On January 25, 2013, Pure Bioscience, Inc. entered into a Letter Agreement with Morrison & Foerster LLP. Under the terms of the Agreement, the Company issued a Promissory Note in favor of Morrison in the principal amount of $1,125,000. In consideration for the Note, Morrison agreed to waive $1,518,540.55 of amounts due and payable to Morrison for legal services rendered.

The Note bears interest at the rate of 7.5% per annum, but the then outstanding balance will accrue interest at the rate of 10% per annum upon the occurrence of an event of default. Beginning March 31, 2013, and on or before the last business day of each calendar month thereafter, the Company is required to pay all accrued but unpaid interest on the then unpaid amount of outstanding principal. Beginning on February 28, 2014, the Company is required to pay equal monthly principal installments of $46,875.

The Company may prepay the outstanding balance under the Note in full or in part at any time, which prepayment will result in a discount of the then outstanding balance as more fully described in the Note. The Note will mature on February 28, 2016, unless accelerated pursuant to an event of default or upon the consummation of a change of control. As a result of the Agreement, the Company will reclassify the amount due and payable to Morrison from a current liability to long-term debt on the Company's balance sheet.