrelated Parties

The Company issued convertible promissory notes totaling $705,000 during the nine months ended June 30, 2015.  These notes bear interest of 8% per annum, which increases to 10% per annum if an event of default occurs, and mature at various dates through September 3, 2016. At the noteholder's discretion, outstanding principal and any unpaid interest amounts of the notes may be converted into shares of Series D, or Series E convertible preferred stock.  At June 30, 2015 and September 30, 2014 the balance of these notes totaled $1,511,012 and $806,012, respectively.  Accrued interest payable related to the notes totaled $102,649 and $39,535, at June 30, 2015 and September 30, 2014, respectively, and is included as accrued liabilities on the balance sheets.

F-32

Aperion Biologics, Inc.

Notes to Condensed Financial Statements

June 30, 2015 and 2014
(unaudited)

4.Convertible Promissory Notes (Continued)

Unrelated Parties (Continued)

As of June 30, 2015, the Company had $1,106,012 and $405,000 issued and outstanding principal amount of convertible promissory notes, plus $90,732 and $11,917 in accrued interest, that are convertible into Series D and E convertible preferred stock, respectively.  As of September 30, 2014 the Company had issued and outstanding $806,012 of convertible promissory notes, plus $39,535 in accrued interest, that are convertible into Series D convertible preferred stock. The Series D notes are convertible at $0.25 per share, subject to adjustment for stock-splits and similar transactions. -The Series E notes are convertible at $0.25 per share, subject to adjustment for stock-splits and similar transactions.  The Series D and E notes are convertible at the option of the holder.  As of the date this report, the Series D and Series E shares were not effected.

If all convertible instruments were to convert at the same time, the Company would not have sufficient common shares authorized. All of the notes contain language that provide that the conversion of the notes may be delayed until the proper number of shares is authorized and reserved, with the Company obligated to use its best efforts to cause a sufficient number of shares to be authorized and reserved as soon as practicable.

5.Demand Note and Line of Credit

Related Parties

On December 18, 2014 the Company entered into a demand note with CrossCart totaling $120,000.  This note bears interest at 8%, which increases to 10% per annum if an event of default occurs. At June 30, 2015, the balance of this note totaled $120,000.  Accrued interest payable related to this note totaled $5,093 at June 30, 2015 and is included as accrued liabilities on the balance sheet.

During fiscal 2015, the Company entered into a line of credit totaling $100,000 with CrossCart.  This note matures on August 31, 2016 and bears interest at 10% per annum, which increases to 12% per annum if an event of default occurs.  At June 30, 2015, the balance of this note totaled $60,600.  Accrued interest payable related to this note totaled $518 at June 30, 2015 and is included as accrued liabilities on the balance sheet.

6.Stockholders' Deficiency

Preferred Stock Dividends

No dividends with respect to the Series A preferred stock and Series B preferred stock accrue.  At the discretion of the Board, dividends may be paid at the rate of 8% of the Series A and Series B original issue price. From inception through the date of this report, the Board has not declared any Series A or Series B convertible preferred stock dividends.

Series C and Series C-2 preferred stock accrue cumulative dividends at the rate of 8% per annum of the original Series C issue price per share from the date of issuance.  Dividends accrue whether or not such dividends are earned or declared and whether or not sufficient funds are legally available. For the nine months ended June 30, 2015, $211,530 and $384,136 of Series C and Series C-2 dividends, respectively, were accrued and expensed.

Common Stock

On May 28, 2015, the Company issued 50,000 shares of common stock to a consultant with a de minimus value in accordance with a service agreement.

F-33

Aperion Biologics, Inc.

Notes to Condensed Financial Statements

June 30, 2015 and 2014
(unaudited)

7.Stock Options

During the nine months ended June 30, 2015, the Company issued 750,000 stock options to a consultant with an exercise price of $0.020 and a fair value of $0.012 per share. The stock options granted are subject to vesting over two years and have a term of ten years.

During the nine months ended June 30, 2015, 562,500 options were forfeited due to the termination of services. The forfeited options were added back to the available pool for future issuance.

The following table represents stock option activity for the nine months ended June 30, 2015:

						Weighted Average
	Stock Options					Exercise Price				Fair Value		Contractual		Aggregate
	Outstanding			Exercisable		Outstanding		Exercisable		Vested		Life (Years)		Intrinsic Value
Balance - September 30, 2014		6,260,247			5,177,077	$	0.08	$	0.08	$	0.08	$	10.00
Granted		750,000					0.02
Exercised		-					-
Forfeited		(562,500	)				0.02
Balance - June 30, 2015		6,447,747			6,043,809		0.08		0.08		0.08		10.00	$	8,854

The following table summarizes information on stock options outstanding and exercisable as of June 30, 2015:

Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Term (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.010		1,775,747		4.00	$	0.010		1,765,747	$	0.010
	0.016		1,220,500		8.26		0.016		1,103,625		0.016
	0.020		187,500		9.88		0.020		187,500		0.020
	0.103		2,189,000		6.33		0.103		2,121,609		0.103
	0.220		975,000		7.06		0.220		765,328		0.220
$	0.450		100,000		2.62	$	0.450		100,000	$	0.450
			6,447,747						6,043,809

Stock-Based Compensation

For the nine months ended June 30, 2015 and 2014, stock-based compensation totaled approximately $43,719 and $57,919, respectively.  As of June 30, 2015, total unrecognized stock option compensation expense is $38,222, which will be recognized as those options vest over a period of approximately four years.

The fair value of each option grant is estimated at the date of grant using the Black-Scholes pricing model.  Volatility is based on average historical volatilities for public companies in similar industries over the expected term of the options.  The expected term of options represents the period of time that options granted are expected to be outstanding.  The risk-free rate is for periods within the contractual life of options and is based on the United States Treasury yield curve in effect at the time of grant. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. In estimating the Company's forfeiture rate, the Company analyzed its historical forfeiture rate, the remaining lives of unvested options, and the number of vested options as a percentage of total options outstanding. If the Company's actual forfeiture rate is materially different from its estimate, or if the Company reevaluates the forfeiture rate in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

F-34

Aperion Biologics, Inc.

Notes to Condensed Financial Statements

June 30, 2015 and 2014
(unaudited)

7.Stock Options (Continued)

Stock-Based Compensation (Continued)

The weighted-average Black-Scholes assumptions are as follows:

	June 30, 2015			June 30, 2014
Term	5.5 to 10 years			5.5 to 10 years
Risk-free interest rate		1.00	%		1.00	%
Volatility		49.30	%		49.80	%
Expected dividend yield		-			-
Forfeiture rate		-			-

8.Commitments and Contingent Liabilities

Lease Commitments

The Company leases office space and certain equipment under noncancellable operating lease agreements.  The leases generally require the Company to pay certain maintenance, insurance, and other operating expenses.  Rental expense under operating leases totaled approximately $28,535 and $26,557 for the nine months ended June 30, 2015 and 2014, respectively.

Future minimum lease payments under noncancellable operating leases as of June 30, 2015 are as follows:

Year ending June 30,
2016	$	8,139
2017		1,740
2018		1,740
2019		1,595
	$	13,214

Royalty Commitments

The Company has entered into a license agreement whereby the Company may use certain inventions and discoveries with its products.  The license agreement calls for sales royalties ranging from 1.5% to 1.9% on net sales less than $10 million and 1.2% to 1.6% on net sales greater than $10 million, with a minimum annual royalty of $35,000, which shall be creditable against the sales royalties.  The cumulative royalty payments to be paid under this agreement shall not exceed $3,500,000.  Unless terminated earlier under the provisions of the agreement, the license agreement will remain in force during the life of the patents for the products included in the agreement.  Royalty expense under this agreement totaled $26,250 for nine months ended June 30, 2015 and 2014. In March 2015, the Company converted the outstanding payable of $105,000 into a convertible promissory note.

The Company entered into a license agreement in 2003 which called for the payment of royalties and milestone payments related to the use of a certain enzyme. The Company has paid a total of $190,000 in royalty payments to date under this agreement, and has accrued $50,000 in additional royalty payments contingent upon the delivery of certain product documentation. The Company has not used the licensed enzymes since 2008. In 2014 the Company received a letter from the licensor alleging that Company owed additional payments under the license agreement; however, it is the opinion of the Company that no payments other than the amounts accrued are owed under this contract.

F-35

Aperion Biologics, Inc.

Notes to Condensed Financial Statements

June 30, 2015 and 2014
(unaudited)

8.Commitments and Contingent Liabilities (Continued)

Royalty Commitments – Related Party

The Company has an agreement with CrossCart to pay CrossCart a royalty of 5% of sales of products produced by the Z-Process and is payable on these sales in perpetuity.  Total royalty expense charged to operations was $1,350 for the nine months ended June 30, 2015. Royalty expense payable at June 30, 2015 was $1,350 and is included as accrued liabilities on the balance sheet.  In September 2015, the Company entered into an agreement with CrossCart and Dr. Kevin Stone, under which such royalty will terminate immediately following the completion of this offering.  See “Subsequent Event” in Note 10 below.

Transaction Bonus

In December 2014, the Company issued a demand note to CrossCart for an aggregate principal amount of $120,000 (the "Demand Note").  As an inducement to enter into the Demand Note, the Company agreed to pay CrossCart a transaction bonus (the "Transaction Bonus") equal to 3% of the gross proceeds received from any control change transaction of the Company.

Change of Control Bonus

In March 2012, the Company awarded Dr. Stone a bonus (the "Stone Bonus Agreement") in the event of an acquisition of the Company.  An acquisition is defined as a sale, merger, consolidation, transfer or other disposition of all or substantially all (more than 80%) of the Company to another entity (the "Acquisition").  An initial public offering of the Company's Common Stock pursuant to an effective registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), does not constitute an Acquisition.  Dr. Stone is entitled to receive a bonus award in an amount equal to 1% of the proceeds received in the Acquisition that occurred on or prior to the completion of an initial public offering of the Company's stock pursuant to an effective registration statement filed with the Securities and Exchange Commission under the Securities Act.

Management Retention Plan

In December 2013, the Board approved the Management Retention Plan (the "Plan"), pursuant to which certain executives are entitled to receive a bonus upon the occurrence of specified events, provided that the participant must continue as an employee of the Company through the occurrence of the triggering event.  Under the Plan, upon a significant external financing (beyond any financing from CrossCart) or a signing of a significant license or distribution agreement, the executives are to receive bonuses and any deferred compensation that would have been paid had full salaries been in effect from July 2013 through the date of the external financing/licensing agreement.  All unpaid salaries have been accrued in the company's financial statements.

In addition, the Plan also provides that upon closing of a deemed liquidation event specified in the Company's certificate of incorporation or a sale of the Company's securities representing 50% or more of total voting power of outstanding securities, the executives are entitled to receive bonus payments based, in part, on the amount of proceeds received by the Company in the Acquisition.

Transactions with Directors

In December 2013, the Company entered into a letter agreement with two of its directors, to provide certain acquisition bonus payments (the "Director Bonus Agreement"), Under the Director Bonus Agreement, in the event of a deemed liquidation event specified in the Company's certificate of incorporation or a sale of the Company's securities representing 50% or more of total voting power of outstanding securities, the directors are entitled to receive bonus payments based, in part, on the amount of proceeds received by the Company in the Acquisition.

F-36

Aperion Biologics, Inc.

Notes to Condensed Financial Statements

June 30, 2015 and 2014
(unaudited)

9. Major Supplier

The Company is dependent on a third party to supply inventory.  The loss or significant reduction in product availability from the supplier could have a material adverse effect on the Company.  The Company believes that its relationship with the supplier is satisfactory.

10. Subsequent Events

Royalty Agreement Amendment

On September 7, 2015, CrossCart, LLC, Dr. Kevin Stone, and the Company agreed to terminate CrossCart's unlimited royalty on sales of products produced by the Company's proprietary manufacturing process, subject to completion of the Company's initial public offering of securities.  The royalty will now be capped after the first $12,000,000 of sales.

Convertible Promissory Notes

On September 1, 2015, the Company completed the sale of $200,000 of convertible promissory notes.  The notes convert into the Series E preferred stock at $0.27 per share at the option of the holder.

Bonus Termination

On September 7, 2015, CrossCart, LLC, Dr. Kevin Stone, and the Company agreed to terminate the Transaction Bonus and Stone Bonus Agreement, subject to completion of the Company's initial public offering of securities.

Lease Commitment

On September 17, 2015 the Company received notice that its offer to extend its commercial lease on the property at 11969 Starcrest Drive was accepted by the landlord for a term beginning October 1, 2015 and ending December 31, 2018.

F-37

PART III—EXHIBITS

Exhibit	Description of Document
1.1	Form of Underwriting Agreement*
2.1	Amended and Restated Certificate of Incorporation of the Issuer, as currently in effect
2.2	Second Amended and Restated Certificate of Incorporation, as in effect following the offering
2.3	Bylaws of the Issuer, as currently in effect
2.4	Amended and Restated Bylaws, as in effect following the offering
3.1	Third Amended and Restated Investors’ Rights Agreement
3.2	Form of Demand Promissory Note issued to CrossCart LLC
3.3	Form of Convertible Promissory Note
3.4	Line of Credit Note issued to CrossCart LLC
3.5	Form of Warrant to purchase Preferred Stock of the Company
3.6	Form of Warrant to purchase Common Stock of the Company
6.1†	License Agreement dated January 8, 2009 between the Company and The Curators of the University of Missouri
6.2	Letter Agreement dated December 23, 2013 by and among the Company, CrossCart LLC and Dr. Kevin R. Stone
6.3	Aperion Management Retention Plan
6.4	Aperion Amended and Restated Management Retention Plan
6.5	Lease Agreement dated December 17, 2008 by and among the Company and Titan Mac Fund I, LP, as amended on June 21, 2012.
6.6	Independent Consultant Agreement effective September 1, 2008 between the Company and David Cocke
6.7	2008 Stock Option/Stock Issuance Plan
8.1	Escrow Agreement*
10.1	Power of Attorney - reference is made to the Signature page of this Offering Statement
11.1	Consent of Marcum LLP

12.1	Opinion Of Morgan, Lewis & Bockius LLP*
13.1	Testing the water materials

* To be filed by amendment.

† Confidential treatment has been requested for certain information contained in this document. Such information has been omitted and filed separately with the Securities and Exchange Commission

SIGNATURES

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of San Antonio, State of Texas, on September 18, 2015.

APERION BIOLOGICS, INC.
By:	/s/ Daniel R. Lee                                  Daniel R. Lee Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Daniel R. Lee and David Cocke, jointly and severally, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her, and in his or her name, place and stead, in any and all capacities, to sign the Offering Statement on Form 1-A of Aperion Biologics, Inc. and any or all amendments (including post-effective amendments) thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Offering Statement has been signed by the following persons in the capacities indicated.

Signature	Title	Date
/s/ Daniel R. Lee	Chief Executive Officer and Director	September 21, 2015
Daniel R. Lee	(Principal Executive Officer)
/s/ David Cocke	Chief Financial Officer	September 21, 2015
David Cocke	(Principal Financial Officer and Principal Accounting Officer)
/s/ David W. Anderson	Director	September 21, 2015

/s/ France Dixon Helfer	Director	September 21, 2015
France Dixon Helfer
/s/ Alfred Holcomb	Director	September 21, 2015
Alfred Holcomb
/s/ Kevin R. Stone, M.D.	Director	September 21, 2015
Kevin R. Stone, M.D.
/s/ Mike Ward	Director	September 21, 2015
Mike Ward